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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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Posts: 3328
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ft collins co
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before election:
 by ktrosper

After election:
The economy is AWESOME because of me!

He'll own every bit of the explosion, politically speaking that is..

The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
I anticipate that 10 Dallas Cowboys Cheerleaders will blow me this evening.-K.D
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As you know, the 1% have been the primary beneficiaries of this bubble. Have they accounted for the wind powering their yachts?
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A True American Patriot!
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LOL... wind powering yachts...... smiley

Winding it down.
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Is it possible to estimate how much of this could be from LED, more fuel efficient cars (eg: 2000 Accord averaged 25/31 mpg while the 2016 version is 27/37 mpg), and the like? The hotel company I work for (own > 600 hotels) - our utility cost per occupied room is down almost 5% vs 2007 before adjusting for inflation by any measure. I think looking at actual energy use is extremely important, but there have been a decent amount of tech advancement in energy savings for corporations, vehicles, and lighting in that time period.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

-~~Ludwig V
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South of Canada
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I could see some reduction in the residential through efficiency gains. My home energy use is less today than in 2007 just because I've got more efficient appliances and lighting. I'm not sure how that squares with the growth of the population but I do think there is a lot of fat in residential energy consumption.

Now industrial declining and commercial being flat are the telling numbers for me. With our so-called consumption economy I expected to see commercial on a steep path upwards. smiley
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It doesn't take any extra energy to issue debt and buy back your stock. Nor does it use energy to remove all accounting standards and make up your earnings.

All this phony growth is on more and more debt being issued and of course ignored when we look at the balance sheets. Look at McDonalds balance sheet and look at the book value of the stock minus the debt.

Will the retailers book write offs on holiday returns? Nope......They will use the current accounting standards and call them a one time write off and ignore them like everything else. Everyone is looking the other way and calling this growth.
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I'd venture to say that much of the so-called increase in GDP is due to extortionist premiums paid into the medical system, a system that Karl has many times pointed out is now taking almost one in every five dollars of economic activity. A now primarily bureaucratic system that produces virtually nothing of value, economically speaking. When combined with inflation, most of the masses are increasingly behind the debt eight-ball and not enjoying an economic resurgence.
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