OUR ECONOMY IN TWO PICTURES:

CLICK THE CHARTS TO VIEW LARGER PICTURES

If ever two charts told the story of an entire economy - make that a World Economy these two chart do so. The first is "high powered money" the Fed is pumping into the system, or QE2, or the "Adjusted Monetary Base" or, better known as the FED'S BALANCE SHEET.

This is money the Fed has been pumping into the banks, as it acquires more and more debt. It is both a measure of the money that has been pumped into the risk markets by the banks, and a measure of new debt accumulated by the Fed. Look at that graph. Read it and weep.

The second is a measure of the MONEY MULTIPLIER. This measures healthy lending and borrowing that leads to plant creation, job creation, goods and service creation. The hoped for result of the first graph is a doubled explosion on the second graph. In a healthy economy every dollar pumped in by the Fed should create 2, 3 4 times the economic activity.

In our economy, as you can clearly see, no matter how much the Fed pumps in, there is no real economic activity.

Why then are corporate profits so fantastic? Because small firms are disappearing into giant Global Mega Corporations which function as global oligopolies, creating wherever labor is cheapest, and selling where goods are most expensive. And as world governments print more and more money to cover greater and greater debts the beneficiaries are those closest to the printing presses, which are the financial conglomerates that get the money for free - and the Global Mega Corporations with close ties to the financial conglomerates.

But they have to sell to somebody, right? Yeah - that's the rub. We're still at the tail end of a 40 year boom built on debt. People still have money. So things seem okay. But look at the two graphs above you'll see exactly where we're headed.