S&P 500 AND THE DOW JONES INDUSTRIAL AVERAGE HIT ALL-TIME LIES!

It's another Friday and media propagandists everywhere have told yet another record lie.



Countless teleprompter readers and countless keyboard jockeys are singing the praises of record dollar closes in the S&P 500 and the Dow Jones Industrial Average.

In actual buying power, which is what counts, both the True S&P 500 and the DJIA are off all-time highs, way off. The True S&P 500 hit an all-time high way back on August 28, 2000, when the S&P closed at $313.35 in True Dollars™.

In reality, the True S&P 500 hit the all-time high a whopping 5,045 days ago! Said another way, that is 13 years, nine months and 24 days ago, or roughly 720 weeks ago since anyone can claim rightfully any talk about all-time highs.

Today, the True S&P 500 closed at $160.18, or 51.1% of its all-time high. From the August 28, 2000, peak to the March 3, 2009, low, the S&P 500 fell a whopping -69.1%, falling at an annual rate of -12.8%.

From the March 3, 2009, True Dollar™ low of $96.82 until now, the True S&P 500 has risen 65.4%, growing at an annual rate of 9.9%. That annual growth seems impressive until one discovers that $1.317 trillion dollars worth of cash and deposits have been created by Federal Reserve bankers through monetizing of new debt incurred by the U.S. Congress on behalf of taxpayers now and long into the future. Said another way, Fed Res bankers have overseen an eye-popping 93.5% growth in cash and deposits since the March 2009 low.

In the 20 years between January 6, 1975, and December 5, 1994, total cash and deposits grew 308.6%, growing at an annual rate of 7.3%. During that time, the True S&P 500 grew 50.7% growing at an annual rate of 2.0%.

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.

Buying power matters. When output rises and instruments of buying — cash and deposits — fall, living betters for most.

Denominational stock prices don't matter much. True stock prices always matter.

From December 1994 to the August 2000 all-time high, True GDP grew at an annual rate of almost 6.4%, growing a full 54.2%. From the March 2009 low until the end of Q1 2014, True GDP has fallen at the yearly rate of -9.7%, falling a full -41.5%!

It should be clear that not only does quantitative easing not work, but engaging in quantitative easing proves to be destructive. Quantitative easing harms any economy.

During the Clinton Good Times, Federal Reserve Bank Units (FRBUs) of cash and deposits fell! During the Obama Hard Times, because of the efforts of debauched, squandering Congressmen and Fed Res bankers, FRBUs have risen to recklessly.

The purpose of cash is to do the work of money, if money existed. The purpose of money is to settle contracts, specifically to extinguish debt.

As money only ever is coined metal by weight and fineness, money has not existed for most Americans since 1933. As cash is evidence of deposits circulating in perpetuity, cash cannot extinguish debt.

The purpose of credit is to bring forth production into the now on expectation of future profits.

When production of property (right of ownership) in the pursuit of profit in purchases and sales, or trade is efficient, trade betters the lives of all. In the end, anyone wants stuff as wealth. Cash acts as a stand-in, a claim against future stuff of wealth. Credit acts as a stand-in for future profit.

Making cash and credit less efficient weakens any economy. That is what Quantitative Easing does. Ben Bernanke has wrecked the U.S.A. like no enemy ever could. His successor, Janet Yellen is bent on following in Bernanke's footsteps.

Those of the Federal Reserve don't understand banking, credit, money, cash at all. Thus, they do not understand trade.

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WHY ISN'T THE ECONOMY DRIVING ANYWHERE? THE CAPITAL ENGINE LACKS FUEL!

So I've been spreading foreboding of late, first with  IT'S LOOKING LIKE MORE RECESSION IN THE U.S.A. IN 2014 and then with S&P 500 MINI-MANIA HITS. 24% CORRECTION OR 42% CRASH UPCOMING?

And now I've had a look at where producers stand with their mixed-use capital and their circulating capital. Specifically, I've looked at commercial and industrial loans gotten from commercial banks and asset-backed commercial paper.

Those who understand financing of trade, businessmen tend to use loans to acquire property in capital retained through time subject to known loss. The known loss is known as depreciation and the name given to that kind of capital is fixed capital.

Businessmen tend to seek accomodation of property in credit receivables they hold against debtors. Such property put into negotiable instrument form is known as commercial paper. Businessmen use property in deposits, otherwise known as wealth, gained from having their commercial paper discounted by a banker, to pay expenses. In so doing, they transmute wealth into capital.

Here's the fixed capital picture.



It's hard to get a good idea of what this should look like over long time as the data set goes back only to 1985. That said, it appears that businessmen go through periods where they build up fixed capital to generate sales.


Here's the circulating capital picture.




And here is what fixed capital and circulating capital look like together.



It appears that true asset-backed commercial paper gives a good indicator ahead of what producers plan to do toward fixed capital acquisition.

Yet what is most troubling is what I call the Capital Engine ratio. Let's have a look.




Think of fixed capital as a car engine and circulating capital as the gasoline. Right now, there is $6.09 of fixed capital loans to $1 circulating capital. 

Before Q3 2007 peak credit, the Capital Engine ratio averaged $1.34:$1. Since the banking credit collapse and following crisis, the Capital Engine ratio averages to $3.22:$1. The Capital Engine ratio has grown a whopping 459% since peak credit.

In short, there isn't fuel, petrol, gasoline to power the engine beyond idling. 

What has caused this stall state? Why, Ben Bernanke, the former chairman of the Federal Reserve, the supposed expert on the Great Depression, is the man who decided to have an engine with little fuel. Death by billions and billions of cuts is what Bernanke believes is the way to handle a banking crisis and deflation after a massive inflation. 

Foolishly, while chairman, Bernanke's entire plan had been interest rate suppression. His successor, Janet Yellen agrees with Bernanke's approach.

When rates are kept low, capitalists seek return outside of the U.S.A. That further puts strain on bank deposits and thus further weakening bankers already weakened from crisis after inflation. 

The worst bit of the Greatest Depression engineered foolishly by Ben Bernanke has been to hurt wage earners. Had interest rates risen, wage earners those living on fixed incomes would have gained buying power. Their living standards 

Central bankers always should do the opposite of prolonging recession. They should accelerate the collapse. Rates should get put up. Bankers should stepped up acccomodation, discounting every bit of commercial paper presented. That is how keep work flowing.

Entrepreneur-adventurers should face the music for their wrong fixed capital structures.

The sooner one gets through hard times to the bottom the sooner revival can happen. In fact, law makers should craft law to require by law accelerated recessions.

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ELECTRICITY PRICES. SHOCKING, ISN'T IT? THANKS, NIXON.

On August 15, 1971, Tricky Dick Nixon took to American airwaves, ranted about evil speculators and then decreed the gold window closed.

"Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators."

Along with closing the gold window, through Executive Order 11615, now known as the Nixon shock, Nixon also decreed a crazed 10% tax on imports, hurting American consumers.

The real shock from Richard "I'm not a crook" Nixon can be seen in price of electricity Americans pay since Nixon removed gold as the means of trade settlement between countries. 

The picture comes from CNS News.

As I explained in FALLACY FRAUGHT FORBES TRIES TO STOKE FEARS OF HYPERINFLATION and elsewhere on Bizarro Theater, today, no one has money. 

Money doesn't exist and hasn't for many decades.

Money is coined metal by weight and fineness. The Romans said so. It's their word.

Rather, Americans have cash. Cash is centralized bank notes circulating in perpetuity.

Specifically, Americans have legal tender cash. So too do Canadians have legal tender cash, the Brits, all those of the Eurozone, the Japanese, and so on. Seemingly, legal tender cash does the work of money, but never is cash actual money.

How can anyone be sure of this truth? Always, money can exist without banking and government. Cash only can exist with banking and banks. Never can cash exist without banking and banks. Not only does legal tender cash need banking, but also legal tender cash needs government.

That bank credit exists in the form of cash and deposits along with Americans no longer having money is why Americans shall suffer never-ending inflation. Inflation is the growth of credit that outstrips the growth of output owing to credit being priced too cheap. 

As I explained in WHY FUTURES MARKETS SHOULD SET THE FEDS FUNDS RATE RATHER THAN THE FEDERAL RESERVE BOARD OF GOVERNORS, as long as Fed Res bankers can tinker with rates, the natural correction on inflation won't happen.

So what was the natural correction for inflation? Bank runs! 

During bank runs, Americans would enforce their property in right of action against bankers as evidenced by deposits to trade deposits for gold on sight. Bankers would keep reserves for when customers would take gold coins rather than cash bank notes. 

Yet, during bank runs, reserves would prove insufficient to cover everyone seeking money (gold coins). In a scramble, those bankers who could not borrow from other bankers enough gold, would go to ruin and along with them, their bank notes in circulation would become worthless.


Here is the full speech the Trickster gave:

Good evening:

 I have addressed the Nation a number of times over the past 2 years on the problems of ending a war. Because of the progress we have made toward achieving that goal, this Sunday evening is an appropriate time for us to turn our attention to the challenges of peace. America today has the best opportunity in this century to achieve two of its greatest ideals: to bring about a full generation of peace, and to create a new prosperity without war. This not only requires bold leadership ready to take bold action – it calls forth the greatness in a great people. Prosperity without war requires action on three fronts: We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators. We are going to take that action – not timidly, not half-heartedly, and not in piecemeal fashion. We are going to move forward to the new prosperity without war as befits a great people – all together, and along a broad front. The time has come for a new economic policy for the United States. Its targets are unemployment, inflation, and international speculation. And this is how we are going to attack those targets. First, on the subject of jobs. We all know why we have an unemployment problem. Two million workers have been released from the Armed Forces and defense plants because of our success in winding down the war in Vietnam. Putting those people back to work is one of the challenges of peace, and we have begun to make progress. Our unemployment rate today is below the average of the 4 peacetime years of the 1960’s. But we can and we must do better than that. The time has come for American industry, which has produced more jobs at higher real wages than any other industrial system in history, to embark on a bold program of new investment in production for peace. To give that system a powerful new stimulus, I shall ask the Congress, when it reconvenes after its summer recess, to consider as its first priority the enactment of the Job Development Act of 1971. I will propose to provide the strongest short-term incentive in our history to invest in new machinery and equipment that will create new jobs for Americans: a 10 percent Job Development Credit for 1 year, effective as of today, with a 5 percent credit after August 15, 1972. This tax credit for investment in new equipment will not only generate new jobs; it will raise productivity; it will make our goods more competitive in the years ahead. Second, I will propose to repeal the 7 percent excise tax on automobiles, effective today. This will mean a reduction in price of about $200 per car. I shall insist that the American auto industry pass this tax reduction on to the nearly 8 million customers who are buying automobiles this year. Lower prices will mean that more people will be able to afford new cars, and every additional 100,000 cars sold means 25,000 new jobs. Third, I propose to speed up the personal income tax exemptions scheduled for January 1, 1973, to January 1, 1972 – so that taxpayers can deduct an extra $50 for each exemption 1 year earlier than planned. This increase in consumer spending power will provide a strong boost to the economy in general and to employment in particular. The tax reductions I am recommending, together with this broad upturn of the economy which has taken place in the first half of this year, will move us strongly forward toward a goal this Nation has not reached since 1956, 15 years ago: prosperity with full employment in peacetime. Looking to the future, I have directed the Secretary of the Treasury to recommend to the Congress in January new tax proposals for stimulating research and development of new industries and new techniques to help provide the 20 million new jobs that America needs for the young people who will be coming into the job market in the next decade. To offset the loss of revenue from these tax cuts which directly stimulate new jobs, I have ordered today a $4.7 billion cut in Federal spending. Tax cuts to stimulate employment must be matched by spending cuts to restrain inflation. To check the rise in the cost of Government, I have ordered a postponement of pay raises and a 5 percent cut in Government personnel. I have ordered a 10 percent cut in foreign economic aid. In addition, since the Congress has already delayed action on two of the great initiatives of this Administration, I will ask Congress to amend my proposals to postpone the implementation of revenue sharing for 3 months and welfare reform for 1 year. In this way, I am reordering our budget priorities so as to concentrate more on achieving our goal of full employment. The second indispensable element of the new prosperity is to stop the rise in the cost of living. One of the cruelest legacies of the artificial prosperity produced by war is inflation. Inflation robs every American, every one of you. The 20 million who are retired and living on fixed incomes – they are particularly hard hit. Homemakers find it harder than ever to balance the family budget. And 80 million American wage earners have been on a treadmill. For example, in the 4 war years between 1965 and 1969, your wage increases were completely eaten up by price increases. Your paychecks were higher, but you were no better off. We have made progress against the rise in the cost of living. From the high point of 6 percent a year in 1969, the rise in consumer prices has been cut to 4 percent in the first half of 1971. But just as is the case in our fight against unemployment, we can and must do better than that. The time has come for decisive action – action that will break the vicious circle of spiraling prices and costs. I am today ordering a freeze on all prices and wages throughout the United States for a period of 90 days. In addition, I call upon corporations to extend the wage-price freeze to all dividends. I have today appointed a Cost of Living Council within the Government. I have directed this Council to work with leaders of labor and business to set up the proper mechanism for achieving continued price and wage stability after the 90-day freeze is over.  Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans – each one of you: workers, employers, consumers – to make this freeze work. Working together, we will break the back of inflation, and we will do it without the mandatory wage and price controls that crush economic and personal freedom. The third indispensable element in building the new prosperity is closely related to creating new jobs and halting inflation. We must protect the position of the American dollar as a pillar of monetary stability around the world. In the past 7 years, there has been an average of one international monetary crisis every year. Now who gains from these crises? Not the workingman; not the investor; not the real producers of wealth. The gainers are the international money speculators. Because they thrive on crises, they help to create them. In recent weeks, the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy – and the American economy is by far the strongest in the world. Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators. I have directed Secretary Connally to suspend temporarily the convertibility of the American dollar except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States. Now, what is this action – which is very technical – what does it mean for you? Let me lay to rest the bugaboo of what is called devaluation. If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today. The effect of this action, in other words, will be to stabilize the dollar. Now, this action will not win us any friends among the international money traders. But our primary concern is with the American workers, and with fair competition around the world. To our friends abroad, including the many responsible members of the international banking community who are dedicated to stability and the flow of trade, I give this assurance: The United States has always been, and will continue to be, a forward-looking and trustworthy trading partner. In full cooperation with the International Monetary Fund and those who trade with us, we will press for the necessary reforms to set up an urgently needed new international monetary system. Stability and equal treatment is in everybody’s best interest. I am determined that the American dollar must never again be a hostage in the hands of international speculators. I am taking one further step to protect the dollar, to improve our balance of payments, and to increase jobs for Americans. As a temporary measure, I am today imposing an additional tax of 10 percent on goods imported into the United States. This is a better solution for international trade than direct controls on the amount of imports. This import tax is a temporary action. It isn’t directed against any other country. It is an action to make certain that American products will not be at a disadvantage because of unfair exchange rates. When the unfair treatment is ended, the import tax will end as well. As a result of these actions, the product of American labor will be more competitive, and the unfair edge that some of our foreign competition has will be removed. This is a major reason why our trade balance has eroded over the past 15 years. At the end of World War II the economies of the major industrial nations of Europe and Asia were shattered. To help them get on their feet and to protect their freedom, the United States has provided over the past 25 years $143 billion in foreign aid. That was the right thing for us to do. Today, largely with our help, they have regained their vitality. They have become our strong competitors, and we welcome their success. But now that other nations are economically strong, the time has come for them to bear their fair share of the burden of defending freedom around the world. The time has come for exchange rates to be set straight and for the major nations to compete as equals. There is no longer any need for the United States to compete with one hand tied beyond her back. The range of actions I have taken and proposed tonight – on the job front, on the inflation front, on the monetary front – is the most comprehensive new economic policy to be undertaken in this Nation in four decades. We are fortunate to live in a nation with an economic system capable of producing for its people the highest standard of living in the world; a system flexible enough to change its ways dramatically when circumstances call for change; and, most important, a system resourceful enough to produce prosperity with freedom and opportunity unmatched in the history of nations. The purposes of the Government actions I have announced tonight are to lay the basis for renewed confidence, to make it possible for us to compete fairly with the rest of the world, to open the door to new prosperity. But government, with all of its powers, does not hold the key to the success of a people. That key, my fellow Americans, is in your hands. A nation, like a person, has to have a certain inner drive in order to succeed. In economic affairs, that inner drive is called the competitive spirit. Every action I have taken tonight is designed to nurture and stimulate that competitive spirit, to help us snap out of the self-doubt, the self-disparagement that saps our energy and erodes our confidence in ourselves. Whether this Nation stays number one in the world’s economy or resigns itself to second, third, or fourth place; whether we as a people have faith in ourselves, or lose that faith; whether we hold fast to the strength that makes peace and freedom possible in this world, or lose our grip – all that depends on you, on your competitive spirit, your sense of personal destiny, your pride in your country and in yourself. We can be certain of this: As the threat of war recedes, the challenge of peaceful competition in the world will greatly increase. We welcome competition, because America is at her greatest when she is called on to compete. As there always have been in our history, there will be voices urging us to shrink from that challenge of competition, to build a protective wall around ourselves, to crawl into a shell as the rest of the world moves ahead. Two hundred years ago a man wrote in his diary these words: “Many thinking people believe America has seen its best days.” That was written in 1775, just before the American Revolution – the dawn of the most exciting era in the history of man. And today we hear the echoes of those voices, preaching a gospel of gloom and defeat, saying the same thing: “We have seen our best days.” I say, let Americans reply: “Our best days lie ahead.” As we move into a generation of peace, as we blaze the trail toward the new prosperity, I say to every American: Let us raise our spirits. Let us raise our sights. Let all of us contribute all we can to this great and good country that has contributed so much to the progress of mankind. Let us invest in our Nation’s future, and let us revitalize that faith in ourselves that built a great nation in the past and that will shape the world of the future. Thank you and good evening.

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LOST DECADES ARE BECOMING THE LOST QUARTER CENTURY WITH ABENOMICS

The “lost decades” story is not just a hoax but one of the most absurd and transparent hoaxes ever promoted in the English-language media. ~ Eamonn Fingleton, Forbes, August 11, 2013

The foregoing comes from Eamonn Fingleton over at Forbes. Fingleton claims perhaps to be the only human to have called the 1989 Japanese stock exchange crash.

The only absurd yarn being spun these days is the denial of the quite real Lost Decades story of Japan. The Lost Decades story has nothing to do about Japanese GDP, nor Japanese per capita GDP, nor Japanese per worker capita GDP. As well, the Lost Decades story has nothing to do the unfavorable demographics of an aging Japanese population and a shrinking total population.

The Lost Decades story is about the story of the massive crash of the Nikkei 225 after the heralding of the supposed Japanese economic miracle of the Keiretsu as superior to free markets economics and the American quasi-free markets system.

The Keiretsu failure of a crazed, unwarranted Japanese bank credit expansion led to a banking crisis and the imfamous Japanese Zombie Banks.

Emerging from reputation of an evil empire of uncivilized, ruthless, mindless savages who japped Americans at Pearl Harbor, the Japanese rose from the ashes of devastated losers of World War 2 with major American help. Through their Ministry of International Trade and Industry, the Japanese developed the Keiretsu, whereby firms would integrate vertically through reciprocal shareholding, all supported by bank credit of a mutually co-owned bank. The Keiretsu system drove what most labeled as the “economic miracle of the Japanese.”

After the Nikkei 225 doubled from about ¥2,500 to ¥5,000 between 1970 and 1973, the prices of Japanese stocks took off on a long steady climb between 1975 and 1984, all attributed to the Keiretsu system, which now many touted as superior to the structure of American firms and their industries.

On July 23, 1984, the Nikkei 225 stood at ¥9,703. From then, the Keiretsu banks began a massive credit expansion to their respective firms, letting these firms bypass corporate bonds markets and the discipline of bond traders. the Nikkei 225 followed right along with this credit expansion. In 1985, the Nikkei returned 25.1%, in 1986, 38.8%, in 1987, 35.6%, in 1988, 15.9% and in 1989, 24.9%. Anyone could have earned money betting on Japanese stocks during this run.

Owing to unprecedented credit expansion, the Japanese seemed to live in permanent boom times of their MITI designed Keiretsu, which gave the Japanese ever rising wages, dizzying realty prices and guaranteed lifetime employment. Far too many Ph.D. eggheads in America, with their penchant for human control rather than free markets economics arising from spontaneous order and the twin dictates of the Law of Prices (winning bids of demand in the face of supply set the price) and the Axiom of Profit (the sum of sales must at least equal the cost of production otherwise the producer goes to ruin), hailed the Japanese and their Keiretsu while chiding the American way.

And then after years of unprecedented capital misallocation by the Keiretsu leaders driven by unrealistic beliefs about markets and foolish over expansion of bank credit in preference to sound bond issuance, a major crash happened, which happens when bank credit becomes the predominant credit source of an economy.

On December 29, 1989, the Nikkei 225 hit a whopping ¥38,915.87. That is 401% higher than only five years and five months. From there the Lost Decade began.

The Nikkei 225 returned losses every year but three from 1990 through 2002. The loss in 1990 stood at -10.7%, in 1991 at -25.5%, in 1992 at -29.4%, in 1994 at -4.8, in 1995 at -7%, in 1997 at -17.6%, in 1998 at -22.3%, in 2000 at -17.1%, in 2001 at -28.2% and in 2002 at -18.7%.

Since 2008, the Nikkei 225 has returned losses in four of six years including a whopping -42.2% in 2008 and -17.3% in 2011. The 2011 close of ¥8455.35 was the lowest year-end close in 29 years. Today, the Nikkei 225 sits at ¥13,615.19, which is a mere 35% of its peak of ¥38,915.87.

Fingleton does not understand capital and private economy driven capitalism. Stock prices always matter. As all stock markets are nothing but referendums on the capital structures of the firms that comprise a stock market. 

Stock prices act like a futures market on capital allocation of firms. Stock buyers and sellers engage in referendum on those capital structures from which future earnings might or might now arise. It’s a way any people decide who should be producing what.

Fingleton heaps scorn on financialism. Yet, Fingleton seems blinded to the failure of the Keiretsu system of the Japanese. Because likley, Fingleton fails to get the importance of capital allocation in any economy and having a competitive tug-of-war for that capital, Fingleston seemingly turns a blind eye to the Zombie Banks of the Japanese and how the Keiretsu likely still hampers the Japanese economy to this day.

World investors have bet against the Japanese economy and the still weak capital structures of its firms.

Only those Ph.D. eggheads with their academia economics have waged a rhetorical war of late in effort to hijack the Lost Decades story so as to justify their penchant for the quite real failure that is Quantitative Easing.

Reality-based, authentic economics reveals that quantitative easing (Q.E.) fails to spur on growth in bank credit expansion faster than economic output and thus fails to spur on prices of goods primarily bought with non-revolving credit (houses, cars) as well as with revolving credit (e.g., airline tix, hotel rooms). Instead Q.E. leads to money accretion (new notes and coins joining extant ones), thus leading to higher prices for goods bought primarily with cash and near-cash equivalents (debit cards) such as food and gasoline.

At the behest of major bankers, central bankers engage in Q.E. in hopes of triggering bank credit expansion and thus prices of bankers’ held collateral as assets (e.g., mortgages).

Politicians and bureaucrats have no clue as to what kind of capital expenditures ought to arise for anyone territorial bounded people. Thus, through money accretion, which destroys buying power, and through taxation to service debt interest, which destroys buying power through confiscation, politicians injure citizens and the citizens’ economy.

In the latest reporting, Japanese GDP grew at a miserly 0.6% quarter over quarter, missing expectation of 0.9% growth. This happens to be the biggest miss in one year. GDP has slowed from an already revised lower 0.9% growth for the first quarter.

Also, data from the Japan External Trade Organization showed that exports to China for the first half of the year fell to the lowest level in four years! Not only have Japanese exports to the Chinese hit a four-year low, but also the year-on-year decline accelerated to 16.7% for January-June from 14.8% in July-December.

• Total Japanese government debt stood at ¥1,008.6 TRILLION (!), which is US$10.26 trillion. Wow, that is 172% of Japanese GDP. In US dollar terms, that debt has fluctuated between $12.99 trillion (2012-09-27) and $9.766 trillion (2013-05-17).
• Japanese per capita purchasing power parity GDP is US$34,277.76. American per capita purchasing power parity GDP is US$48,441.56. On a per cap PPP basis, the per cap American is 1.41 richer than his per cap Japanese counterpart.

QE has failed for decades in Japan. Doubling down by ratcheting up QE even more under Abe and his Abenomics shall fail spectacularly as well. 

Considering the staggering sum of yen put into circulation by the BoJ in buying Japanese government bonds (Japanese quantitative easing) since 1999, which politicians have spent to have concrete poured everywhere, the real Nikkei 225 is much lower than today’s ¥14,784.83.

The Japanese seem bent on achieving a Lost Quarter of a Century at this point. They might push for a Lost Third of a Century since they’re quite good at it.

Here, enjoy a picture of what a Lost Decade looks like courtesy of Yahoo Finance: 

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