A Bubble Economy… that’s about to burst again

The media loves to tell us that everything is great and getting better. After all, the numbers are going up, right?

Well, sometimes numbers go up because there is actual growth and business expansion and standard of living improvements.

But sometimes numbers go up because there is an artificial propping-up of a particular industry (like real estate c. 2006-2007). Or sometimes there is simply an artificial increase in the money supply (or in easily-available credit) which means things are worth more dollars, which looks great on paper, but each dollar is worth less things, which is… not so good. If that is the case, it would mean the standard of living and business growth are actually declining as a result.

So which is it?

Well, the stock market has hit historic highs, but did you know that corporate debt since 2008 has doubled? Yes, doubled. Has this debt been used to expand operations, or workforce, or open new locations, or buy new equipment, or give pay raises, or come up with new and exciting products? Nope.

What then? Why, propping up stock prices, of course. Umm… Jesus.

To top it off, corporate earnings are stagnating and/or dropping. The highest performers on the S&P 500, such as Amazon, Facebook, Netflix, Apple, etc?

Losing money.

That’s right, investors are madly buying up stocks in tech companies that are not turning a profit. In fact, these companies might fairly be described as madly hemorrhaging cash. And investors are buying that up.

Does that sound like healthy investor behavior to you?

If so, then in what insane world do we actually need the word “risky”?

Unemployment numbers are down. But so are the number of people working full time, or even participating in the economy. Account for those in your numbers and employment is not looking so hot.

Business failures are now outpacing startups. Labor productivity is at a low. Unemployment for older workers has surged. Manufacturing jobs are in a steady decline. Growth is in decline. Wage increases are in decline. The value of the dollar is in decline.

Sure, the numbers are going up in a few key areas like the stock market and real estate (again). But does any of this sound like a healthy economy to you?

Look at any market crash in history: the numbers always start sailing upwards and hitting historic highs and make people fantastically wealthy… right before the bubble bursts and there is a severe market correction.

The bubble is already expanding. Don’t believe for a second that this is preventable by your elected office-holders. This is entirely out of the hands of the president. When the crash comes, there won’t be a thing the person (creature? entity?) sitting in the Oval Office can do about it, other than give us some phony reassurances on television or Twitter.

Bottom line: don’t just start celebrating along with the clueless news media when the numbers start sailing upwards.

Question what the numbers mean for yourself.

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