Another Thursday is in the books and as such it’s a data dump of initial jobless claims and an update to the Federal Reserve’s balance sheet. Despite being several months into the COVID-19 pandemic and the Greatest Depression, we are still unfortunately witnessing over 1 million Americans filing for initial unemployment benefits for the week ending 18 July, as the number was 1.4 million – an increase from the prior week. This is not in agreement with any kind of V-shaped economic recovery. In fact, as we continue to see several states across the country close, re-close, or slow their re-openings, it is likely that the jobs report for the month of July will paint an ugly picture. While the White House may want to cheer the June jobs report, which they did, it may prove to be a premature victory lap, as the reality of the pandemic and depression starts to set in.
As we have noted in previous podcasts, the actions taken by governments and central banks can aid the liquidity issues (at least for awhile), but they cannot alleviate the coming insolvency crisis. The insolvency crisis is waiting in the wings and with it will be the loss of hundreds of thousands, if not millions of more jobs – many of which will be classified as permanent job losses. This was an inevitable outcome for living off of debt and thinking that it was all real and sustainable. Unfortunately, we’re repeating the mistakes of the past, which will only prove to make any economic recovery slower and more painful than what otherwise could have happened.
In other news, the Fed’s balance sheet increased “minimally” by $6 billion from the previous week. However, with Congress set to pass new legislation to extend unemployment benefits and spending to help states and local governments, amongst others, will send the Fed’s balance sheet north of $7 trillion and beyond in short order. In a tit-for-tat response to yesterday’s order from the US State Department ordering Chinese diplomats to close down their consulate in Houston, Texas, the Chinese have ordered US diplomats to leave a US consulate in China. This is the new cold war and tensions will likely remain high for the foreseeable future and this issue will also become center stage politically here in the US during the 2020 Presidential election. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Debt #Recession #USA #China #Depression #BananaRepublic #EndTheFed #Congress #Silver #Protests #Bailouts