The Watchman Letter: The US Economy Reality Check, Fiction VS Reality

Today the Global Stock Markets will be up because President Trump is working out a proposal with China to end the Trade War. This is a good thing because Trades Wars can escalate to Military Wars. Yes, this last minute Trade Deal talk is totally political with the Midterms next week. With investors seeing their portfolios recover from their losses from October. The Financial Media's narrative has been the Global Economy is slowing because of the Trade War. It is true that Trade Wars are never good for the economy, But the real problem is the $275 Trillion of Global Debt.

Fiction VS Reality

Fiction: The US Economy is recovering and growing.
Reality: The US Economy is still in a recession and entering Stagflation.

Fiction: The US Inflation rate is 2%
Reality: The US Inflation rate is between 7% to 10%

Fiction: The US GDP is averaging 3% for 2018.
Reality: Since 2000 The US GDP average is -4% when you subtract the the real inflation number of 7%

Fiction: The US Unemployment rate is 3.7%.
Reality: The US Unemployment rate is 16%

Fiction: Americans believe the Economy is improving because the stock portfolios have increase 2 to 3 fold since 2008 and think that their wealth has increased.

Reality: The Central Banks intervention of Historical low interest rates, Asset purchases and $20 Trillion of stimulus has cause multiple bubbles in the Real Estate Market, The Bond Markets and the Stock Markets. This Wealth Effect is based on an increase paper derivative values. which at any moment could be cut in half with another Stock Market Correction.