Economic Cannibalism and Perception Prison

June 2, 2015

Sign Up for Weekly Insights

Keep abreast of the latest changes in the markets and the economy as a whole by signing up for the Weekly Insights newsletter. Every week, Chris Belchamber tells you what’s on his mind when he’s thinking about his clients’ investments. Our blogs, emails, and postings on social media provide key insights as well as updates on strategies, backed with cutting edge research explained in terms investors can understand quickly
[ws_form id="2"]

The heading chart shows two different pictures of the US economy. Which one are you in?

Even in the higher chart above the economy is performing very poorly relative to its long term trend.

A simple log chart of real GDP by Douglas Short here, shows actual growth 14.1 percent below trend, the largest negative spread in the history of the series. Unless you are on the sell side of Wall Street, you can probably see that disconnect.

Markets are highly distorted by the futile (for the economy) policies of QE, as liquidity is being sucked into financial assets and never reaches the real economy. This is the liquidity trap. However, as bad as this is, it still disguises many other distortions.

Thad Beversdorf has done a great job of challenging even this poor showing. What he reveals is that the economy has now become a system of “economic cannibalism” ever since 2008. He has convincingly explained that a story is being told about the economy, and without challenging that story there is a significant risk of becoming a prisoner of perception management.

The article is well worth the read as it makes a great many excellent points, and the charts he produces are very significant perspectives. This is an excellent piece for those who are prepared to be open to Socratic questioning of what we think we really know.

Here are just some of the key quotes:

“..  the idea that perception is reality is a force to be reckoned with in that perception not only deceives but can create a temporary self fulfilling prophecy.  This is the very basis of the danger of perception.”

“The very question of how is it that our ‘capitalistic’ society has become so seemingly unbalanced highlights the dislocation between perception and reality.  Very simply, our society is no more capitalistic than it is democratic.  This is where the effort to understand and be aware is an obligation of citizens.  To be a wantonly foolish citizen is to be an immoral citizen.  If we hope and expect to have a fair and just society, which does include the economy, we must work for it, that is, we must earn it.”

“By simply accepting the story as told without regard to integrity of truth we allow ourselves to become feed for those controlling the story and thus the system.  That is, our sweat equity becomes their wealth, our might becomes their weapon and our efforts become their strength.  In effect those controlling the story eat the just rewards of all those around them.  And that is exactly the system currently in place.  You will find it impossible to reconcile the description of the existing system against the nature of capitalism.  The two systems couldn’t be further apart, in fact, each is the antithesis of the other.”

More Info


Start Today

Investing like the best can lower your stress and risk levels while bringing you higher, long-term returns. It can provide a stable platform for planning and give you more financial security now and for the rest of your life. Let’s get started.

[ws_form id=”2″]