Jubilee Prosperity

Now that deflating markets have our attention, what may be next?

Right on the heels of contrary opinion sangfroid fading the headline extremes, we note some economic situations and market trends that may be unlikely to go away anytime soon.

First is US bank lending falling at the fastest rate in history.

The money multiplier is at a record low of 81%, meaning money supplies are slowing and even contracting, losing 19% every time they transact.

That’s a lot more than the reasonable 1% Uniform Transaction Tax that can ease a lot of our fiscal problems replacing the income tax.

We noted the slowdown in M-3 from the peak in early 2008. This was two years after it was eliminated as an allegedly useless monetary measure by the Federal Reserve Banks.  Now annual M-3 went negative, meaning it is contracting.

http://www.shadowstats.com/alternate_data/money-supply-charts

This is not the stuff of which bull markets, economic recoveries or jobs are made.

We said this for since 2008, despite the 66% countertrend rally since March 2009 which our subscribers enjoyed.

We understand the euphoria of markets making new highs can be heady stuff.

We warned people to lighten up.

Now most assets and markets are not making new highs, except some Big4 Weekly and TopTen Seasonal subscribers had identified.

In short, it looks like 1931 all over again, only this time it may take longer to bottom because of larger government borrowing, spending and taxing at the expense of the productive economy.

Second, as in the 1970s, with government handicapping productive free enterprise, our cost of energy continues to rise, choke consumers and our economy.

Pages: 1 2 3 4 5 6

This entry was posted on Wednesday, February 24th, 2010 at 6:37 am and is filed under Market Psychology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.