"What happens when a dying consumer economy has...borrowed all the debt it's capable of absorbing?"

[marmar]

U.S. Retail Sales Fall, Again - The Next Crash Is Near
Submitted by Sprott Money on 07/21/2015 05:57 -0400


Retail sales have fallen yet again in the mighty U.S. economy, home of the Never-Ending Recovery . Once again, this number has fallen even before we adjust it for inflation, in order to make the statistic meaningful. A retail sales number which is not adjusted for inflation (by subtracting the rate of inflation) only tells us how much depreciating money the people spent, not how many goods and services they actually purchased.

In June of this year, the month just reported, U.S. retail sales are estimated by the government to have fallen (month-over-month) by 0.3%, a seemingly insignificant number. But this is before we adjust that number for inflation. What is the rate of inflation, the real rate?

Our governments hide that secret with statistical falsifications too numerous to list, and in many cases too complex to explain to those without a formal background in economics. But we can see this real inflation, in our own lives. Food and shelter, the two most-important categories of consumption, are soaring at the most-rapid pace seen in our lifetime, somewhere above 20% per year.

Other categories of “consumer goods” have increased in price at a much lower rate, but here’s the point. As more and more of our populations descend to the economic status of Working Poor (or lower), food and shelter become the only categories of consumption. Thus, for this growing majority of our populations, the “inflation rate” for food-and-shelter becomes THE inflation rate: 20+% per year.

....(snip)....

As a matter of arithmetic, no entity can pile-up more and more debt forever, not even according to the voodoo economics of charlatan economists. What happens when a dying, consumer economy has mooched/borrowed all the debt it is capable of absorbing? We get the U.S. economy . ................(more)

http://www.zerohedge.com/news/2015-07-20/us-retail-sales-fall-again-next-crash-near

[Warpy]

1. The Chinese takeout joint closest to me has gone belly up

They told me business had been steadily declining as more and more other businesses in the area died. Now half the shopping center is gone. Other strip malls in my area are completely empty and it would be a food desert without WalMart. Fortunately, I can still drive and buy food. Without a car, I'd be fucked.

This is the Reagan Revolution end game. The demand side is starting to dry up faster and faster as people have no money beyond subsistence and too many people are now trying to stay alive on below subsistence wages. Borrowing to make up the difference is a thing of the past even for people without maxed out HELOCs and credit cards--they know better times are not going to come and all they'd have is debt they can't pay on top of wages that won't feed them.

Without the working and middle classes to feed on, the fatteners of the rich are going to have to come up with riskier and riskier ways of pumping up their paper net worth to try to fill the empty places within. From that will the next collapse come, and it will take everything with it.

It might have begun already. We know the second great depression already has.

[RiverLover]

2. Very interesting read, the author believes another crash is coming...& the reason

What does an economy do when it no longer produces enough goods to pay its own bills? It “consumes”, meaning it cannibalizes (i.e. consumes) all of the accumulated wealth of that society. And when the “consumer economy” has cannibalized all that wealth? It turns to debt .



As a matter of arithmetic, no entity can pile-up more and more debt forever, not even according to the voodoo economics of charlatan economists. What happens when a dying, consumer economy has mooched/borrowed all the debt it is capable of absorbing? We get the U.S. economy .

Thanks for posting.

[haikugal]

3. .

From the link...

We know these regimes are all bankrupt, because none of them can afford to pay normalized (i.e. legitimate) rates of interest on their massive, sovereign debts. Since 2008, only one Western nation (outside of Iceland) has been forced to pay normalized rates of interest on its debts: Greece. And (in conjunction with Austerity) doing so has bankrupted it not once, but twice , in the span of three years.



What is implied when a collection of bankrupt economies is deliberately crashed, after the financial systems of all these economies have been deliberately chained together by the banksters like dominoes? It should mean, simply, “the end” (i.e. Debt Jubilee ).



However, as we see these Western, fascist, puppet-regimes banning public protest , banning free speech , and creating their “secret police”, what it more-likely means is the One Bank choosing to stage yet another Great War. In “the fog of war”, this Old World Order hopes that it can hide the complete-and-utter economic devastation which it has wrought, and somehow retain its corrupt choke-hold on political power, financial power, and the Corporate media propaganda machine.





Let’s hope that that the One Bank has miscalculated – again.

My son may be on layoff again soon. We barely survived the last time....2009 thru 2011...what work there was didn't pay enough to cover expenses. It took that long to find this job.

[Munificence]

4. We are getting close

I'd say we have until late Sept. Things could get real interesting starting tomorrow.

I know I am buckled in and ready.

[Hydra]

5. My household has been treading water just to keep above the rising prices

And gotten away with it through sheer luck. I keep wondering if we're going to be able to keep ahead of it...

[Recursion]

11. The US inflation rate is currently negative

What's getting more expensive for you?

[AtheistCrusader]

13. Yeah, there's some seriously zerohedge doom and gloom in that article.

Earnings will be interesting tomorrow. I expect a correction, not a crash.

Lol, I didn't realize it was actually ZH

[Hydra]

15. Housing and food

Luckily gas went down for the moment. Housing is the killer though- rental rates have easily gone up by 50% or more. Food prices have been moving up by 5-10% per year as well, when they even bother to stock the shelves. Spooky stuff.

[Recursion]

16. That's the downside of only reporting a nationwide inflation rate, I guess

Sorry to hear that.

[Hydra]

17. Eh, part of it is regional, part of it I expected

The housing costs are insane- there's a worker shortage, but there's also a housing shortage. The basic rental in for a place to live is 2/3 of my monthly wage, and it's going up all the time. The food costs I expected to go up- they have been for years now, and the droughts and floods caused by climate change are just getting worse.

Meanwhile, the big money players are working harder than ever to profit from the shortages and to eliminate any social programs that could help. All of my friends that are not comfortably well off are struggling too. Doesn't help that I live in the reddest of red states :/

Oh, ya, and the ACA thing added $150 per month to our bills. I actually get penalized for having my disabled relative live with me.

[CrispyQ]

19. You must not do the grocery shopping in your household or pay the utility bills.

Every week grocery prices go up. Not on all items, but every week some things are more. Two years ago I paid approx $2.50 for a loaf of organic bread. Same loaf is now almost $6! I wonder who's buying it? Not me.

[raccoon]

22. Prices keep going up at the grocery store. nt

[riderinthestorm]

6. Ah and here I thought you were talking about Greece

[lumberjack_jeff]

7. Inequality is killing us.

Everything that is bad in this country has inequality as a root cause.

Money is debt. If people don't expect more income next year than last, they don't borrow.

[Kevin from WI]

8. It's hard to get excited about this. It comes from zerohedge.

Zerohedge is about as reliable a source as Alex Jones. They have been predicting the apocalypse for as long as I can remember. Considering how they make money off of fear mongering, I think everyone needs to calm down. I am not saying there is not a problem, just saying this is business as usual for zerohedge.

[TexasTowelie]

9. It took until post #8 for the sun to shed light on this dismal forecast

so you beat me to the punch. Out of the hundreds of times that zerohedge has predicted a dying economy they've only been correct twice, thus I take this article with a grain of salt.

[AtheistCrusader]

14. Holy fuck I didn't even look at the source and guessed it was ZH in post 13

[silvershadow]

10. Too spammy looking for me. Sorry. nt

[Recursion]

12. The current rate of inflation is negative

The dollar isn't depreciating right now

[1939]

21. For the official "market basket" you are right

For things we have to buy, it just keeps going up and up.

In constant dollars, the slide rule I bought in 1957 for $27.95 was far more expensive than the $2.00 calculator I can buy today. I don't buy slide rules or calculators very often. The meat and produce that I have to buy just spiral up in price.

[JCMach1]

18. Extreme Heat, and too much rain in places contributed to this

My small retail business was down as well... Most business owners I have talked to were slow from April 15-June 30. Things have only picked-up a bit since July .

[jtuck004]

20. Think of someone asking this question in, roughly, 1927. Got a lot ahead. Then ask as of today.

But the mistake people might make is to assume that we still have an entire class and race of people to cheaply subjugate, the raw materials to have a world war and destroy everything, which gave us a reason to phony up economies to rebuild it, pretend to be wealthy, then get rid of most all our natural resources and jobs for the benefit of a very, very few.

Today we would be starting the race near the end, I think.