Economic reality is about to bite – and it won’t matter who’s in power

Charles Hugh Smith highlights two charts from the Federal Reserve that sum up, in the most graphic fashion (literally and figuratively), why all the arguments about Republicans versus Democrats, or socialism versus capitalism, or anything else, are less and less relevant to reality.  Both parties have mismanaged our economy to such an extent that we’re no longer able to avoid the economic hard times bearing down on us – and when they arrive, we won’t be able to afford either party’s pet policies.

Take a look at these charts of total liabilities/debt and federal income tax collected and ask yourself: are these trends sustainable in an economy growing by a few percent a year?  [Click both images for a larger view.]

Federal income taxes collected have practically doubled from the recessionary nadir of 2009: does anyone really think they can double again in the next 9 years?

These geometrically rising trendlines are the acme of unsustainability. The limits have been reached and reversal looms. Ask yourself why multiple bids for real estate have vanished and why the Fed is so anxious to publicly trumpet its dovishness. If the limits were far from being reached, why the tone of desperation?

As I noted yesterday, every injection of stimulus weakens the response of the following dose. After a decade of never-ending stimulus, the positive effects of stimulus have been exhausted. Increasing the stimulus is toxic to an exhausted system pushing its intrinsic limits.

There’s more at the link.

Those charts say it all.  The pattern they portray is simply unsustainable.  It cannot continue:  and, as economist Herbert Stein famously pointed out, in the “law” of economics named for him:  “If something cannot go on forever, it will stop.”

The evidence for this, the fruit of the policies portrayed in those graphs, is all around us – but most of us are refusing to see it, because we’d rather ignore it.  I cite the following recent headlines as evidence:

• Record 7 million Americans are 3 months behind on car payments, a red flag for economy
• Telltale Signs of Recession
• More than 1,500 stores are expected to close this year — here’s the full list
• The Hidden Automation Agenda of the Davos Elite (which has huge implications for the job market, and hence for the need for government support programs – go read all about it)

I’ve said it many times before, most recently just last month.  I’ll say it again.  Get ready for hard times.  They are coming, despite all the froth and bubble on the surface of the economy.  If you think they’re not . . . go look at those graphs again.  Mathematics is an exact, hard science.  There’s nothing fuzzy or wishy-washy about it.  The numbers don’t lie . . . and those numbers are scary as hell.

It doesn’t matter who’s in the White House, or which party controls Congress, or how much we’re spending on defense, or whether or not we have illegal aliens coming across our border. All of those issues are going to be swamped by the economic reality bearing down on us, whether we like it or not – and neither Democrats nor Republicans, and certainly no leading politicians of either party, have shown any understanding of, or commitment to, solving the real problem.

Peter