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2018-01-08 07:00 by Karl Denninger
in Editorial , 316 references Ignore this thread
But But But The Economy Is GROWING!
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There's a line in "Leverage" that you need to always keep in mind -- because it's always true:

Behind every unit of economic output is a unit of energy.

This is fact.  It has always been fact and always will be fact.

It is why I have long advocated, going back to my days running MCSNet, that for honest GDP statistics we need to measure it in some sort of SI unit such as Joules of energy and not "Dollars", "Euros" or similar because you cannot manipulate SI units.

Energy use has risen in the United States all the way up until just before the crash in 2008.

But energy use has not moved up appreciably since with one exception -- a reflexive move in 2010.

No, this is not due to "renewables"; renewable energy sources (e.g. wind, solar, etc) are still energy.  The fact is that the total consumption reached a peak in the United States in 2007 and has declined since.  It was up in rebound in 2010, decreased in 2011 and 2012, increased somewhat in 2013 and then has stalled for the last three years.

Yet we hear claims of the "great economy" and, of course, the booming stock market.

But the facts are that since 2008 there has been only a sputtering actual economic recovery -- in 2010 -- and the economy has been hovering around zero since.

I have pointed this out repeatedly in that the Debt To The Penny series does not lie; every dollar of additional federal debt is by definition unbacked and thus is inflation.  The so-called "official numbers", whether in PCE or CPI are lies.  The emission of credit into the economy is mathematical fact and with it subtracted back out there has been no net GDP expansion worth considering "real" at all.

The energy picture confirms that this is correct.

Instead what you have had since 2010 is the largest valuation bubble -- across the board -- in the history of the United States and perhaps in the world at large.

It will end.

It must, because despite all the screaming, despite all the "MAGA" nonsense, despite all the claims nothing has reignited the marker that is behind every unit of GDP that has ever been created and ever will be in the future.

Seven years you have watched this bubble expand at an ever-increasing rate.

It will not just pop.

It will explode.

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