Author of Be Ready for Anything and Bloom Where You’re Planted online course
(Dec. 26, 2018) The preliminary numbers are in and it appears that Americans exceeded last year’s shopping frenzy with an even more extravagant one this year. Mastercard says that spending was up 5.1% over last Christmas, which brings us to an astronomical $850 billion spent between November 1st and Christmas Eve.
Of these shopping sprees, online sales increased by nearly 20%, which means that we could soon see another wave of brick and mortar closures, just like last year. Amazon pretty much owned Christmas, with a “record-breaking” holiday season, reporting one billion items delivered for free.
Three times as many purchases this year were handled by Alexa, too, which means buyers didn’t even have to type in a credit card number. “Alexa, find me a bankruptcy attorney.”
So, even though Americans blew through $850 billion dollars at Christmas, this may not actually mean that the economy is on the upswing. All the problems there before the holiday didn’t just go away.
All this spending is good news for the economy, right?
Wrong.
Before you get too excited thinking that all the negative predictions are just hogwash, Zero Hedge puts the spending binge into alarming but unsurprising perspective.
But though analysts might be tempted to cite holiday spending as an example that consumption is stronger than the hard and soft data would suggest, and that the mighty US consumer just might come through and save the US economy from a late-2019 or early-2020 recession, there is one thing to consider: As the latest raft of spending data revealed, spending outpaced incomes once again in November, sending the savings rate lower, suggesting that this latest consumption binge was largely fueled by debt.
In other words, analysts who interpreted these strong holiday sales as one last binge before the end of the business cycle might soon be vindicated. (source)
So, in reality, what seems like a bunch of prosperous people going out and treating their families to well-deserved gifts and holiday joy is just the opposite. This Christmas was most likely an example of people who couldn’t afford to spend saying, “to heck with it” and maxing out credit cards that they may never be able to pay off.
All of those problems from before Christmas didn’t just disappear.
Right before the holiday, I wrote an unpleasant article about 8 worrisome signs for our economy. These things didn’t magically disappear because it was Christmas and people blew their budgets. After the article, the stock market plunged even further, making it the absolute worst Christmas Eve in market history. We’re talking Great Depression-era lows.
What’s more…and this should keep you up at night…President Trump had Treasury Sec. Steve Mnuchin summon heads of the 6 largest banks in the country for emergency calls on Christmas Eve.
Brian Moynihan of Bank of America, Michael Corbat of Citigroup, David Solomon of Goldman Sachs, JPMorgan’s Jamie Dimon, James Gorman of Morgan Stanley, and Tim Sloan of Wells Fargo were all contacted.
According to The Street, it’s all good and there’s no need to worry.
U.S. Treasury Secretary Steven Mnuchin said Sunday that he held individual calls with CEOs of the nation’s six largest banks, all of whom said their institutions had ample liquidity for lending to consumers, businesses and all other market operations despite the recent market turmoil.
The unusual statement, issued via the Treasury Department’s verified Twitter feed, also noted that Mnuchin would chair a meeting of the President’s Working Group on Financial Markets, which includes the Board of Governors of the Federal Reserve system, the Securities and Exchange Commission and the Commodities and Futures Trading Commission.
“We continue to see strong economic growth in the U.S. economy, with robust activity from consumers and business,” Mnuchin said in a statement. “With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS and other critical functions within the department.” (source)
Mnuchin says everything is just fine but his statement actually made people more concerned than they were in the first place.
This conciliatory statement just made everything worse.
After Mnuchin’s confirmation of ample liquidity, the reactions went something like this:
To which, the collective response from the whole world seemed to be: “Wait, who said anything about not having ample liquidity?”
Mnuchin also said that the major banks “have not experienced any clearance or margin issues and that the markets continue to function properly.” Again, since few expected otherwise, the “clarification” from Mnuchin only seemed to sow more fear and confusion.
Mnuchin was scheduled to hold another call with the President’s Working Group on financial markets – commonly referred to as the “Plunge Protection Team” – which includes the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodities Futures Trading Commission. He said that the FDIC and the Comptroller of the Currency might participate as well. “These key regulators will discuss coordination efforts to assure normal market operations,” Mnuchin’s statement said.
The curious statement intended to reassure the markets prompted the opposite response. “This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing,” Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. “Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve. We do not see this type of announcement as constructive.” (source)
Now, people in the know who may not have been particularly concerned have questions. Lots of questions.
President Trump’s Christmas message was certainly not uplifting.
The holiday greeting from the President included a few words about his displeasure with the Fed. Not only did he say he lacked confidence in Fed Chairman Jerome Powell, but he had a few other choice words about the increase in interest rates.
“They’re raising interest rates too fast, that’s my opinion. I shouldn’t have confidence. They’re raising rates too fast because they think the economy is so good. But I think they will get it pretty soon. I really do,” Trump said, a day after the Dow lost more than 650 points and fell 2.9 percent — the worst Christmas Eve performance ever.
“I mean, the fact is that the economy is doing so well that they raised interest rates and. President Obama had a very low-interest rate. We have a normalized interest rate, a normalized interest rate, it’s good for a lot of people. They have money in the bank, they get interest on their money,” he said. (source)
Some economic pundits see the 7th rate increase since President Trump took office as a sign that the Fed is deliberately trying to crash the economy and show Trump who is truly in charge.
And all of this isn’t affecting only poor people. The richest folks in the world lost more than $550 billion in 2018. Of course, it isn’t going to affect them like a similar percentage of wealth will affect us normies, but it’s still a startling sign of economic changes.
Things aren’t looking good today.
And as far as this morning goes, things are NOT looking up in the markets on the day after Christmas. Markets in Europe seem to be bracing themselves for upheaval today and stocks in China have already fallen. Bloomberg reports that US Futures are also looking shaky.
Let’s cross our fingers that things pick up throughout the day.
The entire thing is psychological warfare, according to Brandon Smith of Alt-Market.
…the goal of economic subversion is to break down the human mind and change it into something else; something less human or, at the very least, something less rebellious. One can only control people through debt and false rewards for so long before they start to recoil and revolt. Economic collapse, on the other hand, can change people fundamentally through persistent terror and through tragedy. Through trauma, the globalists hope to make men into monsters or robots.
The current system was never built to last. Our economy is designed to fail, yet few people seem to question why that is? They tell themselves that this is because greed has led the money elite to self-sabotage, but this is a fantasy. It is not just that the system is designed to fail, but that it is designed to fail according to an organized timetable. (source)
We’ve seen exactly this happening through the writings of our friend Jose, in the articles where he shares how the collapse of Venezuela went down. Actually, quite a few of the things that Smith writes about in his article can be clearly witnessed in the fall of Venezuela, right down to the replacement of the national currency with a government-controlled cryptocurrency.
What can you do?
This is the worst time possible to dig yourself further into debt. We’re on the brink of catastrophe unless a bunch of rabbits get pulled out of a bunch of hats. And even then, with the astronomical national debt, it would just be kicking the can a little bit further down the road, like paying off all your overdue Mastercard bills with your shiny new Visa.
My suggestions are this:
- Reduce your fixed expenses.
- Build a stockpile as fast as you can.
- Live beneath your means.
- Know what to do immediately in the event of a market crash.
- Learn to be a producer instead of a consumer.
Find as many ways as possible to reduce your reliance on the system. I think we’re in for a bumpy 2019, but if I’m wrong, none of these recommendations is outrageous. In fact, all of them will increase your quality of life. So, what can it hurt to be ready?
Here’s hoping it will all be unnecessary.
Are you concerned about our economy?
What do you think about the currently shaky market and the manipulation by the Fed? What are you expecting in 2019? Share your thoughts in the comments below and let me know.
About the Author
Daisy Luther is a coffee-swigging, gun-toting blogger who writes about current events, preparedness, frugality, voluntaryism, and the pursuit of liberty on her website, The Organic Prepper. She is widely republished across alternative media and she curates all the most important news links on her aggregate site, PreppersDailyNews.com.
Daisy is the best-selling author of 4 books and runs a small digital publishing company. She lives in the mountains of Virginia with her family. You can find her on Facebook, Pinterest, and Twitter.
That’s the same thing everyone should always be doing, so what? We’ve had 4 interest rate raises in order to slow the economy and prevent an overheat, according to the FED.
Home prices are controlled by interest rates and the pace in increase is finally slowing. That’s OK. It’s very hard to “crash” a housing market that has low inventory. It’s very hard to have a foreclosure wave with 3.7% unemployment. Housing needs a breather and is getting one.
Main Street is doing fine, Wall Street is adjusting to the FED withdrawing some too easy money. Remember when everyone said stocks were getting ahead of themselves? Stocks always overdo on both ends, going up and going down.
This isn’t the end of the world, or even a warning of imminent recession.
The spending isn’t built on stupidity but confidence. People are confident they will have a job for the first time in years. Enjoy.
The dow just recorded the biggest point gain in history. (Not my words. MarketWatch). So the worst December since 1931 and still in December, the largest gain. Madness. Unpredictable. Volatile. What is really concerning is out here in the rural area, the livestock auctions are doing strange things. Livestock is selling at rock bottom prices. People say they can’t afford to feed them. Big boar hogs going for $5 a truck load. ? That is ridiculous. The big buyers are not buying. not sure how this is going to unfold.
You think this might be linked to the trade tariffs laid onto China trade? Pork, in particular, is a major export to China and the Chinese have responded to Trump with a large added tariff. No market, low auction prices.
Since I’m poor already and don’t see my situation improving, I’ve been working on all of these things for a while.
I’ve known the economy was in trouble for a long time. People just don’t want to see it.
Love your blog, and Daisy!
(sic) on a sidenote, people paid good money for Amazon’s Alexa/Dot, one of the most popular Christmas gifts, to record every conversation and habit inside their home.
(sic) means stoopid, as in to chuckle, snort, suppress a laugh.
Makes you wonder what was not comprehended. Since OP seems to like the Oxford socialist writers, maybe H.G. Wells story “The Time Machine” portraying prople as chattel is mission accomplished.
Imagine a cow on a beach blissfully chewing its crud watching a tidal wave approaching.
sic
No, (sic) does not mean “stupid” or “funny.” When Writer #2 is quoting Writer #1 — and Writer #1 made errors in grammar, spelling, punctuation, capitalization, or factual errors — Writer #2 uses the term (sic) after the quote to indicate “This is Writer #1’s mistake, not mine.” I am bothering to explain this to you since you seem to be insulting Daisy about… something.
such a true statement John
lol…judging the economy based on the stupidity of Amereika? Not a good idea
Very solid advice, Daisy. I have been unemployed for over a year now, due to health reasons. I am finally being released to go back to work in February-and I can’t wait!! Although I have managed to keep everything paid-that isn’t paid off! Nothing is better than having all of your bills paid in full, with cash in the home safety deposit box. The good part of this austere living is that I have learned to live on next to nothing. It can be done!
I
Americans “Blew” $850 Billion? When did Americans, spending THEIR OWN MONEY in a manner of THEIR OWN FREE CHOICE come to be called “blowing it?” It’s called a Free Market Economy Ace, the best system on Earth. Apparently the author, like all liberals, thinks she’s a better judge of how money should be spent than the persons who earned it.
That was neatly put! I tend to agree: the article rather rubs me the wrong way too. It looks like the same people who were calling prepping ‘hoarding,’ doesn’t it?
I’m a senior widow on a fixed income, as in fixed low, I’m poor as a churchmouse, though I own my land outright, and I spent my butt off this fall and winter anyway and I’ll keep on doing it as long as I have plenty of credit to stretch! Amazon, True Leaf Market and Patriot Supply are going to see more business from me than ever as long as I can get away with it, not only for food but for everything that helps me to produce more of it for myself at home.
Because I’m a prepper, that’s why. Every old country wife has been a prepper since the beginning of history, else the rest of the family would have starved every winter; there’s nothing new about common sense. I’m looking at that Grand Solar Minimum heading for us, that has already knocked over about a third of everybody’s food production and there is one thing of which I *can* be reasonably certain: food prices are going to go up, a lot, every year – exactly as they have been doing already, as any food shopper ought to know by now. This has nothing to do with ‘the economy’ because we can’t do anything about natural solar cycles – but try to prepare for them.
What *does* have to do with the economy is this question: how are we, and our animals and families (notice I put the animals first:)) going to eat what’s sitting in our banks if all of a sudden we cannot get to it in order to spend it? If indeed trouble is coming down the pike, maybe we’d better spend some money while it’s still worth something, particularly if we’re not already well-provisioned against deprivation? Most people are not. For all we hear about ‘preppers’ and their vast pantries, most Americans do not have more than a week’s worth of food in their homes and most people under 60 don’t know much about what to do with what they have either.
‘Debt,’ just like that sinkful of dirty dishes we haven’t got round to, is going to be there waiting patiently for me no matter how long I decide to wait to finish paying it off but at least my animals and I are going to eat in the meanwhile and stay healthy with the natural medicines and supplements I never run out of. If those basics are seen to, one can of course, ‘live on next to nothing,’ but I wouldn’t suggest trying it if they’re not. If you depend upon yourself, on the efficiency and power of your own body and mind in order to live, you don’t put off taking care of them until the MSM tell us it’s safe to start again.
I’d be interested in seeing what kind of ‘gifts’ Americans spent all those billions on this year. I’ll bet a lot of them were more practical, useful items this time. ‘The People’ aren’t all fools.
A person does not need to be a “liberal” to recognize when someone is spending his money foolishly. Is a person entitled to spend his money foolishly? Sure, as long as he doesn’t afterwards beg his relatives and friends (and the goobermint) for money to pay his rent, utilities, gas and groceries, medical bills and student loans.
Liberals don’t spend their own money, they spend other people’s, including yours and mine, on some seriously stupid crap.:) How does the author know if individuals are spending their money ‘foolishly?’ How do you know it? We do know without doubt that our government is spending it foolishly and sticking us with the check. That’s our real pressing problem, one which this article’s author chooses to ignore.
Do you think we’ll ever be rid of the ‘beggers’ as long as we’re forced to give them what they want, through tax hikes forced upon us at gunpoint? There’s an army of them out there already and they’re the ones to worry about, not your own (hypothetical) relatives, who at least are less likely to trash and loot your business and physically attack you for what’s in your handbag.
Do you happen to remember a few years ago, what happened when there was a ‘glitch’ in the food stamp processing system? Stores were trashed and looted all over the country for no more than a two or three day inconvenience. You’re not going to get through to that bunch with stern written lectures on financial prudence: most of them are functionally illiterate anyway, including millions of illegal aliens, all of whom are receiving social benefits at tax-payer expense.
If we’re soon to have more of those system breakdowns, I’d suggest buying more ammo. You can live with a bit of credit card debt but you may not live at all if you haven’t seen to adequate personal security however you can.
This comment goes with a former post. You said you dry your hair before going out and wash it less often to avoid catching cold. I thought you sounded like my mother who was born over 100 years ago. At 65 I am learning that my mother was right again. I walked the dog in my sandals the other day. And I wasn’t very well dressed. It was cold and my feet got cold. I’d been fighting a cold for about a week, taking probiotics and elderberry extract. The cold caught up to me on Christmas Day and I’ve been sneezing my head off ever since. The voice of my mother in my head told me that I should have had my socks on.
Hello Daisy, One of the tips you gave was to be producers not consumers. Can you give me an picture of what that actually looks like. Can you give me a list of producer ideas? Thanks Daisy, I really like your blog because it is not grounded in insanity!