U.S. Economy Stagnates Even With Massive Printing

After watching the schizophrenic market reaction to St. Louis Fed Bullard’s remarks, I am amazed that the world doesn’t think we have gone completely insane.  I don’t know how long this sort of Fed induced lunacy can continue, but real signs are pointing to an economy that is still stagnating even with the trillions of dollars of money printing.

In a previous article, I posted the first 4 months of energy consumption in the industrial & transportation sectors for the past three years:

U.S. JAN-APR Energy Consumption

According to the EIA – U.S. Energy Information Agency, industrial & transportation energy consumption in the first four months of 2012 declined compared to 2011 (the motivation for the Fed to do QE3), but picked up a little in 2013.  Well, it looks like they made a few revisions and it now seems as if energy consumption in these two sectors actually declined in the first five months of 2013:

Industrial & Transportation Energy Consumption

The EIA revised April’s figures down a bit and including May’s industrial & transportation energy consumption, 2013 is still declining.  Even though these negative changes aren’t substantial, it shows that with all the Trillions of Dollars in QE, money printing, bond & MBS purchases… things are not getting any better in the U.S. economy.

I find it simply astonishing how deluded highly educated adults have become in the face of the most silly, immature and deceitful data & rhetoric coming from the top levels at the Fed, Government & Wall Street.  As James Kunstler correctly describes our system today, “A society based on the packaging of Lies.”

The U.S. Economy died back before 2000, however a series of bubbles, the exporting of inflation, and the growth of the derivatives monster has allowed the perception of growth to continue.  As you can see from the chart below, transportation energy consumption peaked in 2007 and has been declining ever since.

Transporation Peak Chart

If the U.S. economy is barely holding its own with the $trillions in monetary stimulus, how will it react if the FED did Taper?  Regardless, anything coming out of the Fed today is totally meaningless for those who want to try and protect their wealth in the future.

Another piece of double-talk came from the Fed today from this article on ZeroHedge:

Bullard Sees No Asset Bubble….Because all Previous Bubbles were “No Secret”

While there is ample proof to prove the Fed’s hypocrisy on that statement in the article, for those who watched the very interesting 4-part History Channel series on “The Men Who Built America”, Alan Greenspan gave a remark in the documentary where is firmly placed his foot in his mouth.  Greenspan discussed how no one was able to foresee the 1930’s depression much like the collapse in 2007-2008.

I gather Bullard didn’t watch that series.

Anyone who is paper trading this market and who isn’t apart of the Insider Banking Elite is truly insane.  The U.S. economy is on life-support.  You take that life-support away and the whole House-of-cards comes crashing down.

I believe one of the best ways to protect an individual’s wealth in the future will be in physical assets such as gold and silver.  Precious Metal Market Sentiment is still in the toilet which is a very good sign.

Unfortunately, many gold and silver investors are increasingly frustrated and seem to be losing patience.  My response to that is…. the frustration and fear in holding precious metals is exactly the reaction the Fiat Monetary Authorities where shooting for.

If you own the physical and look at your wealth in ounces of gold and silver… it doesn’t really matter what happens along the way.

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22 Comments on "U.S. Economy Stagnates Even With Massive Printing"

  1. “Precious Metal Market Sentiment is still in the toilet which is a very good sign.”

    How is this a good sign Steve?

    • Jason…. extremes in market sentiment normally denotes TOPS & BOTTOMS. High sentiment means a TOP is in and low sentiment means a BOTTOM is in.

      steve

      • Thanks Steve!

        I am *really* looking forward to purchasing your report. I need some direction as to what miners to invest in. I am so sick of all the hype surrounding the other subscription based newsletters (Casey, Dines, etc).

        • Jason…. I appreciate your interest in the paid reports. Just to let you know, I will not be providing the typical “Stock Picking Service”. I have been looking over many websites and their PICKS from time to time.

          I find it very interesting that what was a TOP PICK say a year or so ago, is now OFF THEIR LIST. While it’s true that companies will make bad decisions and look good at one time and bad at another, I don’t see companies going from BUY to SELL in a year or etc.

          Furthermore, those websites and services that push a lot of these junior explorers are advertising stocks that the majority will never become commercial mines due to the future energy situtation. I try to stay clear of most juniors.

          I believe you buy those companies that are the most profitable, with cash in the bank and have plans to increase production. However, when the price of silver revalues in the future due to the collapse of the Dollar and the Derivatives Monster, than most silver stocks will be winners.

          The report will not just be about Miners, but also on the silver market. I will be providing insight and data on how energy will impact the silver market as I see it.

          steve

  2. Steve

    I’m curious as to your thoughts on the industrial side of silver consumption. As I understand it, industrial use is well north of 50% in a small market. So small that a 20% increase in purchases would almost overwhelm the silver market. With prices being down 60% from the last high why are the big industrial users not loading up? Solar, tech, autos, medical would all benefit from these low prices, yet they either are on the sidelines or are being buried in physical metal on the market. A 6% drop in price today suggests massive dumping of physical metal, not paper. I say that because if I’m a tech company or solar manufacturer I would be buying all I can afford at these prices… But that’s just not happening.

    I know there is some manipulation in the silver market, but it’s size is so small that you would expect the physical users to be buying with both hands and the price to be advancing.

    I would love to hear your thoughts. Really, what are the solar guys waiting for?

    Tas

    • Could you please read this report cover to cover before making comments?
      https://www.silverinstitute.org/site/wp-content/uploads/2012/11/OutlookSilverDemand.pdf

      The demand from, for example, solar manufacturers is around 1200 tonnes a year. That’s spread around the globe and over one year. Even a 10% percent increase is 120 tonnes. Big deal. Do you think every industrial category will enjoy 10% percent growth at the same time? The industrial demand increases slowly. Why would industrial users maintain a huge silver inventory? A huge silver inventory is a burden on the balance sheet. Have you heard of JIT(Just in Time)? Manufacturers often try their best to MINIMISE their inventory.
      Besides that, do you think Chinese users (China is the second largest silver user) will buy silver on the Comex? Comex silver is silver in NY not Shanghai and denominated in USD not CNY. The Comex also has a maximal limit on physical delivery.

      How about the miners? Do you think a miner will close outright when it suffers a loss? Depreciation and Amortisation are just sunk costs. Miners can linger on for some time.

      Fundamentals work slowly. It is the speculation that decides the price in the short term. Speculation is paper not physical. If you have some basic knowledge about the operation of the Comex and the LBMA, you will know that.

      • Adolf… I gather you were addressing those comments to me. I have read that report and I agree with you on the solar industry as well as the silver industrial market. I have stated several times that INDUSTRIAL DEMAND has not been and will not be the driver of the price of silver in the future… investment demand will.

        If we look at this chart below which you may have already seen, high industrial demand along with supply deficits did not move the price of silver above $5 until 2004 when the deficits suddenly disappeared and surpluses began… amazing aye?

        SILVER MINERS:

        As for the silver producers, I don’t see them closing shop and going bankrupt right off. However, I do see many juniors going that direction as many are now in debt without the possibility of funding.

        Only the marginal (highest cost) mines and companies will close down. Alexco has already reported that they will be putting their Bellekeno mine on care and maintenance this winter hoping prices recover in 2014.

        Moreover, the high cost mines in the larger companies such as Coeur and Pan American may have to be put on care & maintenance as well if prices remain this low or continue to decline.

        While D, D & A – Depletion, Depreciation & Amortization are not actual costs to the mining operations during the period, they represent costs that will impact the company. I gave an example of this in my past article SILVER MINERS LOSE HALF A BILLION DOLLARS:

        Pan American reported $62.3 million for D, D & A, for the first 6 months of 2013 (highlighted in yellow). However, they spent $84 million on Capital for property, plant and equipment (highlighted in red). For clarity, that $84 million was not for purchasing property, rather it was for upgrades and maintenance on their mines.

        So, we can see that they are spending more money on CAPEX for maintaining their mines than they have attributed to D, D & A.

        That being said, these mines can linger for a while. On the other hand, LINGERING at a loss for a year or more will greatly impact silver production in the future.

        Yes, fundamentals work slowly. Speculation drives markets up, down and to insane levels. Unfortunately, the huge growth of the Derivatives Monster has totally destroyed the ability to properly price commodities. In addition, the system has way too many black swans which means a huge re-balancing is coming.

        This is when we are going to see insane valuations for gold and silver due to the fact that the world is currently invested in assets that the market cannot repay or settle in the future. The move into physical assets will make precious metals and their stocks some of the best investments in the future.

        This will not occur due to wild speculation, but rather because the world will be waking up to the fact that they have been speculating in worthless assets in which they assumed safe.

        steve

        • ” I agree with you on the solar industry as well as the silver industrial market. I have stated several times that INDUSTRIAL DEMAND has not been and will not be the driver of the price of silver in the future… investment demand will”.

          And your statement above is backed up by the import figures from India this year. I think most of the increase [a huge increase over last year] is investor demand.

          You may want to disclose to your readers how much Ag India has imported in 2013 as compared to the total world’s production. It is a staggeringly high % of the world’s entire production.

    • Tas… Adolf actually brings up some good points. As for the solar industry, there seems to be a huge glut of panels due to the Chinese cutting prices. I have seen many articles stating that the cost to produce solar panels have come down significantly in the past 5 years. Even though technological improvements have reduced costs, the dumping of inexpensive Chinese solar panels on the market has given a false indicator that prices will continue to decline in the same manner in the next 5 years.

      Furthermore, the optimistic forecasts of the huge leap in solar energy generation by 2020 is based upon the costs continuing to decline. Even though we are going to see more solar power manufacturing in the future, it will be well below the rate many have forecasted.

      The problem with the world today is that it has be designed to run on the JUST IN TIME INVENTORY SYSTEM that Adolf mentioned. While this may be a good system to keep costs down as large inventories hurt the bottom line, it will become increasingly problematic in an falling energy supply environment.

      Tas… at some point in time, institutions, industry, corporations and individuals will be buying silver in mass. They will be doing this more to protect wealth than build inventories. However, I do believe Ted Butler may be correct in that we may also have panic buying in the future that will motivate industrial consumers to get as much as they can.

      steve

    • What information do you have showing that industrial users are NOT stocking up?

  3. the fact that most of the elites are all complicits in the fed ponzi scheme is the thing that really depresses me.

    the great warren buffett openly ridicules gold and goldbugs and cheers the congress to hike the debt ceiling.

    why does this buffett head want so much fiat wealth? he doesn’t lead a extravagant lifestyle and is not good with women? he doesn’t see what the fed does hurts 99% of ppl? if he sees that, where’s his conscience?

    CNBC did a roundtable with rich money managers like drunkenmiller(nice name!). they’re all smirking and embracing no taper: we, the rich own the assets. so they all know it!

    if this world doesn’t go to hell, who deserves to go to hell?

    • I’ve sen a few interviews with Bill Gates. I don’t think Warren Buffet and Bill Gates are as evil satan followers as everyone makes them out to be. They want to give away billions of their fiat for philanthropy.

      However, I do think they are mistaken in their belief that their little club of billionaire buddies can solve all the world’s problems through their genius and the rest of us are supposed to just wait around for instructions and handouts. So I don’t think they really want this model changed or maybe they have a hard time even envisioning a different paradigm.

    • judejin… Warren Buffet is apart of that mentality that believes there are no LIMITS TO GROWTH. This is the same belief the Fiat Monetary Authorities adhere to. As I have mentioned before, Fiat Money derives its worth from a growing energy supply. As the global energy supplies increases, it allows the interest on the fiat monetary system to be repaid.

      However, when the world hits a plateau of energy production, it starves the Fiat Monetary System of fuel. That is why we are seeing so much silly behavior in monetary printing, QE, assets purchases and etc. Basically, the Fiat Monetary Authorities are trying to postpone the inevitable.

      Buffet doesn’t believe in gold because he believes those huge companies that he owns and supports can continue making and selling that CHEAP CRAP forever. Gold would put a LIMIT on growth. These folks don’t like limits.

      Even though Bullard said they can TAPER… they cant. Sure, maybe they will cut a few BILLION at first…. but then they will be forced to do even more.

      QE & Monetary Printing is like SHALE OIL WELLS, once you starting down the path, you can’t stop or the system collapses. If the companies in the Bakken stopped drilling, production would decline 40% in one year. Which means the current 750,000 barrels a day would fall to 450,000 barrels a day in one year.

      GOD HATH A SENSE OF HUMOR…

      steve

  4. Just wondering, how much of the decline in energy use is due to increased efficiency?

    • Yirgach… you bring up an excellent question. I don’t believe there is a great deal of increased efficiency in the industrial sector, but if there is any it may be in the transportation area. If we look at the chart below from the EIA, we can see the fuel consumption efficiencies from the different sized vehicles:

      The black line on 2007 denotes the year they made some changes, so, you will see large adustments in the figures from one year to the next.. However, if we just go by 2008 and after we can see a trend.

      In the small vehicle category, fuel consumption per gallon is actually getting worse since 2008. In 2008, the average was 23.7 mpg, but by 2011 it had fallen to only 23.1. This is probably due to Americans feeling the shock of high oil prices in 2008, switching to higher mpg rated vehicles… but then gradually moving back to more luxury cars with lower mpg rating.

      Skipping over to the Large Trucks, or the Semi-tractors, we can also see that fuel consumption per gallon is also declining since 2008 from 6.5 mpg to only 6.3 mpg in 2011. Of course we don’t have 2012 figures, but I would guess that the degree change in efficiency would not be enough to offset the trend.

      If we look at all three vehicle categories, all of them are showing less efficiency, not more. Thus, the falling energy consumption in the industrial & transportation sectors seems to be due to less demand and usage rather than higher efficiency.

      Lastly, the peak in transportation energy consumption graph at the end of my article corresponds nicely with this chart below showing Peak in U.S. vehicle-distance traveled:

      steve

    • Yirgach, my understanding is that manufacturing is becoming more efficient, however nowhere near enough to offset peak (cheap) oil.

      However, its worth thinking about “efficiency” like a mainstream economist. Any economics textbook will define increased efficiency as being able to do more with LESS human labor such as by automation or removing middle managers etc… So when this happens, manufacturing is left with overcapacity due to ‘demand destruction’ because more impoverished people can’t buy all their shit anymore.

  5. “If you own the physical and look at your wealth in ounces of gold and silver… it doesn’t really matter what happens along the way.”

    While the energy-driven angle of Mr. St. Anglelo’s reports is to be admired, even lauded, as being considerably ‘ahead of the curve’ in the world of precious metals reportage, the failure to extend the analysis of energy-driven relationships from the geospheric to the biologic results in the failure of those insights to provide maximal profit to the reader.

    This is due to the fact that study of the biological sciences is rife with accurate reportage of ‘energy-driven’ relationships – the great majority of which, according to our scientific guides, are variations upon the theme of “host&parasite.” And while there are no shortage of symbiotic relationships to be found within that general heading… the overall conditions of biological life as we humans have inherited and extended it’s principles… is the theft of energy from primary producers by agents whose multitudinous methods of disguising their core mission leaves both political and biological sciences with an identical legacy of bottom line truths.

    To ignore those truths is to trash the benefits that can accrue from studying the data that analysts like Steve provide us. The purpose of quoting his statement above is to show, not a disdain for his thinking, but the dangers of the limitations of a focus overly concerned with a section of the jigsaw puzzle which we gold\silver holders must put together in order to come out whole.

    What happens along the way… will in fact determine the survival of most of us. There will indeed be a brief period of ‘promised prosperity’ in a peak metals market… that we can all reasonably hope to benefit from with our tenacious ownership of the ‘monetary metals’ – but it will go the way of all flesh… and those multi-millions years of biological bottom line – energy of any description will be stolen from it’s producers by those who covet it. Be forewarned… and read on, my friends, with a wariness born of knowledge of the world and it’s ways. Steve is ‘best of class’… but it’s time to ‘get of of school’!

  6. If you could clarify your message into 1 or 2 sentences, what would it be?

    • Sorry, my response was not allowed by something called “mod security”

      [Not Acceptable! An appropriate representation of the requested resource could not be found on this server.]

      Kind of funny… in a chilling sort of way!

      • roguefaction… You bring up an excellent angle. Actually I agree with your premise. By the way, the quote,“If you own the physical and look at your wealth in ounces of gold and silver… it doesn’t really matter what happens along the way” pertains to the paper trading of the metals not the societal, geographical or economical changes that are coming.

        Your description and explanation of those “who will covet our energy in the future” is a bit obtuse. While I enjoy high-quality writing style, sometimes its nice to get down to the JOE-BAG-OF-DOUGHNUTS nuts and bolts explanation.

        I am a bit confused by your statement:

        “the failure to extend the analysis of energy-driven relationships from the geospheric to the biologic results in the failure of those insights to provide maximal profit to the reader.”

        If you are referring to the biologic as it pertains to the whole system, then I believe profits should actually be limited. Nature does not allow profits, rather they are reinvested back into the system cycle. Only humans have this short-sighted selfish ability to think they can take large profits from the earth and create mega cities that behave more like a cancer or return the excrement of their manufacturing & living processess as pollution.

        So, in that regard, I believe if we were really going to include the whole earth living economic system in the equation, then hoping for huge profits in silver or gold is really quite silly & pathetic.

        Unfortunately, the overwhelming majority of those who are holding tightly onto their gold and silver with large dollar signs in the eyes, have no idea about the biological economy. That is why I tend not to write about it. Furthermore, I would bet my bottom silver dollar that most could care less.

        Lastly… tribes, butchers, thieves, kings, corporations & empires have been coveting energy from humans for thousands of years. Unfortunately, this sort of past-time will continue. However, I do not believe the big corporate entities as some in the fringe have forecasted will control it all. The falling EROI of energy will impact the largest corporations the most.

        Anyhow…. I really appreciate your reply and also wanted to let you know that I have no idea what you meant about “Mod Security.” I have a spam filter on the site because I get a great deal of mindless garbage including numerous links. If you were to reply in words and sentences, I don’t think your comment would have been rejected.

        steve

        • Steve…

          [Not Acceptable! An appropriate representation of the requested resource could not be found on this server.] is the actual message received in consecutive attempts to post a response to Webster yesterday – when using my preferred proxy so as to not be naked to the usual suspects of the NSA variety.
          It’s clearly an internal matter to your site’s server which you may not have been informed of previously. The reason that I said the message was sort of ‘chilling’ is that I’m finding it increasingly difficult to post anything anywhere on the web. And while most of these “difficulties” appear on surface as of the “technical variety” I’m now more than half way disposed to view them as simply filters of increasing sophistication by which “tptb” are gradually winding down our ability to speak freely… about that challenges the approved narrative.

          My actual response was this – “Pretty much everybody who comments in the metals media has been bullied\bribed\blackmailed into complicity with the cabal behind the curtains; Steve is one of the very few who strikes me as still being ‘independent’ and uncompromised – which is why I bother to comment here from time to time.

          When he makes a statement which encourages pm holders to let down their guard even for a second… such as that which I quoted – I am compelled to witness to the above truth. There are no safe havens in this storm, EVERYTHING owned by ANYONE in the west will be stolen – one way or another.”

          – which was disallowed when using a proxy – but not when without… I’ll leave up to you to determine whether it was qualifiying as “words and sentences” – I know I had to do some fancy footwork to try and meet Websters’ two sentence limitation – lol!

          Now onto the meat of your reply.

          “Profits” are not and were not my intended target. The ability to make a profit from the wise use of one’s resources and\or intelligence is a bedrock “right” which we need be prepared to ‘fight’ for in order to protect our species against complete devolution.

          Cheating, theft, and the imposition of raw physical power are the hallmarks of our legacy as homo sapiens, directly connected to all of life right back to the bacterial; science has shown us that at every level of the animal and vegetable kingdoms, these attritubes have been primary for millions of years. Rising to a different(might I suppose “better”??)level of socialization seems to be still a bridge too far for us as we enter yet another millenium.

          Some of the worst examples of our human application of these negative characteristics have involved our apparent ‘fatal attraction to’ and ‘lust for’ the shiny metals. You and I have touched base on that subject in other forums, and in other contexts; wherein I have been impressed by your willingness to both teach and learn.

          That is a dynamic combination my friend, all too lacking in the blogsphere as far as precious metals commentary is concerned. It’s a subspace full of self-appointed experts who prey upon the pyschological weakness’s of those who have refused to buy into the MSM fiat farce, and have been paying the price for their disobedience to the moneypower, ever since “twist” took down the sector.

          It’s because I value your site and your observations so much that I will even override my net protocol to comment here once again: I’ve said it before and I’ll say it again – you’ve got the potential to become the goto guy for gold\silver sector stuff. If you choose to leave angles out because you think they don’t appeal to your supposed audience…. you may just be throwing out the baby with the bathwater.

          Making this site an island of full-spectrum sanity and commentary in an increasingly insane and fraudulent blogosphere would be my wish for your future success – and my intution of what will get you there. But what do I know?

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