"It's Worse Than You Think"

                                                                                            
             You can ignore reality, but you can’t ignore the consequences of ignoring reality

                                                          - Ayn Rand

The title quote references the conversation I mentioned a couple weeks ago with a local businessman who knows a retired military General with ties deep into the Pentagon.  The reference is to the U.S. economic and political system, not the condition of the Dept of Defense.

While the Obama regime and the elitist-controlled media seem to never fatigue from telling us that the economy is recovering, the data suggest otherwise.  My latest and freshest data point is the National Retail Federation's estimate that retail sales fell 3% over the 4-day holiday weekend this year.  What's remarkable, if not outright stunning, about that is the fact that this year it was truly 4 days of sales, as many big retailers opened on Thanksgiving.  Given the heavy degree of discounting, and the pervasive ad campaigns advertising the deals, I don't know how you can conclude anything but that the consumer is tapped out.

But let's take a look at two more data points that come from the website of the Federal Reserve.  This first graph shows a plot of real median income and the home ownership rate in the U.S (sourced from Confounded Interest blog, edits in red are mine).:

(click on graph to enlarge)

How can the economy possibly be improving when household income adjusted for the Government's low-ball inflation bogey is rapidly declining.  Moreover, despite the heavy advertisements of a housing recovery, the rate of home ownership is in steep decline.  Yes, I know housing prices are going crazy, supposedly, but this is largely due to a big surge in "investment" buying that has dropped off rapidly over the past few months.  You can see why here, if you have not read this yet:  Housing market black swan coming.

This second chart shows the rate at which the Fed is printing money - please note that the rate of increase is accelerating despite the debate over what and when "taper" means (sourced from St. Louis Fed website, edits in red are mine):

(click on graph to enlarge)

What's most interesting about this is that almost none of that money is going beyond the big bank balance sheets in the form of "excess reserves" being held at the Fed.   Now, why is the Fed printing over $85 billion per month now only to have it sit collecting interesting by our Too Big To Fail banks?   If you have not read this, I explain why the Fed will not taper and that I believe it's because the banks would be largely insolvent if the Fed were not injecting this kind of capital onto their balance sheet:  The Taper Won't Happen, Here's Why

Circling back to my quote from Ayn Rand at the top, most people with whom I discuss the economy/system with are either unaware of just how bad things are getting or they may know but choose to bury their head in the sand and ignore it.  But just because we collectively as a society choose to not look at a problem or pretend it's not there doesn't mean it will go away.  In fact, based on everything I look at, except for maybe sales of high end sports cars, expensive jewelry and rare art, our system is crumbling quickly.  I am willing to bet that 2014 ushers in an era of severe economic pain and Government control over our lives.  Those charts above tell me I'm probably right.