Submitted by Charles Hugh-Smith of OfTwoMinds blog,
It is not possible to coherently discuss the "New Normal" economy without discussing financialization--the substitution of credit expansion and speculation for productive investments in the real economy--and its sibling: globalization.
For years the Fed has been lying about inflation.
There are many methods of doing this, but the simplest was to use a “measure” of inflation that did not actually measure inflation at all.
This is the famous Consumer Price Index of CPI. It is meant to measure inflation, but ignores obvious costs of living items like food and energy usage.
Why lie about inflation?
Two main reasons:
1) Doing so allows the Fed and others to overstate economic growth in the US.
Autos & parts inventories-to-sales ratios soared to 2.30x from 2.18x - levels that have only been higher during the financial crisis. This, combined with a rise in clothing inventories to sales, held overall business inventories at their highest to sales since the crisis and deep in pre-recessionary territory.
Retail inventories rose 1.0% MoM despite a 0.3% drop in sales (with motor vehicles inventories up 2.3% as sales tumbled 3.2%) leaving the inventories to sales ratio at cycle highs...
Simply put, this won't end well.
Well that de-escalated quickly...
As Reuters reports,
Chinese steel futures were on course for their biggest weekly fall since 2009 on Friday, as a selloff in the country's commodities showed signs of spreading to other global markets for raw materials such as palm oil and base metals.
Authored by MN Gordon via EconomicPrism.com (h/t David Stockman),
Rubbernecking at the economic train wreck of central planners is not without hazard. A strained collar and dry eyes, for instance, are common perils. So, too, is the lasting grimace of disbelief that comes with the rollout of each zany scheme to save us from ourselves.
Etched forehead lines and nighttime bruxism are several of the secondary effects. Not owning shares of Amazon is another. Though, over the long term, this will likely be an advantage.