Eight Charts Showing the Real State of the American Economy

Jim Rickards was interviewed recently by Money Morning, and he presented 8 must-see charts …

1. Bang for the Buck

The bang for buck has plunged in terms of how much stimulus federal spending has on the economy … going from $2.41 per dollar spent in the 1950s and 60s to 3 cents per dollar now:

Of course, the government has been spending money on the wrong things … which don’t really stimulate the economy.

2. Money Velocity

The velocity of money is collapsing as fast as during the late 1920s … right before the start of the Great Depression (due to bad Federal Reserve policy):

3. Misery Index

The “Misery Index” – unemployment plus inflation – is worse than it was in the late 1970s:

4. Misery Index – Part 2

And worse than it was during the Great Depression:

5. Balance Sheet Leverage

The Fed’s balance sheet has exploded … and the Fed’s debt-to-capital leverage ratio has grown from 22-2 to 77-1:

6. Bank Debt Versus GDP

Bank debt is skyrocketing also, and is now growing 30 times faster than the economy (which is important since excessive private debt causes depressions):

7. Stocks Versus GDP

Stocks are now more than twice as overvalued – in terms of stock market capitalization versus GDP – as they were right before the Great Depression:

8. Dollar As Percent of Global Currency Reserves

And the dollar is declining rapidly as a share of global currency reserves:

Articles by: Washington's Blog

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