Saturday, June 23, 2012

What Do The Nation's Top Financial Wizards Know?

When it comes to the economy the Fed has consistently overstated economic strength.   Take a look at the chart and table.  In January of 2011 the Fed was predicting GDP growth for 2011 at 3.7%.  Actual real GDP (inflation adjusted) was 1.6% or a negative 56% difference. The estimate at that time for 2012 was almost 4% versus 1.8% currently.

We have been stating repeatedly over the last 2 years that we are in for a low growth economy due to the debt deleveraging, deficits and continued fiscal and monetary policies that are retardants for economic prosperity.  The simple fact is that when an economy requires nearly $5 of debt to provide $1 of economic growth the engine of prosperity is broken.
Five dollars of debt for every dollar of growth? We might want to look at a new model.


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