Rich get richer as economy gets better; everyone else is worse off

[Jacob]

I understand that austerity is considered a bit of a failure in the UK these days, even by former proponents. Is that accurate Ark?

[derspiess]

Wealthy older people rock.

If you're in their will.

[The Brain]

Where there's a will there's a way.

[Ed Anger]

You are all out of my will.

[garbon]

You are all out of my will.

[Warspite]

I understand that austerity is considered a bit of a failure in the UK these days, even by former proponents. Is that accurate Ark?

Yes, I detect that the wide support for austerity is eroding somewhat. The government's plan to let sterling devalue, slash state spending and unleash the private sector doesn't seemed to have worked. Our imports, including most of our energy requirements, are more expensive; state spending has fallen by less than a rounding error; and the private sector is sitting on buckets of cash, holding wages down, and it turns out during a global economic crisis our usual export markets aren't looking to buy British.

[MadImmortalMan]

Speaking of the rich getting better off, the Bank of England today confirmed that its subsidised lending programme to businesses will apply to property investors.

This means that the buy-to-let market in the South East of England is going to get yet another state-guaranteed shot in the arm, with increasing amounts of money chasing the limited housing stock in the region. Meanwhile, planning regulation reform has, it is revealed, not actually resulted in any great change in the number of new houses being built.

Looks like another property bubble is on the way.

One also has to wonder how the UK economy might be better off if there were not such a large intergenerational transfer of wealth going on through the rental sector right now, siphoning off half of take-home pay from young consumers to wealthy older people.

Where do I apply for this program plz?

[Jacob]

Where do I apply for this program plz?

The UK.

[citizen k]

Based on the Non-Massaged Data, the US is Back in Recession
By Phoenix Capital Research


Beneath all of the bogus economic data, the US economy is tanking again.

One of the biggest games played by the bean counters in Washington in the US is the overstatement of GDP growth by understating inflation.

Consider this simple example. Let's say that the US GDP grew by 10% last year. Now let's say that inflation also grew by 10%. In this scenario, real inflation adjusted GDP growth was ZERO. However, announcing ZERO GDP growth is a major problem politically.

So what do the Feds do? They claim that inflation was just 8%, and BOOM you've got 2% GDP growth announced for a year in which real GDP growth was actually zero.

This game is played all the time via a metric called the GDP "deflator." Technically what this is meant to do is remove the effects of inflation from the GDP growth numbers to show what real growth was.

However, what it actually ends up being is an accounting gimmick that allows the numbers to overstate GDP growth.

For this reason, when I look at the US economy's growth I prefer to use its nominal GDP numbers. These numbers do not include a deflator metric. As such they're much closer to showing the actual growth as opposed to the gimmicked "real GDP" numbers.

With that in mind, take a look at the chart below:



As you can see, the US economy is once again slowing down rapidly with a sub-4 reading. I've circled all of the other times the US economy has registered a reading like this in the last 40 years.

ALL of them were periods that were later identified as recessions.

So the Fed is once again facing a recession... at a time when it has already cut interest rates to zero and engaged in just about every monetary loosening imaginable. To top it off, inflation is already appearing due to the Fed's previous actions.

There is a term for slow growth and high inflation: it's stagflation. Sure it doesn't show up in the official data. But then again, when was the last time reality did show up there?

[DGuller]

Wow, this genius fails to read his own graph properly.

[derspiess]

Seems like every goofball with an audience wants to be the first to proclaim we're in a recession.

[CountDeMoney]

Seems like every goofball with an audience wants to be the first to proclaim we're in a recession.

That's because we never got out of it.

[mongers]

Seems like every goofball with an audience wants to be the first to proclaim we're in a recession.

That's because we never got out of it.

Some people got out of it, though arguable the real winners were in it for about a day. 

[Valmy]

You are all out of my will.

Your estate is going to be divided 23 ways as it is.

[Admiral Yi]

His argument defeats itself.  We're in recession because the other times we had nominal growth less than 4% we called them recessions.  But we called those recessions because after deflating the nominal growth rate by inflation we had negative real growth.