"REAL" GDP IS FAKE, BOGUS, CRAP. AMERICANS AND SCHOOL CHILDREN HAVE BEEN HOODWINKED FOR DECADES.

The formula for "real" GDP taught in schools:

nominal GDP ÷ base year GDP × 100

This yields "real" GDP in what was called "constant dollars." Supposedly, this "real" GDP is a measure goods and services of the current year deflated to the prices of a base year GDP. Base year GDP is merely the nominal GDP of the year chosen to be the base.

You can watch Sal from the Khan Academy teach the difference between nominal and "real" GDP on YouTube and then you can watch Sal teach the Constant Dollar method to calculate supposedly "real" GDP also on YouTube.

Under logical scrutiny, the concept gets exposed as mere hokum, bunko. Think about it. The base year GDP is inflated by whatever the inflation was for that year.

Before 1996, the BEA used the school method. From 1996, the U.S. Department of Commerce has used the chained-dollar method (see: BEA's Chain Indexes, Time Series, and Measures of Long-Term Economic Growth).

The BEA method for real GDP, though complicated, is hardly much different that school-method GDP. The new method uses the average of two successive periods of GDP. So year two of a chained-dollar average becomes the year one of the next chained-dollar average. The minions at the BEA believe this removes distortion that any year might cause owing to changes in composition of goods and services.

The math looks something like this:

"real" GDP = nominal GDP ÷ implicit price deflator

where the implicit price deflator = (current-dollar ÷ chained-dollar) × 100

and a chained-dollar = base period current-dollar measure × (chained-type quantity index number current period - chained-type quantity index number base period)


Anyway, chained-dollar "real" GDP is still as bogus as the chain consists of an averaged succession of already inflated GDP as the basis to deflate current dollar GDP.



Could you measure a length of a distance with a ruler that changes in size the farther you go? That is what academicians and the minions at the BEA claim you can do with their bogus method.

And today, that academician economists can't see this plain truth reveals how stupid they are, how weak their intellects are, how indoctrinated they are. Worse are the millions of idiot-like parroters who parrot the false belief of "real" GDP when they report on it.

Men were much smarter about money and banking from the years of the late 1870s through the 1920s. One such man was Edwin Walter Kemmerer who was known as "the money doctor." This is what Kemmerer had to say about inflation:

 

Kemmerer goes on to say:

Anyway, there is a method to deflate away inflation, which uses a metaphorical measuring stick kept at a constant length. That method is my method — the True Dollars™ method. It is the only real, true, legitimate method.

Both the constant-dollar method or the chained-dollar method rely on prices. Prices are an effect and not a cause. It's impossible for an effect to be its own cause.

It's impossible to deflate prices with past inflated prices.


Economists are idiots to believe otherwise. And guess what? They believe otherwise.

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Q2 2015 GDP FOR CANADIANS. CANADIANS HAVE BEEN SUFFERING RECESSION FOR MUCH LONGER THAN RECENT PROPAGADISTS CLAIM

Yesterday, the John Shmuel of the Financial Post reported that Canadians have entered a "technical recession" — two quarters of negative growth. Shmuel went on to report that most Canadian economists would claim Canadians aren't experiencing a recession because the unemployment rate seems steady and wages in current Canadian dollars seem to be growing.

Of course, Schmuel's beliefs are silly.



Right now, Canadians are feeling the effects of the recession of the Chinese and the depression of the Americans.

The Canadian economy has shrunk -34.9% in True Dollars™ since Q2 2011.

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U.S. PROPAGANDA ROLLS ONWARD. Q2 2015 DISPOSABLE PERSONAL INCOME SHRANK AT THE ANNUAL RATE OF -2%

Yesterday's, pro-government workers at the Bureau of Economic Analysis promoted their fiction that "real" GDP is now growing at the annual rate of 3.7% when in truth, the economy shrank -1.5% (see: Q2 2015 GDP FIRST REVISION. THE FICTION OF 3.7% "REAL" ANNUAL GDP GROWTH), the story for individuals gets even worse.

Personal income shrank at the annual rate of -1.9% as measured in the second quarter


Of those who work for a living, the hardest hit have been shopkeepers, restaurateurs and other proprietors whose income ex-inventory and capital depreciation shrank at the rate of -2.3%. The next hardest hit have been wage-earning workers whose compensation shrank at the annual rate of -2.2%.

Of everything, unemployment insurance payouts have shrunk the fastest, falling at the annual rate of -8.1%.

Likely, for those who are lucky enough to stumble upon my work, there are some, maybe even many, who doubt my True Dollar™ method. Owing to cognitive dissonance, they feel the need to defend the lies they accept from politicians, agents of Congress, academics and news media talking heads.

That doesn't bother me whatsoever. My graphs do the ultimate talking. My graphs consistently line up with reality, the reality of everyone's experiences.  Reality never lines up with the claims made by agents of Congress like those of the BEA and agents of the President along with the data and charts they present.

If you look at the Personal Rental Income, and if you thought about what happened after the peak of the Greenspan-Bernanke Great Inflation, the biggest credit bubble in the history of mankind, you would expect rental income to go up as millions of Americans defaulted on their mortgages and reverted to living in rentals. My chart shows that exactly.



Sometimes, confusion hits many because they see that welfare doled by Congress has fallen. They would expect such welfare to have risen during tougher times. In current dollars, that welfare spending rose, but in True Dollars™, that spending fell. Why welfare collectees didn't notice because True Dollars™ prices for the things they buy, like food, have fallen at a faster rate.



If you look at the Unemployment Insurance Income chart, and if you thought about what happened after the peak of the Greenspan-Bernanke Great Inflation, the biggest credit bubble in the history of mankind, you would expect unemployment income to go up as millions of Americans found themselves out of work. My chart shows that exactly.  Now that claims have been exhausted, payouts for unemployment insurance have fallen precisely because there are few left who qualify to make claim for benefits. My chart shows that exactly as well.



These Medicare and Medicaid income charts match reality as well.

You should tell all your family, friends and co-workers about Bizarro Theater. You should stop listening to the silliness propagated by academicians, politicians and those who work in financial news media.

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Q2 2015 GDP FIRST REVISION. THE FICTION OF 3.7% "REAL" ANNUAL GDP GROWTH

Minions at the Bureau of Economic Analysis claim that real gross domestic product is now growing at an annual rate of 3.7% as measured in Q2 2015 after a statistical revision from a number published a month ago. Their claim is pure fiction.

These minions deflate current GDP using a past inflated GDP. Ask yourself, how could that work, logically?

True GDP expressed in True Dollars™ tells an altogether different story. As you can see in the chart, True GDP is down -1.5% for the quarter and -4.4% year over year.




The only growth to be seen is growth in inventories. No one should want a growth in their inventories in a just-in-time world.

Mark my words. Black Friday is going to expose all of the phony numbers published by agencies of Congress, like the Commerce Department's BEA. In True Dollars™, total consumer credit relative to disposable personal income is too high. I shared the chart for that with you in THERE STILL IS NOT A RECOVERY SEVEN YEARS LATER. HERE IS WHY, PARTLY.





Americans continue to live in the Greatest Depression. Likely, there is world wide depression as the Chinese have now entered recession as I have shared in Q2 2015 CHINESE GDP REVEALS THE CHINESE ECONOMY IS SHRINKING. THE CHINA MIRACLE HAS COME TO AN END.

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Q2 2015 CHINESE GDP REVEALS THE CHINESE ECONOMY IS SHRINKING. THE CHINA MIRACLE HAS COME TO AN END.

Many claim workers for the National Bureau of Statistics of China (NBSC), the statistical agency of the National People's Congress of China fudge the GDP numbers for China. Their belief is so pervasive that articles about whether these workers fudge numbers or not has become regular journalism fodder. Chinese premier Li Keqiang fueled the fudged data beliefs of many when he said GDP data is "man-made and, therefore unreliable".



Back on July 15, 2015, the Economist.com published Whether to Believe China's GDP Figures. The writer of that work claims workers for the NBSC smooth the data rather than fabricate it. As well, the writer points readers to a work published by Quartz whose writer, Gwynn Guilford, mocks the latest NBSC GDP data, calling it a "charade."

Back on March 25, 2013, three workers of the Federal Reserve Bank — John Fernald, Israel Malkin, and Mark Spiegel — stated, "...reported Chinese output data are systematically related to alternative indicators of Chinese economic activity. These include alternative indicator indexes of Chinese activity composed of variables that are less susceptible to official manipulation, as well as externally reported trade volume measures. Importantly, these models suggest that Chinese growth has been in the ballpark of what official data have reported. We find no evidence that recently reported Chinese GDP figures are less reliable than usual." In short, Fernald and friends claim there isn't any unusual fudging of data by Chinese statisticians.

The Conversation published a work by an economics professor, Carsten Holz. In the work, Holz quoted a former NBSC official who said, “the government statistics organisation primarily serves the needs of macroeconomic decision-making of Party and government leaders at each administrative level, and is responsible to the Party and government leaders at each administrative level.” That said, Holz himself wrote, "Double-checks more often than not confirm the plausibility of the official data. In other words, if we make a reasonable comparison between the figures for real growth in GDP components against the actual volume of physical output, then those official real GDP growth rates look rather good."

In China GDP: Believe It or Not?, Leslie Shaffer of CNBC quoted a few men regarding their views on the veracity of second quarter 2015 data. Some take the data as truth, some do not. Still others say it doesn't matter because the Chinese economy is growing. A few of the guys might have it right, Adam Myers, senior market strategist at Credit Agricole; Ewen Cameron Watt, chief investment strategist at Blackrock Investment Institute; Brian Jackson, China economist at IHS Global Insight; and Patrick Chovanec, chief strategist at Silvercrest Asset Management.

Myers said, "You only have to look at commodity prices to see that there's a disconnect with what the official Chinese data is showing and what really the demand in the underlying economy is having for things like raw materials. We've been talking about that for months and still the Chinese data remains relatively solid, but all the underlying anecdotal evidence points to a much deeper slowdown in China. Put on top of that the wealth and credit effects that we've seen through the Chinese stock markets in the last couple weeks, a much larger deterioration appears to be on the cards than the official data would indicate."

Watt said, "If you really want to get the measure of what people think about China, go look at commodity prices, go look at the Aussie dollar, go look at employment in Australia. It's telling me the economy is slowing down," he said. "There's a huge oversupply because of the assumption the fixed investment boom is going to last forever."

Taking the GDP data as truth from the National Bureau of Statistics of China and expressing that data in True Dollars™, the Chinese economy shrank -1.0% from the second quarter of 2015. Already, the Chinese economy had shrunk 3.16% in the first quarter of 2015. Year-to-quarter, the Chinese economy has shrunk 4.1%.

And while the Chinese economy has grown 9.1% over the last five years, the Chinese economy has shrunk -5.4% since hitting peak GDP at the end of Q3 2013. So, it's likely a safe call to say the Chinese economy is in recession. It remains to be seen if the recession runs into a depression.



Looking at the graph above, the Q3 2008 dip into Q1 2009 should surprise no one as that came during the US and European Banking Crisis. The Chinese economy shrank -7.7% during that period.

Since Q2 2011, Chinese economy has fallen -2.79%. This should surprise no one. And if all gave earnest thought to the above, they would come to see that it makes sense.



Exports account for a bit more than one-fifth of Chinese GDP (22%). If economies of Chinese importers are slowing, how can the Chinese economy not also slow? 47.8% of Chinese exports go to these countries: USA (19%), Japan (8.3%), Germany (4.4%), UK (2.5%), Mexico (2.4%), France (2.3%), Russia (2.3%), Canada (2.3%), Australia (2.0%), Nederlands (2.0%). Poorer Americans and poorer Europeans can't buy Chinese goods even at low, Chinese prices.

Back on July 8, 2015, Michael Auslin writing for the New York Post claimed the China economic miracle is over. Auslin pointed to the 30% plunge in stock prices between May and July, 2015, after a 140% run up between July 2014 to July 2015, a plunge that wiped out $3 trillion from stocks as "more evidence that China’s high-flying days are over." In his work, Auslin mentioned Derek Scissors, a resident scholar at the American Enterprise Institute (AEI) who focuses on the Chinese and Indian economies. According to Auslin, Scissors supports the belief that economic growth in China has essentially stopped.

In a work by Scissors published by the Financial Times on August 21, 2015, Scissors stated, "China’s economy began weakening no later than 2008, and probably before. A temporary upswing starting in late 2009 and continuing into 2010 was due to an unsustainable, unwise, and unprecedented explosion in debt. From 2011 on, ups and downs in the global economy have not been due to ups and downs in China – the trend in Chinese performance has been invariably down." As you can see in my graph above, Scissors hunch is right. Scissors has another worthy read, China’s Stall, published on June 17, 2015, by the American Enterprise Institute.

On August 16, 2015, Foreign Affairs published China Hits the Wall by Salvatore Babones. Babones stated that, "[t]hree and a half decades of easy profits from one-way bets on China's reintegration with the outside world have come to an end."

Babones believes a crisis is coming to the Chinese, a crisis driven by administrators at all levels of the Chinese government failing to meet their financial obligations owing to demographic stagnation, capital flight, and the decision in 2013 to give the market a decisive role in Chinese economic development.

In the work, Babones suggested that China escaped the 2008 U.S. And European Commercial Banking Crisis even though the Chinese suffered a 16% decline in exports year-over-year 2009 to 2008. To offset that decline, Babones stated that executives for Chinese law givers spent $586 billion on airports, subways, and high-speed rail.

Way back on October 21, 2014, The New Yorker published Is the Chinese Economy About to Fall Off a Cliff, a work by John Cassidy. Cassidy cited a Conference Board work by David Hoffman and Andrew Polk in which Hoffman and Polk wrote, “Private sector debt, now at almost 200% of GDP and up from 117% at the end of 2009, is still accruing at 15 percentage points per year...[debt is]  well in excess of the thresholds that have historically triggered financial crises in other countries.”

The other day, Carlo Cottarelli, an executive director of IMF, went on record and said, "Monetary policies have been very expansive in recent years and an adjustment is necessary...It's totally premature to speak of a crisis in China." In so many words, Cottarelli has said that too much credit has been given.

Here is what I teach about any crisis and panic. A crisis arrives when too much property of futurity has been created and not enough profit arises from sales of property happening in the now. When true prices fall, margins get squeezed on extant capital. When enough dominoes of failing topple, all get pushed to panic.

A crisis begins with a sudden realization of epic loss. It's the movement of mind from uncertainty (50-50) to certainty (100%) and 100% probability of loss on a wide scale. A crisis begins when all those who have undertaken too much credit for trade find themselves lacking income from extant capital structure sufficient to service debt. All too often, they have overpaid for their capital structure.

Every crisis has the panic part. Panic is the scramble for the exits. Panic is the rush to exit credit positions. Crisis is the storm. Panic is the scuttling during the storm.

There has yet to be an economy derived from bank credit, especially one with bank credit as legal tender whose people haven't found themselves with too much credit relative to forthcoming expected profits. When the Chinese create too much property of futurity (credit) relative to property traded at profit in the now, the Chinese will experience crisis. This downturn in the Chinese economy could be the turning point when the Chinese find out they have paid too much for too many factories from which they cannot earn profits.

Clearly, the Chinese needed to embrace banking credit capitalism to lift 600 millions from bare subsistence poverty because Mao communism could not do it. Mao communism previously starved to death their ancestors.

Unfortunately, the Chinese Communist Party leaders likely won't let market forces remedy the excessive creation of property of futurity. Likely, the Chinese will pull a George Bush who said infamously (watch on YouTube), "I've abandoned free market principles to save the free market system."

The recent sodium cyanide industrial explosion accident in Tianjin that leveled blocks, blowing up thousands of new cars awaiting delivery and sadly killing over 100 might turn out to be symbolic of the blow up that could be happening in the Chinese economy.

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2015 Q2 GDP REPORT FROM THE BEA, ANOTHER REPORT AND ANOTHER BIG LIE.

Once again, workers at the Bureau of Economic Analysis, an agency of Congress, have lied to Americans. According to these minions of Congress,

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis.  In the first quarter, real GDP increased 0.6 percent (revised).

The BEA jokers say "Real" GDP is up 2.3%. But they use a previous inflated GDP to deflate the current GDP. How can something currently inflated be deflated by something also inflated?

How does that work? It doesn't. It can't, ever.

Meanwhile, true GDP as measured in True Dollars™, which is the only legitimate way to account for inflation, has declined yet again. Year over year, true GDP is down -4.4%. Quarter over quarter, true GDP is down -1.8%.

The Greatest Depression continues, first brought to you by the Greenspan-Bernanke Great Inflation, the greatest credit bubble in the history of mankind, followed by the Bernanke-Yellen Quantitative Easing, the greatest capital killer in the history of mankind.







Since Q1 1959, this is the state of economy with respect to quarters up or down and streaks of true growth or true decline.

The USA economy has never been this bad for this long since 1959. Why should anyone expect anything else? Americans experienced the greatest inflation — rise in bank credit — in the history of mankind between 1994 and 1997. Americans have been experiencing reckoning ever since.

GDP is now down -6.3% below the Bill Clinton Q1 1994 low. OBAMA AND HIS CONGRESSES HAVE STEERED AMERICA INTO A 1975 FORD ERA ECONOMY.

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THE ECONOMY IS DRIVING INTO A DEEP DITCH. CENTRAL BANKERS NO LONG UNDERSTAND CAPITALISM. LEGISLATORS NEVER DID.

For every quarter, the minions at the Bureau of Economic Analysis, release data that supports an accounting known as the National Income and Product Accounts (NIPA). NIPA data contains much data including the all-important GDP data.



Part of NIPA is Table 7.2.5.B., the Motor Vehicle Output table, which contains data about the state of automobile manufacturing and selling in the USA. Those with authority must believe that motor vehicle manufacturing and selling are such weighty matters when it comes to the economy that specific statistics must be gathered and collated regarding these activities.

From no one else on the Internet and likely worldwide can you get what I give you in these charts — the current dollar data fixed in True Dollars™. In chart after chart I have presented elsewhere in my work, once you see dollar data in True Dollars, you see how the charts exactly correlate with reality, with what Americans experience daily in their commercial living.

Academician economists rely upon an error-filled method of deflating current inflated prices using a base of past inflated prices. Anyone with good sense can see right away that method is wrong. Using previously inflated prices as the means to deflate current inflated prices fails to deflate anything.

While I have access to 45 charts generated from the NIPA Motor Vehicle Output data, I shall share with you a few of the key ones. Using my charts you can tell exactly where the economy has been and where it is going.

First up is the master chart, the Motor Vehicle Total Output chart.




Even before the September 11, 2001, calamity that brought down the Twin Towers, the economy was in decline. The foregoing chart shows that and corresponds with the GDP chart.





The sum of automobile output is down -10% from Q1 1959!



Americans haven't seen lows in final sales of motor vehicles since 1970.



Private fixed investment in new trucks is down -43.5% from the all-time peak hit Q3 1999. That said, it's up 77% from the Q4 2008 bottom.



After the dead cat bounce to Q3 2010, final sales of motor vehicles to those residing in the USA continues to fall, having fallen -12.8% since.



The sum of domestic output of new cars is -25.1% below the Q1 1959 sum!



And here come the charts that shock the mind.



Personal spending on autos is down -71% from the Q3 1998 all-time peak. Americans spend as much on cars today as Americans did in 1959!



Personal spending on trucks is down -55.8 from the Q3 2001 peak.



And here is a huge eye-opener. On a per capita basis, Americans, 16 and older, spend -15.6% less on cars than Americans did in the beginning of 1959.







Elsewhere I have written how Quantitative Easing has wrecked the return to extant capital and was causal for a crazed amount of true unemployment. As well, as long as legislators of Congress pursue a policy of working-age immigration double-digit growth rates, enterprises will be hard pressed to gain increasing returns to capital. Merely, they will employ more workers at ever lower wages.

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IS TRUE ECONOMIC GROWTH AT LONG LAST COMING SOON TO THE U.S. ECONOMY? MAYBE.

The pessimists seem quite down on the U.S. economy. However, these pessimists rely on nominal GDP stats and the quite dubious real GDP stats from the Census bureau.

One well-known pessimist, a brokerage firm operator also who peddles gold believes a spate of bad numbers will translate into Q2 GDP numbers lower than Q1, a new round of quantitative easing and dollar that buys less than it does now, especially against cash from other banking systems. Another well-known pessimist, a stocks salesman who is a popular financial blogger has called for a recession.



The U.S economy can't go into recession because at least through Q1 2015, the economy has been shrinking since the last growth peak of Q4 2007. Likely, many disbelieve my claim. Yet, in true terms, after removing the effects of monetary accretion, the economy has been shrinking.



At a point sometime in the near future, the shrinking is going to stop. When it does, the economy is going to take off and along with it, the prices of stocks and commodities.

We might be nearing that point given these charts.

When Americans were in true hard times, there were slightly more than nine out-of-work Americans for every American hired. Have a look.



At the peak of hard times, there were almost 13 Americans clawing for every new job opening. Now, there are about four truly unemployed Americans for everyone new job opening.



During the peak of hard times, there were about 41 Americans working under supervision for every working American who found himself or herself laid off or fired. By the end of March 2015, that had grown by more than twice as much.



As a contrarian of sorts, I'd say now is the time to look at depressed commodities like timber and steel. Likely, now is the time to look at firms and industries that have been out of favor during the great dollar-figure run-up of the S&P 500.



The last time I looked, Americans were living in great times to buy houses. Low rates plus jobs equals house buying. I'd expect new construction to take off if present employment trends hold.

I look forward to the Q2 GDP numbers. For now, I say, let's go!

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AMERICANS LIVE IN THE GREATEST DEPRESSION STILL. NO RECOVERY. NO EXPANSION. IT'S ALL BEEN A PACK OF LIES.

For those who read Bizarro Theater, I ask you to spread the word about this important work.



Back on April 14, 2015, I released the charts from the U.S. Census Bureau on Advance Monthly Sales for Retail and Food Services for March 2015 adjusted for inflation (see: ADVANCE RETAIL SALES SHOW EIGHT YEARS OF LIES. WHAT RECOVERY? DEPRESSIONS NEVER LASTED THIS LONG WHEN AMERICANS HAD MONEY.)

In chart after chart, you see the true picture of retail. There isn't a sector of retail that has not experienced a decline in sales from peaks happening between Q4 2007 and Q3 2008. Some sectors like grocery retailers and food and beverage retailers hit their respective peaks in Q4 2000.

Cars, other vehicles and parts sales for such hit a peak way back in Q4 2001. It should not surprise then why car makers begged for bailouts.

And everywhere else you can look from manufacturers' new orders and personal income to savings and investment, you see the same pattern of downward curves. In short, the economy has been shrinking for years in spite of the lies from Janet Yellen, her predecessor Ben Bernanke, President Obama and many TV blabber heads.

The Federal Reserve System and its workers have failed consistently at managing the economy. They cannot do it. 

What execs at the Federal Reserve System are successful at doing is colluding with successive U.S. Congresses to keep Americans from agitating for a return to money — coined metal by weight and fineness. Having legal tender bank notes and checkable deposits as the only means of debt settlement to U.S. Congress keeps banking going in spite of the needs of Americans.

First up is GDP. True GDP is down 2.1% from Q4 2014 to Q1 2015.

Here is the state of acquiring capital for production. If the economy were growing, this curve should be sloping upward to the right.




Here is what manufacturing looks like.














And all of those charts and many more that will be published with frequency and made available free to those who subscribe to various priced-products all show the same downward trend.

Spending by Americans constitutes more than 2/3's of the economy. Americans true disposable income keeps falling.







Therefore Americans can't spend.



And enterprisers can't earn.









And few can save on falling true incomes.





And few can profit on falling incomes.



But U.S Congress' Obamacare is increasing Medicaid income. And that readers, is the crowning achievement of six years of Obama and his congresses.

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AMERICAN CORPORATE PROFITS STILL IN DECLINE AND STILL TOO HIGH. SEE THE TRUE PICTURE.

Many continue to tout what ought to be considered a smoke-and-mirrors, propaganda recovery for the American economy.

Today, I give you the true picture of corporate profits. First, this is the picture the Federal Reserve gives you. They report corporate profits in dollars.



And now, I give you the true picture. This is what corporate profits look like after deflating.



Anyone whose been living their adulthood years since the 1990s knows this picture corresponds to their reality while the Fed Res dollars picture tells nothing. Likewise, those were in their primes between 1960 and 1970 knows the truth of my picture. The same holds true for those who were in their primes in the 1980s.

To be sure, whenever True Corporate Profits have been rising, Americans have lived better. This aspect of reality contradicts the false preaching of socialism revivalists like Thomas Piketty.

All-time peak True Corporate Profits hit Q2 2006, leading True Peak GDP and True Peak Credit, which Q4 2007.

It looks like True Corporate Profits are following the trajectory of True GDP though not the rate of decline. Corporate profits are still too high relative to the long run True Average of US$88.60 billion, 1.63 times higher than that average.




So how well does True S&P 500 correspond True Corporate Profits and GDP? Keep in mind that in any year for awhile now, about 45% of revenues for the S&P 500 firms get earned outside the USA.



As it is, a couple of weeks back, I showed you the true picture on SNAP in YELLEN. THE FED, THE LIES, THE FAKE RECOVERY. 46 MILLION NEEDY AMERICANS STILL NEED FOOD STAMPS. How can anyone believe there ever has been a recovery after the collapse of the Greenspan-Bernanke Inflation Bubble, the largest credit bubble in the history of mankind?

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DAMMIT JANET. THE USA ECONOMY RECOVERY HAS BEEN DERAILED YET AGAIN.

Back on January 5, 2014, in STATE TAX RECEIPTS LAG TRUE GDP. IS THE RECOVERY ON OR NOT?, I said, taxes are lagging behind GDP precisely becaues profits had been lagging the two quarters of True GDP growth. And I warned,

However, unless those curves at least flatten and then swing up within the next few quarters,  it is hard to see how the two quarter positive turn in True GDP can sustain.

The month before that, I revealed what could have been the start of the USA economy advance in THE USA ECONOMY ADVANCE LIKELY HAS BEGUN AT LONG LAST.

Well now, it doesn't look as if an advance can be sustained under the present commercial state.

On Friday, January 30, 2015, the U.S. Bureau of Economic Analysis released the Q4 2014 GDP data. In their release, workers of the BEA claim "real" GDP is up 2.6%.

That might be so, as "real" GDP is a concocted measure of dollar-named GDP deflated by using a past inflated GDP. In short, "real" GDP tells you nothing.

However, True GDP, which shows you reality, reveals that GDP has returned to decline mode. True GDP gets calculated by removing the effects of inflation.



Q4 2014 GDP is quite a let down considering that in Q3 2014, True GDP per industry worker was  up noticeably from a likely bottom in Durable Goods, Financial Activities and especially the Finance and Insurance sub-sector, as well as in Transportation and Warehousing, reflecting that production of property in capital had been far advancing production in wealth, which is always a good sign of a smooth running economy.

Yellen and her predecessor, Bernanke have done much to prolong the agony of the long, slow depression, the reckoning that followed the Greenspan-Bernanke Inflation Bubble, the biggest credit bubble in mankind's history. Quantitative Easing is exactly opposite of what Americans need.

Suppressing interest rates and thus cheapening credit kills the the return to capital for those with extant capital paid for with credit at higher rates borrowed upon expectation of higher prices.  This has resulted in unnecessarily lengthened, high unemployment followed by capital growth restriction and thus true wage growth impairment.

The fixed investment in capital equipment looks hideous still.

BEA workers shall force us to wait until February 27, 2015, for the second estimate for fourth quarter GDP.

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STATE TAX RECEIPTS LAG TRUE GDP. IS THE RECOVERY ON OR NOT?

“...Look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own...If you’ve got a business — you didn’t build that. Somebody else made that happen.” ~ Barack H. Obama, II, 44th President of the United States of America

When politicians give speeches, never is it that they say something stupid because they are stupid themselves. Rather, politicians repeat what their speechwriters have written.

So are speechwriters stupid? Speechwriters write persuasion geared to appeal the majority. Speechwriters rely on the majority having easily bamboozled intellects and defective characters by appealing to their instincts of greed, envy and sloth.

It's not likely that Obama is daft about all things America and economics. It's that Obama expects most who listen to him to be daft. So, in truth, Obama's deceitful way reveals his true character.

All of those roads and bridges of the past were not built by ghosts. Men built them. But before taxes could be ripped from men to pay for those things, all of this had to happen in sequence:

production → surplus → sales > outlays = profit

For if there is no profit, in short order, any firm gets put to ruin. There is no way to pay for needed capital — products that yield goods in production of something else.

If firms can't break even first, there can be no taxes collected. Firms would go to ruin in short order if taxes could be levied below break even.

Without profit there can be no taxes. All taxes are an unearned share of profits. If no profits arise, there can be no taxes. Politicians are sharing the profits by the force of taxation  without having invested any cash or credit into the capital of anyone.

That means there can be no roads, bridges, government bureaucrats, government freebie welfare for layabouts, none of that without first there being surplus and profit. That is how reality works.

Obama ought to have said the truth. That today's businesswomen and men can sell more because of roads and bridges built and paid for by their ancestors with income ripped from their hands by politicians like Obama.

In THE USA ECONOMY ADVANCE LIKELY HAS BEGUN AT LONG LAST, I revealed the upwelling of private sector True GDP compared to public sector True GDP along with the general advance of True GDP. Yet, as you can see from the following graphs, taxes are lagging behind GDP.

States' legislators are having a hard time collecting taxes using their extant tax laws. Why is this so? Profits growth for firms and workers has yet to match the latest True GDP growth. Sales are advancing though.

However, unless those curves at least flatten and then swing up within the next few quarters,  it is hard to see how the two quarter positive turn in True GDP can sustain.

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SPOTLIGHT TAIWAN. TRUE GDP. EWT.

The Taiwanese have experienced their first true economy growth since Q3 2013 and the first growth of size since the time betwee Q2 2009 and Q4 2010.




With 21 years of GDP and cash exchange rate data, measured by quarters, the Taiwan economy has grown 59.5% of the time and has shrunk 40.5% of the time.

The longest growth streak lasted fifteen quarters between Q4 1993 and Q2 1997. The longest decline stretch lasted nine quarters between Q1 20111 and Q1 2013 matching an alike decline one other time.

True GDP hit a peak Q1 2008. From the peak to the True GDP low hit Q1 2014, True GDP declined -8.9% a year, falling a full -30.1% over six years.

Since the low, True GDP has grown 1.7% growing at the yearly rate of 3.4%.

After hitting a low in January 2009, True EWS has grown 18.3% from the bottom, growing at a yearly rate of 0.3%. With 17 and ½ years of data, for 53.6% of the time, EWS has been up and for 46.4% of the time, EWS has down months.





After hitting a low in January 2009, True EWT has grown 17.9% from the bottom, growing at a yearly rate of 0.3%. With 17 and ¾ years of data, for 47.1% of the time, EWT has been up and for 52.9% of the time, EWT has been down.

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THE USA ECONOMY ADVANCE LIKELY HAS BEGUN AT LONG LAST

Although blogging as all know it began around 1999, blogging didn't take off until 2004. With a growing economy, many jumped on the financial blogging bandwagon, including the pessimists and other associated cranks.

Since Banking crisis of 2008 caused by the massive inflation undertaken by former Federal Reserve central bankers Greenspan and Bernanke, these perpetual downers and cranks have earned their  their readership by bashing the Federal Reserve and its figureheads (Janet Yellen, William Dudley, Richard Fisher) as well as Wall Street, its major commercial banks, its major financial banks and their figureheads.




Along the way, bloggers have coined anti-establishment heroes, who, in truth, are part of the establishment such as Elizabeth Warren, the former egghead from academia and the current a senator from Massachusetts. As well, these bloggers stick together in an unwritten alliance, referencing each other's published works. For more on Elizabeth Warren, you can read all you ever need to know about her right here on Bizarro Theater: POOR-MINDED ELIZABETH WARREN NEEDS HELP WITH REALITY, THE REALITY OF TRADE, PROPERTY AND PROFIT.

Most amusingly, many of these cranks and perpetual downers have peddled buying gold, you know, in case the zombie apocalypse, or at least the banking version of that comes.

Like everything else, gold rose in price fueled by buyers flush with credit along with the massive inflation fueled economy.

Peak GDP hit Q4 2007. Gold buyers were slow to catch that signal, so slow in fact they kept buying until March of 2008. And then as deflation began of the Greenspan-Bernanke Bubble, the biggest credit bubble in the history of mankind, true gold fell right with it.



True gold didn't resume its price run until it became clear Americans were experiencing a banking crisis. That price run began in December 2008. True Gold continued to rise until hitting a true peak in September 2011.

Since then True Gold has fallen and has fallen hard. True Gold is down -50.2% having fallen at a rate of -19.8% a year.

With that performance, it should be clear that gold is a bad bet. If you have greater curiosity, check out my work right here on Bizarro Theater, IS THERE EVER REASON TO BUY GOLD?

All the same, here is what the True GDP picture looks like for the USA.



The most recent low in True GDP happened this year, in Q1 2014. From peak True GDP until the most recent low, True GDP fell -41.8%, falling at a yearly rate of -7.7%.

Since hitting that Q1 2014 low, True GDP has grown 2.52% growing at a yearly rate of 5.2%.

Only in four quarters — Q2 2008, Q4 2009, Q2 2010, and Q2 2013 — was there any growth in True GDP over the preceding quarter.

Looking at the next chart, you can see that Public Sector True GDP crossed over Private Sector True GDP in Q1 2009. That is never good for the economy.

In the great, long, slow deflation of the Greenspan-Bernanke Inflation, the longest decline stretch happened over the 11 quarters between Q3 2010 and Q1 2013.




Even more telling is this chart. The right end of the chart shows growing Private True GDP has lifted True GDP growth over the last two quarters.




It's looks like it is time to become optimistic about the economy. If I were a betting man, I would bet the reckoning is over. Enough individuals and firms have righted themselves. It is time for true growth, sustained growth.
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It should be noted by everyone the earth over that neither the U.S. Congress nor central bankers of the Federal Reserve did anything to cause the economy to recover. No one can take credit for fixing the economy after almost seven years.

Those who do are liars. Those who claim others have fixed the economy are little better than toadies.

If only the Federal Reserve would publish Commercial Clearings on a timely basis. Then we would have confirmation of sustained True GDP growth.

For more on the importance of Automated Clearings, check out THE SECRETS OF AUTOMATED CLEARINGS, GDP AND THE ECONOMY. RECOVERY? WHEN? right here on Bizarro Theater.

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IF THE UK JOINED THE USA, OR WHY THE UK ISN'T POORER THAN EVERY US STATE OTHER THAN MISSISSIPPI

Back on August 22, 2014, The Spectator  published a work by Fraser Nelson whereby Nelson claims Britain is poorer than every state of the USA except Mississippi. Many have doubted Nelson's claims.

While working on the World Economy League, I decided to check out Nelson's claims using 2014 GDP data annualized and dispersed to regions or states in the same proportion as held for 2013 GDP.

Nelson almost has it right. However, he is quite off in his reckoning.

Unlike Nelson, the data presented here consists of the latest available GDP, latest population estimates, and the latest cash exchange rate.

For your convenience, I present to you a few tables, each with slight difference so you can better understand how the countries of the UK would rank against the states of the USA as well as how the countries would stack up against regions of the USA along with how the country of England broken out by region would stack up against the USA.

Taken as a whole, if the UK were a state, it would rank 43 ahead of eight states.

Table 1. UK vs the states of the USA


Here you can see, the UK as a whole ranks 43. And here is how the UK stacks up when split into its constituent countries.

Table 2. Countries of the UK vs the states of the USA


The English rank 41st, ahead of such fixed-income, retirement states as Arizona, Florida and South Carolina as well as much of forever-poor Appalachia. The Scottish rank 49th. The Northern Irish and Welsh come in next to last (53rd) and dead last (54th).

And here is how the regions of England stack up along with the remaining countries of the UK against the states.


Table 3. England Regions, Remaining Countries of the UK vs the states of the USA


 With England broken out into regions, we see Greater London comes in an impressive 4th. At last, Brits have something to cheer about, at least Londoners do.

And here are the countries of the UK against regions of the USA.

Table 4. Countries of the UK vs the regions of the USA


Neither the U.S. Congress nor its agencies recognize these regions as official. However, these regions best reflect allied trade activity.

To give you perspective, Americans living in Greater New York have more than twice the income of Brits living in Northern Ireland or in Wales, on average. Overall, Americans about 1.3 times the income of Brits, on average.

Americans living in Greater New York have about 1.6 times the income of Americans living in Appalachia. However, Americans living in Appalachia have 95% of the income of Brits living in England. Said another way, Brits living in England have a scant 5% more income than Americans in Appalachia, the poorest region of the USA.

On average, a Welshman Brit has half the income of an American living in New England and about three-fourths the income of an American living in Appalachia.

Back on October 25, 2014, I published WAKE UP BRITS. MEMBERSHIP IN THE EU MAKES YOU POORER BUT DOESN'T MAKE YOU ANYMORE EUROPEAN AS ANYONE ELSE, in which, tacitly, I stated that Brits ought to exit the EU and enter into an Anglo-American commonwealth. Without doubt, it doesn't seem that EU membership has made the wage-earning working-stiff Brit richer.

After seeing the foregoing numbers, it puzzles why Brits want to keep riding the wrong horse.

I'm sure glad that my nine-times great-grandfather left Kent, England, behind in 1630 and came to America.

BONUS FOR AMERICANS

Table 5. Income per Head Adjusted by Projected RPP for 2014



I'm not a fan of regional price parities for the same reason I am not for purchasing power parity (see below). That said, I've included the calculated numbers for Regional Price Parities (RPP), using a trend line estimate for the 2014 RPP percentages.

However, for a smartly constructed basket of goods — gasoline, milk, hair cut — for alike-sized markets by population with the same demographic profile, it might be possible to see the effects on prices caused by government bureaucracy stepping in and skimming from the top.

What About PPP?

Some might, "What about PPP?" Purchasing Power Parity is a flawed concept.

PPP reflects the flawed beliefs of academic economists and their pseudo-science of economics rather than reflecting the reality of commerce.

Purchasing power parity involves a wishful hypothetical versus the actual — what the exchange rate ought to be between the cash of two banking systems giving anyone the same buying power anywhere versus what cash exchange rates are.

In the reality of commerce, all prices adhere to the one, true, infrangible law that governs all of trade — the Law of Prices. The Law of Prices of holds the winning bids of purchase and sale for what is on offer set the price. Prices reflect buying power and willingness to bid.

Producers get constrained by the great Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the cost of production otherwise producers go to ruin.

The whole trick of business is producing so that one can adhere to the Axiom of Profit on given prices set by winning bidders. The prices set by winning bidders determine the sum of sales for producers. At whatever price winning bidders set, those producers whose costs are higher than their sales get forced out of production.

For PPP to hold true, output, working-age demographics, return on capital, cash-to-deposits, and the various kinds of credit (commercial, realty, personal) credit would need to be proportionally the same in every comparing country. In short, countries would need to be fractal images of each other exhibiting self-similarity, varying only in size by the power law.

PPP cannot account for the commercial reality of return on capital, which gets driven by working-age demographics. Differences in capital structure shall govern differences in efficiency and hence output. Differences in output shall drive differences in prices.

Those who believe in PPP and calculate PPP focus upon a hypothetical, non-existent, so-called market basket of goods. Even in the same country, no two have the same market basket of goods purchased in any period.

Every market for every good has its own make. Legal boundaries, territorial demographics and trade activity affect supply and thus prices winning bidders must pay.

Far worse, almost always, PPP figures fail to account for taxes, often the largest expenditure of any individual. Sales taxes range from none to almost 9% levied on every purchase.

You can't buy Italian marble in Alabama. You must import it. You can't buy a beach-front rental on the Pacific in Nebraska. You can't buy black diamond lift tickets in Orlando, Florida.

As well, everyone's cost of living differs from everyone else. Some eat a dozen eggs a week, others, a dozen a month.

Cost means outlay. Cost does not mean price. Cost is the sum paid. Price is the rate paid.

When anyone conflates cost with price, you can be sure that one doesn't understand commerce and reality.

Methodology

The GDP for the UK consists of the latest available quarterly current price gross domestic product for the United Kingdom, seasonally adjusted in billions of British pounds, as published by the OECD and re-published by the Federal Reserve Bank of St. Louis, and then annualized. 

For each region, the total, annualized GDP has been apportioned by the same ratio as the reported 2013 GVA by country of the UK and by region of England. 

The GDP for the US consists of the latest available quarterly current price gross domestic product for the USA, seasonally adjusted in billions of U.S. dollars (Table 1.1.5. Gross Domestic Product) as reported by the Bureau of Economic Analysis of the Department of the Commerce.

For each state, the total, annualized GDP has been apportioned by the same ratio as the reported 2013 GDP by state by the BEA. 

The population for the USA comes from the Census Bureau's Population Clock. The population for the UK comes from Country Meters. As with GDP, population has been apportioned by the 2013 ratios of the respective countries, states and regions.

The Cash Exchange Rate for U.S. Dollars to one British Pound comes from latest available public quote. 

The RPP adjusted data comes from the U.S. Bureau of Economic Analysis.


New England: Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
New York: Connecticut, New Jersey, New York
Mid-Atlantic: Delaware, Maryland, Pennsylvania, Virginia, West Virginia
Appalachia: Alabama, Kentucky, Mississippi, Tennessee
Southeast: Florida, Georgia, North Carolina, South Carolina
Great Lakes: Illinois, Indiana, Michigan, Ohio, Wisconsin
Plains: Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota
Greater Texas: Arkansas, Louisiana, Oklahoma, Texas
Mining: Colorado, Montana, North Dakota, Wyoming
Southwest: Arizona, California, Nevada, New Mexico, Utah
Pacific Northwest: Alaska, Hawaii, Idaho, Oregon, Washington 

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EUROPE IS THE SICKMAN OF EUROPE. EUROPE HAS BEEN SHRINKING SINCE 2008.

Nicholas I of Russia once referred to Ottoman Empire as the "sick man of Europe" because the Ottoman leaders had let themselves become beholden to Europeans.

Today, all of Europe is the sick man of Europe precisely because the 500 million individuals living in their respective countries have turned over their sovereignty to a mishmash consisting of the European Union and the Eurozone banking system.



Of late, economic commentators everywhere ponder what could happen if Germany, France and the like fall into recession. It's all rather silly to read.

The Eurozone countries have been in permanent recession  since Q1 2008. Yet, unquestioning reports of news media continue to report that economies of European countries are growing as measured by GDP.



Far too many don't stop and start to think about much of anything. Governments don't experience crisis when True GDP is growing. When True GDP rises, ceteris paribus, true tax receipts rise, workers' incomes rise and so forth.

How could anyone believe True GDP is growing if European governments are having problems collecting taxes to pay interest on bonds? To believe otherwise is to reject reality right before one's eyes.

If you wonder why Spaniards, Portuguese, Italians and Frenchmen can't pay their bills, well they can't because their economies are shrinking and not growing.

Far too many are so indoctrinated, their minds so easily manipulated. Even when reality stares into their faces, they reject their own common sense because "an expert" with a Ph.D. or a TV teleprompter reader or a politician hasn't told them what to believe.

Here is the growth between Q1 2002 and Q1 2008.



And here is the decline between Q1 2008 and Q3 2014.

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And here is a forecast from 2007 through the full year of 2014.

Methodology

GDP data comes from the Federal Reserve, which gets the data from the OECD. Using OECD data, the Federal Reserve reports GDP for the individual countries in euros.

For each period, the quarterly GDP in euros gets converted to U.S. dollars using the published cash exchange rate for the end of that quarterly period.

The conversion of quarterly GDP expressed in dollars then gets normalized, removing the effects of monetary accretion by converting dollars of that period into True Dollars™ using a proprietary deflator.

Academicians use an erroneous method when deflating GDP from current GDP to so-called real GDP. To learn more about their amazing error, read INFLATION REVEALED! "REAL GDP" AND FEDERAL RESERVE BANK UNITS, right here on Bizarro Theater.

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THE SECRETS OF AUTOMATED CLEARINGS, GDP AND THE ECONOMY. RECOVERY? WHEN?

Commercial banking. Commercial banking is what gives rise to any advanced economy. In spite of popular misguided hatred for bankers, without commercial banking, you would be living at a bare subsistence. Nothing that you know would exist — the Internet, smart phones, cars, pain killers, sports stadiums, TV.

A hidden aspect to the economy are the many transactions commercial bankers handle, which transfer checkable deposits between two parties — someone, a firm or government agency.

An automated clearing house (ACH) is a bank clearing house uses computers for inter-bank settlement of electronic credit and debit transfers of depository institutions. The Federal Reserve operates FedACH, the automated clearing house service of the regional reserve banks of the Federal Reserve.

Bank Clearing During World War 2

FedACH handles direct debiting of consumer bills such as mortgages, loans, utilities, insurance premiums, rents; one-time debit transfers of converted checks, debt cards over the Internet and telephone calls; direct credit transfers such as deposit of payroll, Social Security welfare, other government welfare, tax refunds; tax payments to federal, state, and municipal governments; payments made to vendors of federal, state, and municipal governments.

Until True Commercial Clearings begin to rise, no one should expect the economy to be sound. Until True Government Clearings begin to rise steadily, no one should believe an expansion is under way.

Here is what True GDP looks like compared to True FedACH clearings.

Here is what True GDP looks like compared to True FedACH government clearings.



And here is what True GDP looks like compared to True FedACH commercial clearings.




First, here is a general observation. During GDP growth, commercial clearings and government clearings grow. The government clearings growth rate far outstrip commercial clearings growth rate during true GDP growth as political coffers get fat from unearned shares of profits, otherwise known as taxes.

Now, let's look at the true clearings during true GDP growth years and decline years.

Beginning Q4 1988 off Reagan Low of Q3 1987 to Bush 1 Peak (Q3 1990), True GDP grew 5.9%, growing at a yearly rate of 2.91%. True Commercial Clearings grew 18.2% growing at a yearly rate of 8.7% and True Government Clearings grew 40.6% growing at a yearly rate of 18.6%.

From the Bush 1 Peak to Clinton Low (Q3 1990 to Q1 1994), True GDP shrank -14.8%, shrinking at a yearly rate of -4.2%. In spite of contraction, True Commercial Clearings grew 14.8% growing at a yearly rate of 3.7% and True Government Clearings grew 23.6% growing at a yearly rate of 5.8%.

So, how could the economy shrink while commercial clearings and government clearings grow? Technological advance could account for the former. Mandated new taxes in the face of Read My Lips could account for the latter.




From the Clinton Low to Clinton Peak (Q1 1994 to Q4 2000), True GDP grew 51.4%, growing at a yearly rate of 6.1%. True Commercial Clearings grew 81.8% growing at a yearly rate of 8.9% and True Government Clearings grew 191.9% growing at a yearly rate of 16.5%.

The Clinton Good Times, from the Clinton Low to Clinton Peak truly were good times for wage earning Americans. Back in EVERYBODY'S WORKING FOR THE WEEKEND, FOR LESS, I showed that during the Clinton Low to Clinton Peak,  Americans experienced True Private Wage Income growth for any stretch since the years between Johnson and Reagan.

In S&P 500 AND THE DOW JONES INDUSTRIAL AVERAGE HIT ALL-TIME LIES!, I showed how the True S&P 500 hit the all-time high back on August 28, 2000, when the S&P closed at $313.35 in True Dollars™. Between December 5, 1994, and the all-time high hit on August 28, 2000, the True S&P 500 grew 261.9% growing at a blistering rate of 25% a year. Likely surprising to many, over those 2,094 days, or 5 years, eight months and 24 days, cash and deposits fell -6%, falling at an annual rate of -1.1% and leaving cash and deposits $69.7 billion less than before the start of the run.

In, True State of the Union: Wage-Earners' Income and Taxes, I show during that 1994 and 2000 stretch, as a percent of GDP, true private wages rose. As well, true average income rose, employment incidence rose and hit an all-time peak, and true individual taxes as a percent of GDP rose, nearing the all-time high.

Contrast the Clinton Good Times with the Bush 2 Low to Bush 2 Peak between Q3 2003 to Q4 2007. During the Bush 2 Illusion Economy, fueled by the Greenspan-Bernanke Credit Bubble, the biggest inflation in world history, True GDP grew 17.9%, growing at a yearly rate of 3.5%, a bit more than half the rate of the Clinton Good Times. True Commercial Clearings barely grew 2.8% growing at a yearly snail's pace of 0.6% and True Government Clearings grew 42.1% growing at a yearly rate of 7.7%.

After the blow up of the Greenspan-Bernanke Inflation of the Bush 2 Illusion Economy, a two-part decline hit. From Bush 2 Peak to the Obama Greenshoots (Q4 2008 to Q3 2009), GDP fell -18% falling at a yearly rate of -9.5%. True Commercial Clearings fell -15.9% falling at a yearly rate of -8.3% and True Government Clearings grew -17.4%% falling at a yearly rate of -9.1%.

And then the full on Obama Disaster (Q4 2009 to Q1 2014) hit thanks to Obama and his Congresses. During the Obama Disaster, True GDP has shrunk -29.6%, shrinking at a yearly rate of -7.5%. True Commercial Clearings have shrunk -25.6%, shrinking at a yearly rate of -6.4% and True Government Clearings have shrunk -37.9%, shrinking at a yearly rate of -10.0%.

Overall, since the Bush 2 Illusion Economy Peak through the Obama years and Obama disaster, True GDP has shrunk -42.2%, shrinking at a yearly rate of -8.1%. True Commercial Clearings have shrunk -37.9%, shrinking at a yearly rate of -7.1% and in lockstep with True GDP, True Government Clearings have shrunk -4.2%, shrinking at a yearly rate of -8.1%.

Looking at the year over year from Q1 2014 and the last two years also from Q1 2014, which is the last quarter for published data, the picture is ugly still. Over the last two years, True GDP has fallen -12.4% falling at a rate of -6.4% a year. True Commercial Clearings have fallen -14.5% falling at a rate of -7.5% a year. True Government Clearings have fallen -7.0% falling at a rate of -3.6% a year, this being the one glimmer of hope.

The one year picture looks alike. True GDP has fallen -7.0%. True Commercial Clearings have fallen -7.5%. True Government Clearings have fallen -1.6%. Again, this adds to hope.

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¡OH-LAY! ¡OLÉ! SPANISH POLITICIANS DECREE HEROIN AND HOOKERS LEGAL (AT LEAST ON PAPER)

According to Libertad, Spanish politicians will legalize prostitution and drug trafficking for the purposes of statistics in an effort to boost GDP on paper. In so doing, with a higher GDP, Spanish politicians can run bigger fiscal year deficits and still remain within 18-country Eurozone banking mandates as outlined in the Stability and Growth Pact (SGP) mandated by European Union politicians for the European Economic and Monetary Union (EMU).



Under the SGP, EMU member countries cannot have a fiscal year deficit greater than 3% of GDP nor can the cumulative political debt exceed 60% of GDP. Current Spanish GDP tallies to US$1.358 trillion (€1.062 trillion). Adding US$44.7 billion (€35 billion) worth of otherwise illegal drugs sales and illegal prostitute hook ups instantly will add 3.3% to Spanish GDP.

Adding heroin and hookers to GDP statistics would let Spanish politicians run a US$42.1 billion (€32.9 billion) fiscal year deficit and still abide by the SGP. The legally-sanctioned illegal prostitution and illegal drug industry would let Spanish politicians up their FY deficit spending by US$1.36 billion (€1.06 billion) and stay within the SGP of the EMU.

Overnight, prostitution and drugging would become an industry equal in size to electrical power generation as well as education. Each of the 19,773,438 Spanish males age 15 and over spent US$2,262.59 (€1,769.91) last year to party it up with street walkers and drugs.

Politicians always seize the opportunity to spend more of what they don't have in their never-ending quest to maintain their tenuous grip on power. As always, the greedy extend their grubby hands awaiting to get more of that borrowed spending.

Enjoy a groove tune by Lowell George and Little Feat.

There's whiskey, and bad cocaine. Poison get you just the same. 

And if that don't kill you soon. The women will down at the Spanish Moon. 

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CATCH AMERICA NOW, IT'S FALLING. THE GREAT COLLAPSE OF AMERICA HAPPENING RIGHT BEFORE YOUR EYES

Already I've have show you this chart:



And this chart, which shows the Greatest Depression ever suffered by Americans, six years running now.




But first, if you need to read about FRBUs, check out INFLATION REVEALED! "REAL GDP" AND FEDERAL RESERVE BANK UNITS. 


Now I want you to see these:



In the above, you can see how many dollars worth of GDP gets produced relative to a dollar's worth of total bank credit.

As you can see, recession happened between 1972 and 1974, with resumption of the 1971 leverage through the years 1976 to 1985. Leverage shrank a bit and found a new level between 1987 and 1996.

Since 1996, GDP to credit leverage has fallen from $2.28 at the end of the second quarter in 1996 hitting a low of $1.56 at the low of the Greatest Depression between 2008 and 2009, Since then GDP to credit leverage seems to have found a new low level.

This is what the "new normal" is all about.



Here you can see that when the economy runs, credit runs as fraction of GDP, lifting GDP. In 2004 featured the death cross moment.

Perhaps this is why politicians distract Americans with silliness de jour whether the Ukraine, gay marriage, Keystone XL or what have you.

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