Plunging Into Difficult Economic Times: “Worst Global Dollar GDP Recession In 50 Years”

by | Dec 14, 2015 | Commodities, Conspiracy Fact and Theory | 28 comments

economic-storm

This article was written by Tyler Durden and originally published at Zero Hedge.

Editor’s Comment: Those who follow this website and others who cover similar information have known of these trends for a while, but it is revealing nonetheless to see how deep the recession has reached in raw numbers. The role of the Federal Reserve has been disastrous for the American people, and the more that its chairmen and chairwoman intervene – in either direction – the worse it seems to get.

If the graph can be interpreted literally, we are clearly headed for the most severe restructuring of wealth and power since shortly after the last world war. How long until the next war heads our way?

The Truth Comes Out: “This Is The Worst Global Dollar GDP Recession In 50 Years”

by Tyler Durden

The following brief summary of the global economic situation should, once and for all, end all debate about whether the world is “recovering” or is now mired deep in a recession.

From DB’s 2016 Credit Outlook

Debt has continued to climb since the crisis with Global Debt/GDP still on the rise, with no obvious sign of when this rise stops for many major countries. Indeed much of the post GFC increase in debt has been raised on the back of the commodity super-cycle which is currently unraveling in EM and the US HY market. Outside of this, the US overall has de-levered to some degree but even there debt levels remain very high relative to all of history excluding the GFC period.

With limited tolerance from the authorities to see defaults erode the huge debt burden, the best hope for a more normal financial system is for activity levels to increase so we can slowly grow the economy into the debt burden. However this requires strong nominal GDP growth and we continue to see the opposite. The left hand graph of Figure 6 looks at a global weighted average of Nominal GDP growth in the G7. On this measure we are still seeing historically weak activity.

In dollar terms the situation is even worse. The right hand chart of Figure 6 shows a much more volatile global NGDP series which converts the size of each economy in dollar terms and then looks at the growth rate YoY. With the recent strength in the USD we are seeing a huge global dollar nominal GDP recession – the worst since the 1960s. Whilst this might not be a series that is followed, it does show the sharp contraction of dollar activity levels in the global economy over the last year or so which has to have ramifications given it’s the most important global financial market currency.

What DB did not point out but is obvious, is that the synthetic dollar squeeze of the past year has made the global collapse now even worse than what was experienced during the great financial crisis, and it is getting worse by the day.

And so, with the world trapped in the worst USD-based GDP recession in 50 years, here is the question for Yellen: with every other central bank easing and the Fed tightening, what happens to i) the USD in the future and ii) to future world growth in USD.

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    Comments

    28 Comments

    1. Justonemore

      You mean we are not in a recovery?

    2. eppe

      Hope all are prepped, we might be in for a long hard ride…

      Eyes open, no fear…

      • durangokidd

        “What DB did not point out but is obvious, is that the SYNTHETIC DOLLAR SQUEEZE (my caps) of the past year has made the global collapse now even worse than what was experienced during the great financial crisis, and it is getting worse by the day.”

        The dollar is the weapon of choice. The FED is at war with the BRIC’s. Guess who is kicking ass???

        Don’t under estimate these mfkrs. They will make you look stupid. They know EXACTLY what they are doing. They want you to think they don’t. πŸ™

      • GMAFB

        If you aren’t prepped by now you’re just pissin’ in the wind…

        Same shit, new day…

      • Marcus

        Personally, I never feel like I’m prepped enough.

        • Someone else

          That’s our motto. Never enough….Merry Christmas everyone!!

          • Rebecca

            Just. Not. Ready.
            It gets harder all the time. I can withstand some things and not others. Every time I turn around I see another important need.

        • GMAFB

          Then you’ll never be ready. Like everything, preparedness is a state of mind.

          Same ‘ol shit, just another day…

    3. rellik

      It would be more useful if the graphs were up to date, so we don’t have to interpolate off graph from 2008, and 2010. Today is 2015. We aren’t seeing the damage the Obama Regime has done. Using the graphs to infer todays GDP(G7) to world growth is iffy at best, given the artificial interference of the FED, EPA, Saudi oil dumping, Wars, Chinese banking system, Russian sanctions, Iranian oil coming back to market, et al. Things are much more dangerous and dynamic since the Obama Regime set out to destroy America as we knew it.
      I’m looking forward to $1 gas and $2 Diesel. World change is in the air.

    4. john stiner

      Since the debt is just monetized with printed paper currency, then it is meaningless. Just snap your fingers and the debt disappears.

      • USMC1982

        Yes, but so does the buying power of the dollar disappear.

    5. Kevin2

      I have no economics education but I’ve read a bit on the subject. I was under the assumption that in a dollar contraction they had the printing press available without the instant inflationary spiral. I thought that its the continuing of too much M1 that their out of ammo on.

      • durangokidd

        K2: Dollars are being destroyed and sucked OUT of the system at an amazing rate. That is why they call it a “credit crunch”. πŸ™

        • Old Nam vet

          damn DK I think my light bulb just went on πŸ™‚

        • Kevin2

          DK

          I understand that. So why would they not QE 4,5 or 6 at this point and inject more in on as best they can compute a one to one basis?

    6. Marcus

      In the current financial system, debt is considered an asset. wrap your head around that one.

      • rellik

        You should explain further. In another life I was a business major. I switched to STEM majors when I saw all that all the guys with a BA degree got laid off.

      • Sailing Jim

        So I’m actaully rich!!

    7. Pat

      Been a long time coming and I’m not sure how they have kept it from sinking yet. War follows all financial crisis. This does not end well

    8. Jim in Va.

      The old adage: Don’t spend what you don’t have.

    9. PO'd Patriot

      Definitely FUBAR.

    10. Asshat

      People just keep using the plastic cards and making the minimum payment till they get laid off and then default quickly. I bet this is the majority of people because I’ve seen people working jobs that pay squat and they are driving new SUVs and wearing designer clothes. They don’t have the $ for this shit but they live like there is no tomorrow. The debt bomb is either gonna blow up or the creditors are gonna extend credit and forgive debts. They are not gonna stop kicking the can so you know what is gonna happen.

      • Rebecca

        I have seen those. Tend to live with others like mom n dad and their check goes for a car.

        • AGENT SKINHEAD

          That’s because of the screwed up system, they caint afford a mortgage. It friggin’ sucks.

    11. sixpack

      OFF TOPIC:

      Someone please go read this article and tell me if I’m wrong. The article says this guy just “found” a .22 hole in his mattress and wall. He also claims he found the spent .22 casing in his room as well. He then told on the “gun-nut” next door. The police found 114 guns in the neighbor’s apartment.

      The uncle says it was a setup. I agree, but I don’t think obama himself did it. I think the neighbor and the cops got together and fabricated the story to raid this guy. The spent casing would’ve had to be shoved through the hole after the shot. It could not have followed the slug through the wall to be “found”.

      I think the guy who says he found the bullet holes, slug and casing in his bedroom is a liar. This might be how they start confiscating weapons stashes, before we realize what’s going on. 114 legal guns gone in one swipe.

      Here’s the link. AM I WRONG?

      ht tps://www.rt.com/usa/325939-guns-arrest-thanks-obama/

    12. ponomo

      How is a loaf of bread only $3.50 fed notes?

    13. Frank Thoughts

      It is always the hidden in plain sight trends that people miss time and time again. We are currently in a long-term strategy to keep the dollar at the centre of the global economy. This strategy had two parts: the first was to cheapen the dollar in order to encourage industries to move out of the US to Asia; the second part was to export the debt economy to the rest of the world. Both these goals have been accomplished: all the dirty industry has moved to Asia and all the ’emerging’ economies are mired in debt denominated in US dollars.

      This now means the final coup de grace is upon us: let the dollar rise in value. This will create a tsunami of wealth heading towards the US, it will make all global products and imports very cheap in US dollars, and it will re-establish the world as America’s workshop providing all the goods and services to support the American standard of living (cheap oil and gas, cheap consumer goods, etc.). Keep in mind: all the global institutions work on the dollar. Those parasites are not going to wipe out their own wealth.

      Another hidden trend is the Islamification of finance. Quietly and stealthily, people have been trained to dislike interest rates. This is a core component of Islam: usury is considered haram. Global finance is moving from the Jewish usury model to an Islamic model of no real interest rates charged.

      To summarize, the US dollar will come back on top, and the US will lead the world in an Islamic-friendly financial model of low or no real interest rates (relative to inflation). It is the Saudi business model: no interest rates, most of the population dependent on the beneficence of the ruling class (EBT, welfare etc.).

      • Kevin2

        Frank Thoughts

        And the Rothchild Warburg banking institutions just disappear?

        I can’t see a sustainable system where the world continues to accept the US fiat dollar domination. When the US has to use the military to force the continued use of the USD its days are numbered. Its like the Lincoln statement about fooling people.

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