Wednesday, June 4, 2014


Today, true consumer spending accounts for 68.8% of true GDP. Consumer spending has come a long way from Q2 1971, when consumers accounted for 59.9% of GDP.

Even in the midst of the Greatest Depression in American history now running into its sixth year, consumers increased their share of GDP by 1.99% even after 42.8% decline of GDP from the peak hit at the end of Q4 2007.

Before the Greenspan-Bernanke Credit Bubble, true consumer spending averaged 62.1% of true GDP. During the greatest credit bubble in American history, the Greenspan-Bernanke Credit Bubble, true consumer spending averaged 66.2% of GDP. Since the Banking Crisis of 2008 caused by the Greenspan-Bernanke Credit Bubble, true consumer spending averaged 68.4% of GDP.

So how do individuals as do it? Why they do it the American way, with credit!

And for all the years until Obama, True Revolving Credit as a part of True GDP grew.

Notice how at the end of Q1 1997, True Revolving Credit stood at 6.13% of GDP. It fell by Q2 2000 to 6.07%. Likely, this should have been when a reckoning should have taken place.

Instead, this is when Greenspan let it all out into the final rage of inflation. When Greenspan did, Americans seized on turning the estimated equity in their houses into a ready ATM machine known through the magic of HELOCs — Home Equity Lines of Credit.

Also known as Disposable Personal Income, here we see that True After-Tax Individual Income is up.  How can that be you ask?

Well not from wage income. Whether working for private ownership employers or working for government, after the Clinton Prosperity years, True Wages as a percent of True GDP have been falling.

True Wages have fallen a whopping 44.6% since peak wages were hit Q4 2007!

Well, maybe True Investment Income has helped a bit.

Yet, maybe True Welfare Income is helping more.

The chart of True Welfare Income to True Investment Income should shock you and everyone else. 

And how does Congress pay for that welfare? Congress borrows, of course. 

The excessive borrowing and spending by the U.S. Congress has wrecked the economy. At the end of Q2 2001, Debt to GDP stood at 53.8% thanks to President Clinton and the Gingrich-led House of Representatives.

And so it began. Americans left behind the Clinton Prosperity and entered into the Bush-Obama Hard Times after experiencing the Greenspan-Bernanke Bubble.


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