Here are two signs the US economy is imploding.
US Bank Deposits Continue To Plunge
September 21 (King World News) – Gerald Celente: U.S. bank deposits shrank by $370 billion in this year’s second quarter, falling from $19.93 trillion to $19.56 trillion, a record quarterly fall-off and the first decline since 2018, according to the Federal Deposit Insurance Corp.
Bank accounts swelled by $5 trillion in 2020 and 2021 as the federal government sent a series of stimulus payments to businesses and households.
Those stimulus payments nearly tripled the amount of money U.S. banks stored with the U.S. Federal Reserve, often in the form of treasury bonds.
Now the stimulus payments have ended and the Fed is cleaning out its bond portfolio, which will cause banks to store less money there.
Also, inflation is rampant and the U.S. Federal Reserve is raising interest rates, both of which are forcing consumers to spend more on everything from socks to new homes.
As long as inflation rises faster than worker pay, bank accounts will continue to shrink as people have to pay more to buy less.
Moreover, with the Federal Reserve raising interest rates the economy will decline as money becomes more expensive to borrow. And the deeper the economy sinks the more people will be fired by companies whose profits are in decline, which results in more people buying less consumer goods. (See in this issue, “When the Economy Falls Jobs Go With It”.)
Electricity Prices Soaring In US
As U.S. gasoline prices fall, electricity prices are on the rise, climbing 15.8 percent year on year in August, the biggest 12-month leap since 1980, according to the U.S. Bureau of Labor Statistics.
Some electric utilities have literally doubled their electricity prices to consumers this year after winning permission from their public utilities commissions to do so.
Much of the price hike is due to increases in the cost of natural gas, which fuels the production of 37 percent of U.S. electricity.
Also, heat waves across the southern and western U.S. have boosted demand for electricity to run fans and air conditioners, which, in turn, has raised demand for natural gas.
Natural gas prices are up a third in the U.S. over the past 12 months.
The rise in price is due partly to oil companies’ loss of production during the COVID shutdown and major producers’ decision not to boost production as demand returned, as we reported in “Oil Majors Withhold Investment in New Production” (3 Aug 2021).
Also, the U.S. is liquefying and shipping record amounts of natural gas to Europe to help offset the region’s loss of supply. Russia has shut off key exports to Europe in an attempt to break Western sanctions imposed because of the Ukraine invasion.
U.S. electricity consumption will increase 2.6 percent this year, government forecasters predict.
Rising energy costs are a critical factor fueling inflation: every retail, service, and manufacturing business uses energy, spreading its rising cost throughout the economy…
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Putin Mobilization Has Not Been Priced Into Markets
Art Cashin, Head of Floor Operations at UBS: The overnight global equity markets are somewhat nervous and edgy. In Asia, markets were weaker with hits of more than 1 1/2 % seen in places like Tokyo, Hong Kong and Australia. Other markets were also weak. The press seems to blame it on more Covid worries. I think it is concern about rising rates in the U.S. and concern about what Mr. Xi will have to say after his step outside the country.
In Europe, markets are marginally better, but trading nervously. The Bank of England will be reconvening after the pause for the Queen’s funeral. There are reports that Germany may nationalize one of its largest energy companies. I do not think the Putin mobilization speech with its reference to tactical nuclear weapons has been fully discounted. Markets will continue watching nervously. The President speaks at the
U.N. and possibly will reference the Putin commentary. So, we are going to get a lot of push and pull here.
Anyway, the key event of the day obviously is the Fed statement and the press conference. Bloomberg points out that several times this year very sharp moves after the Fed press conference. So, we shall see. Again, we assume that Powell will avoid words like – neutral, etc. that markets may interpret as we are about to pause.
As we outlined earlier, we assume, barring geopolitical surprises, stocks to drift up until 2:00 p.m. and then after the statement and the corresponding internal Fed member projection of possible inflation, we will get whacky trading as everyone tries to assess that and that whacky trading will last for ten to twenty minutes and then everything is in the hands, in fact, the microphone of Jay Powell.
So, geopolitics may be coming to center stage that we will have to watch (thanks to Wonder Woman, we learned that President Biden speaks to the U.N. about 10:30, but then he conducts bilateral meetings and social formats throughout the day. So, while the 10:30 speech is important, it is a roll of the dice throughout the day). At any rate, you know the rules. Stay close to the newsticker for those very geopolitical reasons. Keep your seatbelt fastened. Stay nimble, alert and at all cost, try to stay safe.
***To listen to Dr. Stephen Leeb discuss the massive change that is coming in the global monetary system, Xi’s meeting with Putin and much more CLICK HERE OR ON THE IMAGE BELOW.
To listen to Alasdair Macleod discuss gold and silver disappearing from storage vaults and why a squeeze higher is imminent CLICK HERE OR ON THE IMAGE BELOW.
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