It's a vicious cycle... perpetuated by fear. The economy will turn around when the average US consumer isn't afraid to spend their paycheck on a computer.
I think that type of thinking is wrong and exactly why were in this depression (basically been pushing it back while having a snow ball effect over the decades, pretty much when nixon in 71 got us out of the gold standard and got the printing presses running).
I also think confidence charts means nothing in the real world. How does confidence help an economy when its based off a highly flawed system to begin with? Such as the keynesian economics.
That's what I think is messed up. The more the consumer spends of the money that they dont already have (credit cards) means that our fake GDP rises since its based on 70% of consumption (see the correlation there?). So it gives the illusion that our economy is recovering, but not this time as the debt is WAY too high in the trillions now. Before 30 years ago we were printing millions of dollars then in the 90's to Bush's era we've been printing billions and now were dealing with Trillions!
Also the stock market such as the nasdaq, dow jones, comex, forex is highly manipulated by goldman sachs and its revolving door with washington/feds generally.
I think that Keynesian economics is generally faulty from the beginning. Putting interest rates near 0% or extremely low so it teases the public to borrow/spend more (credit card again) and when credit contracts the Feds print money to correct the economy? Which they call quantitative easing.
That is messed up. I follow the Austrian economics where savings and producing and exporting goods should be higher in the ratio than importing.
70% consumption and 30% GDP basically shows that the United States imports 70% of its products/goods and exports 30%. So our real GDP is about 30% of our fake GDP!! Thats crazy.
I'm into history and every history book you read about any civilization over the 6000+ years that has printed money away from gold/silver standard it always collapsed. Generally the average paper money lasts about 72 years before a collapse and in the United States case is very rare because its in a different situation which is a world reserve currency. Just about everyone hoards our money. So its kind of in a weird/awkward situation but I think it'll be corrected by all the other nations slowly moving away from the dollar and into gold/silver as the reserve or their basket of currencies as the new reserve minus the dollar.
Many top economists such as Marc Faber, Jim Rogers saids that their 100% sure that the United States will see hyperinflation in 5-10 years! And I believe it.
G8 summit already called for a new reserve currency and I wouldnt be surprised if China, Russia, India, South Korea, Brazil, Japan is all dumping their U.S. bonds behind everyones backs keeping quiet.
One interesting thing on the side (you may be skeptic about it as I am 50/50 on it but rather entertaining) is that the guy who runs the webbot project expects to see a problem in the us dollar around oct-nov of this year and runs through nov. of next year before we hit hyperinflation.
But you are correct in your statement that the citizens are afraid of spending their money right now. That's why were going to see stagflation first than anything where an economy doesnt grow anymore and inflation starts to set in.
Alot of Americans right now are hoarding their us dollars and either saving it (30% up) since 3 years ago which was -6% lol, or their paying off their mortgages/credit card debts and just not spending any money right now (cash or swiping credit cards).
And its just the beginning of the death of the dollar. Just take a look at the new reserve currency prototype that Medvedev just revealed a few days ago.
