Ms. Yellen is nervous. Maybe she’s not used to public speaking. Maybe she’s intimidated by the presence of Ben Bernanke and Paul Volcker. Maybe she’s lying and, unlike Obama, has no confidence in her ability to lie convincingly.
The following video is short and fairly dull, but as you’ll read, there’s a point to noticing Ms. Yellen’s repeated claims that the U.S. is not a “bubble economy”.
The U.S. economy is not a “bubble economy”?
M’thinks Ms. Yellen doth protest too much.
• Suppose I maxed-out all of my credit cards, borrowed heavily from the local bank, and hit all of my friends and fans for every dime I could beg, borrow or steal.
Suppose I used all the money I borrowed to buy a new $1 million mansion, a Tesla Model S auto and an extensive new wardrobe. Anyone looking at my clothes, car and home would suppose that I must have a great job, a strong income stream and be very prosperous.
But what if they learned how little money I actually make and how deeply indebted I was? Do you suppose that they’d realize that my seemingly-prosperous lifestyle was mostly an illusion based on debt rather than productivity. and I was a fraud?
If my lifestyle was mostly illusion, would it be fair to call me a fraud and my lifestyle a “bubble” that was inflated by debt that was excessive (and even irrational since I could never really repay it)?
• Now, apply the same principles to our allegedly strong U.S. economy:
The “official” National Debt has more than doubled since Obama took office and is now nearly $20 trillion.
John Williams (shadowstats.com) claims the true national debt is closer to $100 trillion. The Congressional Budget Office and economist Laurence Kotlikoff have said that, including unfunded liabilities, the U.S. government’s true national debt is over $200 trillion.
My question to you, dear reader, and to Ms. Yellen is this: How can any rational person claim that–despite being built on at least $20 trillion in National Debt that won’t ever be repaid in full–the U.S. economy is strong, self-supporting, and definitely not a “bubble economy”?
Of course it’s a “bubble economy”. All modern economic “bubbles” are built on excess and irrational debt. The “bubbles” are inflated with debt (mere promises to pay). Hasn’t our seemingly strong (but overly-indebted) U.S. economy been “inflated” (stimulated) with excess debt? Isn’t that what the Quantitative Easing (QE) of the past several years has been all about–to “stimulate”/”inflate” the U.S. economy with trillions of dollars worth of unpayable debt-instruments (promises to pay)?
That being so, how can Janet Yellen or anyone else claim that the U.S. is not a “bubble economy”–and keep a straight face?
The truth is that the U.S. economy is a “bubble economy”. Our enormous debt proves that it’s a “bubble”. As such, it’s certain to “pop”–and probably not so long from now.
In fact, since the global monetary system is based on debt, the whole global economy is a “bubble economy” that’s certain to “pop”.