Since 2008, the U.S. government and Federal Reserve have been fighting what is literally a second U.S. Great Depression. It’s the reason why so many Americans still feel like the recession never ended; the truth is it never did. The numbers that are used by conventional economists are skewed by mismatched statistics, hedonics and a grossly underreported inflation rate.
Stocks are making all-time highs at the same time America’s poorest have never been more in debt! Our labor force participation rate is at a 36 year low…this truly is the part-time jobless recovery. No matter how much money the FED pumps into the system, it just can’t overcome the fundamental underlying problems. Americans are burdened with too much debt and are not deleveraging. Instead, they are defaulting.
Here is the scary part. Every 7 or so years, the U.S. experiences a recession. Check out this list below from the National Bureau of Economic Research.
Business Cycle Reference Dates
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- April 1960 to February 1961
- December 1969 to November 1970
- November 1973 to March 1975
- January 1980 to July 1980
- July 1981 to November 1982
- July 1990 to March 1991
- March 2001 to November 2001
- December 2007 to June 2009
The last recession officially started 7 years ago, so even if we were living through normal times, there is a good chance a recession is coming soon – or what I would refer to as the next leg down in the current depression.
Either way, the FED has to be asking themselves this: After pumping trillions into the economy — openly manipulating stocks and monetizing our debt — what policies will it use for the next official recession and how much larger will the next downturn be due to the phony recovery?
This scenario on the anniversary of the Lehman Brothers filing bankruptcy no doubt has to haunt the Federal Reserve and Treasury officials.