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The U.S. Economy is Dead

 

Jeff Nielson for Sprott Money

 

 

For the past quarter century; the most effective “stimulus” for the U.S. economy has been a fall in gasoline prices. This is no great surprise, given that the United States had been the most gas-guzzling nation on the planet – and by a wide margin. But times have changed!

 

 

After Barack Obama publicly admitted that the U.S. government had ruthlessly manipulated oil prices lower, as “part of its strategy” of economic terrorism against Russia; global oil prices have been cut in half. The only other time that oil prices have fallen so far or so fast in the last quarter century was the brief/temporary collapse in prices which accompanied the Crash of ’08.

 

 

Has this enormous economic stimulus kick-started the U.S.’s zombie economy? Not at all. Indeed, the collapse in the U.S. retail sector has accelerated throughout this plunge in oil/gasoline prices. This should not be possible. Economic stimulus from lower prices (in any sector) is supposed to be automatic.

 

 

What does it mean when an economy not only fails to respond to “automatic” stimulus, but continues to rapidly decompose? It means we are dealing with a deceased economy. This is a “surprise” to the irredeemable charlatans who have the audacity to call themselves economists, but it shouldn’t have been. Not if any of them were paying attention. Not if any of them lived in the real world.

 

 

Back in the real world; evidence of the U.S.’s zombie economy is both overwhelming and abundant. It begins with 0% interest rates. As has frequently been noted in the past; 0% interest rates are the economic equivalent of a defibrillator. As with a defibrillator; it is the most-extreme form of stimulus known to us. As with a defibrillator; it is a “therapy” option which is so radical/reckless that it is only ever intended to be used as a last resort, to resuscitate a patient on Death’s door.

 

Equally, as with a defibrillator; if it doesn’t “work” right away, it will never work (has anyone ever heard of a nation called “Japan”?). When a doctor attempts to resuscitate a patient with a defibrillator, and fails after a couple of minutes; does he continue to jolt the patient, again and again and again and again – year after year? Of course not. He quickly gives up, because it has become evident that he is no longer “treating a patient”, but merely charring a corpse.

 

 

This is what the U.S. government (and other Western governments) has been doing for the past 6+ years with its 0% interest rate: charring a corpse. Further proof that the U.S. economy is already dead comes from a chart of the heartbeat of the U.S. economy (and any capitalist economy) – it’s “velocity of money”.

 

 

As we see; the U.S. “heartbeat” (i.e. the flow of money) has nearly stopped, having fallen further/lower than at any time in recorded history. What does it mean when money stops moving, in a “capitalist economy”? What does it mean when the money (i.e. blood) stops moving in the heart of the greatest Capitalist Empire the world has ever seen? R.I.P.

 

 

But there is even further, equally overwhelming proof that this gas-guzzling, consumer economy is dead, and it comes from the gasoline consumption numbers, themselves. “Official” U.S. gasoline consumption hasplummeted by nearly 75% from its absolute peak in July of 1998. More pertinently; the gasoline consumption numbers have plummeted by roughly 66% since the start of the U.S.’s (imaginary)“recovery”.

 

 

What does it mean when the gas-pumps stop being used in a gas-guzzling economy? It means the same thing as when the money stops moving in a capitalist economy, or when a “patient” fails to respond to a defibrillator. R.I.P.

 

 

This brings us to the ghastly train-wreck known as “the U.S. retail sector”, the cornerstone of thisconsumer economy. Regular readers are already familiar with the “Black Friday Shopping Massacre” in the 2014 U.S. holiday shopping season. Yet despite that horrific 20+% (year-over-year) collapse in U.S. holiday shopping; the “news” from the U.S. retail sector has gotten much, much worse since that initial plunge.

 

 

It began with an equally large/ugly collapse in December retail sales. When adjusted for inflation, and expressed as an annualized number; the “0.9%” drop reported by the statistical liars of the U.S. government translates into a 25% plunge in December retail sales – even worse than the Black Friday collapse.

 

 

Equally important, and as noted in a recent commentary; these horrific plunges in U.S. retail sales arecumulative. After retail sales collapsed at the end of November, it collapsed by an additional (annualized) 25% in December. And now, as we move to January and a new year; we see yet another, sickening plunge in U.S. retail sales – even as gasoline prices continue falling.

 

 

The “advance estimate” of U.S. January retail sales reports another, enormous, cumulative drop. The “-0.8%” fantasy-number reported by the U.S. government translates into another, additional (annualized) collapse in excess of 20%.

 

 

With U.S. gasoline prices now hovering just above $2/gallon; this represents roughly a $1.50/gallon plunge from average prices through most of 2014. In other words; (for the first time) Big Oil has chosen to pass along to consumers nearly the entire plunge in crude oil prices, in the form of lower gas prices. Yet despite this massive stimulus to the U.S. economy; the U.S.’s pauper consumers haven’t even been able to maintain their level of spending.

 

 

Supposedly, their wallets are all full of the dollars they have been saving from dramatically lower gasoline prices. Yet outside of gasoline purchases; Americans continue to buy less of everything else. So-called “core retail sales”, which excludes (among other things) gasoline consumption, fell in January by nearly 10% when adjusted for inflation and annualized.

 

 

The near-bankrupt consumers (in this near-bankrupt economy) don’t have “more dollars” in their wallets thanks to the huge plunge in gasoline prices, they have simply been going further into debt at a slower rate. The only “benefit” the U.S. economy has received from (much) lower gas prices is that this corpse is decomposing at a slower rate than it would have, if the U.S. government had not manipulated oil prices lower.

 

 

Yet note what the liars/charlatans expect us to believe (inside and outside the U.S. government). In theirfantasy-world; despite the horrific and unprecedented collapse in U.S. retail sales in November and December, we’re supposed to believe that “consumer spending” for the fourth quarter (as a whole) rose by 4.3%.

 

 

In the Wonderland Matrix fabricated by these liars; the faster U.S. “retail sales” fell each month, the faster U.S. “consumer spending” rose for the whole quarter. It’s exactly the same as someone claiming to have traveled downhill in order to get to the peak of a mountain. It’s not simply a lie, it’s a ridiculous lie.

 

 

It is precisely these sorts of perverse, utterly absurd lies which will inevitably shatter the brainwashing which the One Bank (puppet-master of the U.S. government) has laboured so diligently to perfect over the past several decades. Yet what choice does it (and its media/government puppets) have?

 

 

Ultimately any lie one uses to attempt to cover-up a corpse is quickly perceived to be ridiculous and/or perverse, for one, simple reason. Corpses tend to smell very bad, very soon. Soon the stench emanating from the U.S. zombie economy will be so overpowering that it will be perceptible even to the deadened senses of its zombie population.

 

 

Jeff Nielson for Sprott Money