Friday, March 2, 2018

Scary Chart Doom Porn

Here's a few charts that should give anyone pause. I continue to believe that we are about to start a stock market and economic decline that will affect your household wealth. I've been wrong for awhile, so maybe don't get too worried!  I indicated in a previous blog post that household wealth may be about to decline precipitously.  We're in a period where the Federal Reserve is determined to raise short term rates until something breaks.

And something always breaks. Here's some more key charts:




The Federal Reserve is reversing QE by selling a small but increasing amount of it's holdings of Treasury bonds. Right now, the Federal Reserve is allowing bonds to reach maturity and roll off their balance sheet. The Treasury pays the Fed for these bonds. When the Federal Reserve starts actually selling bonds, buyers will give the Fed money, so quantitative tightening will eventually reduce the money supply. But the money supply is falling anyway and that is not a great sign. The Fed is playing a risky game of reducing money AND raising the Fed funds rate. We're still in a big PhD-led monetary experiment which started in 2009.
Money Supply Growth is Slumping Which Has a Decent Record of Preceding Recessions (one exception in 1995) The Federal Reserve

Here's a couple of bonus charts that may be the scariest. After all, if more debt doesn't help or even hurts, then we really have reached the end of the road:



More Debt Doesn't Work.  More Debt May Actually Hurt Going Forward

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