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Economist John Williams says the economy is in deep trouble, and the Fed knows it. Williams says the Fed talking up “robust economic growth” that is causing inflation is “nonsense.” Williams explains, “The one thing that is not causing inflation is ‘robust economic growth.’ So, when they talk about raising interest rates to kill this robust economic growth that’s triggering the inflation, that’s absurd, and the Fed knows it. . . . If the Fed foolishly raised rates as reflected in the payrolls as not being fully recovered, you are going to have a sharp downturn, a double dip depression here. At the same time, you are still going to have the inflation. You are going to end up with an inflationary depression or a hyper-inflationary Great Depression.”

According to Williams’ forecast, “In terms of a crash, I am looking for much higher inflation, maybe hyperinflation, and I am looking for the economy to crash. You can address the inflation by personally holding physical gold and silver.”

So, jobs are going to disappear? Williams says, “They already have, but hopefully all the effects of the pandemic will disappear, and people will get back to work, but that is not happening now. There is no sign of it getting better. In fact, the numbers are indicating it’s getting worse. . . . The holiday retail economy in November and December declined at the worst pace since the Great Recession. You had a negative holiday shopping season. That’s not a booming economy.”

On top of that, Williams says the real inflation rate is 14.8 %, if you disregard all the gimmicks the government uses to make inflation look less than what it really is. Williams says, “That’s the highest inflation rate since the Truman Administration.”

…click on the above link to read the rest of the article…

Hyperinflationists Come Out of the Woodwork Again

April 14, 2020

Hyperinflationists Come Out of the Woodwork Again

CoinDesk asked me to share my opinions on the chance of hyperinflation. My thoughts are below.

From CoinDesk

Hi Mish,
I am working on an article for CoinDesk about recent fiscal and monetary splurge by governments and central banks across the globe and the impact on gold and bitcoin. As I see, a majority of analysts and economists are calling for hyperinflation and rally in gold.
Could you please share your take?
Thanks
CoinDesk

Matter of Definitions

Before there can be a rational debate on anything, people must agree on definitions.

I believe most people would accept this definition: Hyperinflation is the complete collapse in currency against every other asset.

Pick a currency, say the US dollar. To bet on hyperinflation and be correct, the dollar would have to go nearly worthless vs the Euro, the Pound, the Yen.

Alternatively, 50% in a single month would quality. Professor Hanke defines Hyperinflation as a 50% Currency Collapser in a Month.

Q: How likely is that?

A: Close to zero.

Replay Discussion

Curiously, this is a replay of my 2010 article Williams Calls for “Great Hyperinflationary Great Depression”.

Williams is John Williams of Shadowstats. He was not alone. Here is a snip changing the name Williams to “Hyperinflationsists” in the first word of these four points.

Hyperinflationists focus on money supply, ignoring credit although credit is far more important.
Hyperinflationists ignore numerous global interconnections. Calling for hyperinflation in the US alone ignores happenings in Europe, Japan, and China. I remain amazed at how US-centric hyperinflationists in general are.
Hyperinflationists ignore US gold holdings, the largest in the world.
Hyperinflationists ignore the massive influence of consumer attitudes and bank attitudes towards lending.

To expect the US dollar to go to zero vs the Euro, Yen, Food, gold, Yuan, etc., was then and is now pure silliness.

…click on the above link to read the rest of the article…

Economy Still Falling Off a Cliff – John Williams

December 9, 2019

Economy Still Falling Off a Cliff – John Williams

Economist John Williams says don’t put too much faith in the good employment numbers that came out last week because “It’s not as happy of a picture as it looks.” Williams is the founder of ShadowStats.com. His calculations strip out government accounting gimmicks to give a more accurate picture of economic data. Williams explains, “What the Fed has done with their easing, according to the Fed, is they created a circumstance of sustainable moderate economic growth. So, they don’t need to cut rates anymore. That’s nonsense. You don’t have sustainable moderate growth. For example, look at this last month, industrial production is in a state of collapse. . . . Manufacturing is negative. . . . Oil production is collapsing year to year as oil and gas exploration has plunged. . . . Retail sales have been overstated in employment . . . . That’s going to be revised lower. . . . We have been getting better numbers as of late, and the economy is still falling off a cliff.”

Maybe that explains the Fed’s panic moves with $60 billion a month QE, which it says is not QE, and extreme intervention in the repo market where the Fed routinely pumps out tens of billions of dollars in liquidly a night. Williams says, “The system is not stable, and it probably is insolvent. They blew the system back in 2007. They gave up on the domestic economy to save the banking system. . . . They spent all their resources propping up the banks, and they are still doing the same thing, and it’s still costing us in terms of economic growth.”

So, the Fed is pumping out billions of dollars every month, and yet, the economy keeps sinking. What does this tell Williams? “The system is not operating properly. These are stopgap measures, stopgap liquidity that the Fed is putting into the system.

Economy Still Falling Off a Cliff – John Williams

Entering Period of Perpetual Money Printing – John Williams

July 24, 2019

Entering Period of Perpetual Money Printing – John Williams

Economist John Williams says be careful what you wish for when it comes to Federal Reserve interest rate cuts. Williams explains, “Unless you can get a good healthy consumer, you are not going to get a good healthy economy. It’s that simple. I think the Fed recognizes that, but they want to get rates higher because that will help the banking system. It will help make lending a little easier and start to return the system to normal. The problem with them backtracking now is the Fed may not ever be able to go back and do what they did before. We may be entering a period of perpetual quantitative easing (money printing). That changes the ballgame, and I am not sure where that’s going to go. It’s not as happy as it would have been if we had gone through a transition where bad parts of the banking system failed and you rebuilt and had a strong buildup from there with the economy and everything else. . . . Perpetual quantitative easing (money printing) is frightening, and it’s a new world. No one has ever seen anything quite like this.”

Williams says all his data is showing the economy is already faltering. Williams point out, “If you believe the GDP numbers, the economy has expanded 25% since the Great Recession, but there is no other number that shows that. . . . I have been contending that we are heading into a new recession. What I am looking at in recovery is that the economy has never really recovered. . . . . The Fed raised rates too much in too fast of a period of time. Had they stretched that over a couple of more years instead of trying to get things back to normal in two years, that might have worked better. What they did was effectively crashed the economy.”

…click on the above link to read the rest of the article…

Fed Will Crash Markets & Dollar, Gold Protects – John Williams

January 27, 2019

Fed Will Crash Markets & Dollar, Gold Protects – John Williams

Economist John Williams warns the Federal Reserve has painted itself into a very tight no win corner. No matter what the Fed does with rates it’s going to be a disaster. Williams explains, “You had some very heavy selling towards the end of the year and when you saw the big declines in the stock market you also saw that accompanied by a falling dollar and rising gold prices. That was foreign capital which was significant fleeing our markets. So if the Fed continues to raise interest rates, and they want to do and they still don’t have rates where they want them, it’s going to intensify the economic downturn. That’s going to hit the stock market. If they stop raising rates . . . and they have to go back to some sort of quantitative easing, that’s going to hit the dollar hard. Foreign investors are going to say the dollar is going to get weaker and let’s get out of the dollar. Then, you are going tom see heavy selling in the stock market. So either way they go, they created a conundrum for themselves because of the way they bailed out the banking system (in 2008-2009). At this point they don’t have an easy way out of this.”

Williams says the U.S. is already entering into a recession. Williams contends, “The first quarter, which is the quarter we are in right now, the first quarter of 2019 likely will be in contraction partially due to the government shutdown. That is slowing the economy on top of the interest rate hikes, but the cause of the recession here is not the government shutdown. It’s the Fed hiking rates . . . the fundamental driving factor that was putting us into recession even before the government shutdown was the rapid rise in interest rates.”

…click on the above link to read the rest of the article…

Is the U.S. in a depression? (How John Williams became America’s most important statistician)

June 10, 2018

Is the U.S. in a depression? (How John Williams became America’s most important statistician)

America’s economy has been progressing steadily. First quarter real GDP growth came in 2.2%. The official unemployment rate is 3.8%. Inflation, according to the Fed’s preferred measure is 2%.

But how accurate are those numbers?

“Nonsensical,” says John Williams, founder of Shadow Government Statistics, who has been tracking U.S. government data for more than three decades.

Williams reckons that, using traditional calculation methodologies, true inflation is likely running above 6% and the unemployment rate over 20%.

Most importantly, Williams’ calculations suggest that the US economy has been in a two decade-long depression. His line of reasoning is worth a look.

Underestimating inflation

Williams argues that U.S. statistical agencies overestimate GDP data by underestimating the inflation deflator they use in the calculation.

Manipulating the inflation rate, Williams argues in Public Comment on Inflation Measurement , also enables the US government to pay out pensioners less than they were promised, by fudging cost of living adjustments.

This manipulation has ironically taken place quite openly over decades, as successive Republican and Democratic administrations made “improvements” in the way they calculated the data.

These adjustments (such as hedonic adjustments to inflation calculations, or not counting people who have stopped looking for work as part of the labor force) inevitably cast the government’s numbers in a more favorable light.

However, mainstream media journalists tend to have a poor grasp of mathematics. They were thus unable to grasp the depth of the problem, let alone explain the issues to the public.

Politicians have thus been able to fudge economic data openly. For example, the chart below shows U.S. GDP growth as measured by official sources.

The following chart (produced by Williams) shows GDP growth as calculated using a GDP deflator, corrected for an approximately two percentage point understatement.

…click on the above link to read the rest of the article…

The U.S. Deficit Is Beyond Control: Markets Don’t Like Long-Term Government Insolvency

February 15, 2018

The U.S. Deficit Is Beyond Control: Markets Don’t Like Long-Term Government Insolvency

johnwilliams

Economist John Williams sat down with USA Watchdog‘s Greg Hunter to discuss the dire state of the dollar and United States economy. The monetary path the US is on is out of control, and the unwillingness of government officials to reduce the deficit and stop spending money will cause major problems in the very near future.

Years of socialist policies and reckless spending will eventually end in a complete collapse. Williams is not the only economist to sound the alarm either. As the tax cuts are always positive (people keeping more of their money is always good for the economy) the unwillingness to decrease the size and scope of the government with an expanded deficit will be the downfall of a once great nation.

The interview with Williams begins with him declaring the drop in the stock market to be the fault of the federal reserve. “Did the Fed trigger this most recent round of selling?” asks Hunter.

“It looks like it. If you recall, the story was, bond yields are rising. Rising bond yields means someone’s selling bonds. The Fed wasn’t actually selling bonds, they just were not rolling over the bonds that they normally would…I think you’re gonna see the dollar selling off very rapidly and gold rallying as a flight to safe haven.”

Then the discussion of the tax cuts comes up, as Hunter asks Williams to deliver his take on the lower taxes.

“The tax cuts are generally positive. Anytime you cut taxes that is generally a plus for the economy. The problem is the average guy is still not making ends meet. Anything that increases the disposable income is a plus.

…click on the above link to read the rest of the article…

Can You Trust US Economic Data? Eight “Out Of The Box” Investment Insights – Peter Diekmeyer

September 2, 2016

Can You Trust US Economic Data? Eight “Out Of The Box” Investment Insights – Peter Diekmeyer

This morning, Canada released GDP data which showed the economy shrank by 1.6% on an annualized quarter-over-quarter basis during Q2. While economists forecast a 1.5% drop, those “projections” were made after the quarter was already over. Six months before it started, almost everyone was saying that things were going to be fine.

Canada isn’t alone. As our old friend Larry Summers has pointed out , “not a single post war recession was predicted a year in advance by the Fed, the Federal government, the IMF or a consensus of forecasters.”

In short, while astute investors need to take into account the official line, they also need to go “outside the box.” Following are eight creative insights from economic and investment thinkers, almost all of whom operate outside consensus silos.

A 23% unemployment rate? John Williams of Shadow Statistics believes that US government has long been presenting misleading economic data. Much of this originated in statistical agencies rejigging calculation methodologies which started in a big way in 1994 during the Clinton Administration. The upshot, says Williams, a gold fan, is massive hidden inflationary pressures.

Headline inflation, for example, which is currently running in the 1% range y/y, would be between 3.5 and 7 percentage points higher using previous methodologies, he notes. Worse, lower official inflation numbers reduce the COLA increases that governments pay pensioners, which in turn amounts to de facto defaulting. Apartment building owners in rent control districts where increases are tied to headline inflation results are also hard-hit because they aren’t allowed raise their prices to match rising costs.

Understating inflation also enables the US government to overstate real GDP, which is calculated by subtracting the inflation rate from nominal GDP. As for headline unemployment, which is currently under 5%, Williams estimates that it could be as high as 23%, if calculated using previous methodologies or by polling ordinary people on how they regard their existing status.

…click on the above link to read the rest of the article…

Weekly Commentary: Cracks at the Core of the Core

January 17, 2016

Weekly Commentary: Cracks at the Core of the Core

January 15 – Bloomberg (Matthew Boesler): “The U.S. economy should continue to grow faster than its potential this year, supporting further interest-rate increases by the Federal Reserve, New York Fed President William C. Dudley said. ‘In terms of the economic outlook, the situation does not appear to have changed much” since the Fed’s Dec. 15-16 meeting, Dudley said, in remarks prepared for a speech Friday… He added that he continues ‘to expect that the economy will expand at a pace slightly above its long-term trend in 2016,’ and said future rate increases would depend on incoming economic data.”

January 15 – Reuters (Ann Saphir): “The stock market’s swoon does not change the economic outlook and is merely market participants trying to make sense of global developments, San Francisco Federal Reserve Bank President John Williams told reporters… ‘As the Fed is moving gradually through a process of normalization it’s not surprising that we are not going to be at the peak stock prices’ of last year, Williams said. So far swings in stock market prices have not fundamentally changed his expectation for moderate economic growth, he said.”

The world has changed significantly – perhaps profoundly – over recent weeks. The Shanghai Composite has dropped 17.4% over the past month (Shenzhen down 21%). Hong Kong’s Hang Seng Index was down 8.2% over the past month, with Hang Seng Financials sinking 11.9%. WTI crude is down 26% since December 15th. Over this period, the GSCI Commodities Index sank 12.2%. The Mexican peso has declined almost 7% in a month, the Russian ruble 10% and the South African rand 12%. A Friday headline from the Financial Times: “Emerging market stocks retreat to lowest since 09.”

Trouble at the “Periphery” has definitely taken a troubling turn for the worse. Hope that things were on an uptrend has confronted the reality that things are rapidly getting much worse.

…click on the above link to read the rest of the article…

What If There Is No “Fed Put” – Paul Brodsky Thinks Yellen Will Not Bailout Markets This Time

January 15, 2016

What If There Is No “Fed Put” – Paul Brodsky Thinks Yellen Will Not Bailout Markets This Time

Earlier today, Art Cashin summarized most (very desperate) traders’ thoughts when he said that as a result of today’s market crash, “the Fed will try anything” to prop up the wealth effect it had so carefully engineered with seven years of central planning in the aftermath of the financial crisis. Perhaps the only question left is “where is the put”, or where on the S&P 500 is the Fed’s breaking point beyond which Yellen will have no choice but to make a statement, or take action, in support of the market.

Yet one person who is far less sanguine abou the latest in a long series of central bank bailouts of the stock market is Macro-Allocation’s Paul Brodsky, who believes that instead of the Fed Put, the time of the Fed Call has come.

Here’s why:

The Fed Put Call

Investors are blaming Fed rate hikes, and hence a strong dollar, for weakening global output, commodity prices, and global equity prices so far in 2016.

The Fed knows exactly what it’s doing.

Equity returns are certainly dismal thus far in 2016. Through January 14 at 14:00PM EST, the MSCI World Index had declined by 8.6%. Accordingly, “the markets” had begun to doubt the Fed’s resolve to hike rates four times in 2016. Fed funds futures implied the December Fed Funds rate at 0.70%, up only 34 basis points from the current rate (0.36%). This implies the market is betting the Fed will hike once or twice more.

Clearly, investors see the equity markets as the leading indicator of Fed policy. We disagree. The Fed no longer works implicitly for equity investors (i.e., “the Fed Put”); it is primarily working for the U.S. banking system by stabilizing and increasing its deposit base, and for the state by providing an incentive across the world to invest in Treasury debt.

…click on the above link to read the rest of the article…

Food and Medicine Will Soon Be Unobtainable

January 14, 2016

Food and Medicine Will Soon Be Unobtainable

If product is not moving, then how will you get your food, medicine and other essential supplies? Famed economists, John Williams, from Shadow Stats and Joseph Meyer, Straight Money Analysis, will tell you that the Baltic Dry Index is the best indicator of the economic health of the economy.

The BDI Is At a Record Low

Unfortunately, the BDI, has just dropped another 3.1% to a new record low of 402. To anyone who knows anything about economics, it is clear that the end of this financial era is quickly coming to an end.

The MSM Conspires to Keep the Truth From the People

The Main Stream Media is totally ignoring the precipitous and unprecedented drop in the BDI. However, the impending financial crisis is not going unnoticed by those who manage the shipping industry. They recognize this as the total disaster that it is. For example, total orders at the shipyards in China, have dropped off by a nearly 60% in the first 11 months of last year according to Bloomberg.

Why Is the Record Drop In the BDI a Problem?

In President Obama’s “last” State of the Union Address last night, did he fail to mention that he will not be leaving office anytime soon? Sorry Hillary. The coming catastrophe will soon allow Obama to stay on as President in order to manage the present crisis and to, of course, “save the American people”.

America is the land of the 3000 mile salad. Virtually everything we consume, wear and use is shipped thousands of miles. The BDI measures the volume of shipments on a global scale. If the volume of shipment was any lower, nothing would be shipped. Could you write the ending to this? Can you even imagine mass starvation and civil unrest of unprecedented proportions?

This Perfect Storm Could Cause You to Starve to Death

…click on the above link to read the rest of the article…

Why This Feels Like a Depression for Most People

October 9, 2015

Why This Feels Like a Depression for Most People

“And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John Steinbeck, The Grapes of Wrath

Everyone has seen the pictures of the unemployed waiting in soup lines during the Great Depression. When you try to tell a propaganda believing, willfully ignorant, mainstream media watching, math challenged consumer we are in the midst of a Greater Depression, they act as if you’ve lost your mind. They will immediately bluster about the 5.1% unemployment rate, record corporate profits, and stock market near all-time highs. The cognitive dissonance of these people is only exceeded by their inability to understand basic mathematical concepts.

The reason you don’t see huge lines of people waiting in soup lines during this Greater Depression is because the government has figured out how to disguise suffering through modern technology. During the height of the Great Depression in 1933, there were 12.8 million Americans unemployed. These were the men pictured in the soup lines. Today, there are 46 million Americans in an electronic soup kitchen line, as their food is distributed through EBT cards (with that angel of mercy JP Morgan reaping billions in profits by processing the transactions).

These 46 million people represent 14% of the U.S. population. There are 23 million households on food stamps in a nation of 123 million households. Therefore, 19% of all households in the U.S. are so poor, they require food assistance to survive. In 1933 there were approximately 126 million Americans living in 30 million households. The government didn’t keep official unemployment records until 1940, but the Department of Labor estimated 12.8 million people were unemployed during the worst year of the Great Depression or 24.9% of the labor force. By 1937 it had fallen to 14.3% or approximately 8 million people.

…click on the above link to read the rest of the article…

The Endless Emergency—–Why It’s Always ZIRP Time In The Casino

September 9, 2015

The Endless Emergency—–Why It’s Always ZIRP Time In The Casino

Based on the headline from the latest Jobs Friday report you wouldn’t know that we are still mired in an economic emergency—–one apparently so extreme that it might entail moving to the 81st straight month of zero interest rates at next week’s FOMC meeting. After all, the unemployment rate came in smack-dab on the Fed’s full-employment target at 5.1%.

But that’s not the half of it. The August unemployment rate was also in the lowest quintile of modern history.

That’s right. There have been 535 monthly jobs reports since 1970, yet in only 98 months or 18% of the time did the unemployment rate post at 5.1% or lower.

In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done?

Not at all. The talking heads have been out in force insisting on yet another deferral of “lift-off” on the grounds that the economy is allegedly still fragile and that the establishment survey number at 173,000 jobs came in on the light side. Even the so-called centrists on the Fed—–Stanley Fischer and John Williams—–have gone to full-bore, open-mouth, two-armed economist mode, jabbering incoherently while they await more “in-coming” economic data.

Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages. To wit, if last October’s Bullard Rip low on the S&P 500 holds at 1867, the FOMC will declare “one and done”, at least for the year; and if the market succumbs to another spot of vertigo, the Fed will concoct yet another lame excuse for delay.

Indeed, the Fed’s true Humphrey-Hawkins target is transparent. Namely, avoidance of a “risk-off” hissy fit at all hazards.

…click on the above link to read the rest of the article…

The US Economy Continues Its Collapse

August 11, 2015

The US Economy Continues Its Collapse

Do you remember when real reporters existed? Those were the days before the Clinton regime concentrated the media into a few hands and turned the media into a Ministry of Propaganda, a tool of Big Brother. The false reality in which Americans live extends into economic life. Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.

The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.

The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?

In 1994 the Clinton regime stopped counting long-term discouraged workers as unemployed. Clinton wanted his economy to look better than Reagan’s, so he ceased counting the long-term discouraged workers that were part of Reagan’s unemployment rate. John Williams (shadowstats.com) continues to measure the long-term discouraged with the official methodology of that time, and when these unemployed are included, the US rate of unemployment as of July 2015 is 23%, several times higher than during the recession with which Fed chairman Paul Volcker greeted the Reagan presidency.

…click on the above link to read the rest of the article…

A Recession Within A Recession

May 30, 2015

A Recession Within A Recession

On Friday, the federal government announced that the U.S. economy contracted at a 0.7 percent annual rate during the first quarter of 2015. This unexpected shrinking of the economy is being primarily blamed on “harsh” weather during the first three months of this year and on the strengthening of the U.S. dollar. Most economists are confident that U.S. GDP will rebound back into positive territory when the numbers for the second quarter come out, but if that does not happen we will officially meet the government’s criteria for being in another “recession”. To make sure that the numbers for Q2 will look “acceptable”, the Bureau of Economic Analysis is about to change the way that it calculates GDP again. They are just going to keep “seasonally adjusting” the numbers until they get what they want. At this point, the government numbers are so full of “assumptions” and “estimates” that they don’t really bear much resemblance to reality anyway. In fact, John Williams of shadowstats.com has calculated that if the government was actually using honest numbers that they would show that we have continually been in a recession since 2005. That is why I am referring to this as a “recession within a recession”. Most people can look around and see that economic conditions for most Americans are not good, and now they are about to get even worse.

For quite a while I have been warning that another economic downturn was coming. Well, now we have official confirmation from the Obama administration that it is happening. The following is an excerpt from the statement that the Bureau of Economic Analysis released on Friday…

…click on the above link to read the rest of the article…

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