There has never been a more difficult period in U.S. history to discern the economic times. People don’t understand money. They don’t understand how manipulated our markets and statistics are. These are anything but normal times and you need to protect yourself.

You know by now that I’m no Pollyanna. I don’t trust the Fed or the feds. They have placed us in an untenable position with no simple method of escape. Our current election is like another changing of the guard at Windsor Castle. Bodies move around but everything remains the same behind the scenes.

Please look at the black line on the following chart that looks backward to what is known as the “Great Depression”

This black line shows U.S. national production declining significantly from 1929 to the 1932-1933 time frame. That’s three to four years. It took until 1939 for national production to reach what it was in 1929. The U.S. economy didn’t really get rolling again until WW2.Of course, there was much more than just declining production that made up the Great Depression. There were bank failures, stock market collapses, business failures, and massive unemployment. Here’s a definition of a depression, once again, from last week’s editorial:

A sustained economic recession in which a nation’s Gross National Product (GNP) is falling and marked by low production and sales and a high rate of business failures and unemployment.

Look again at the following chart from John Williams Shadow Government Statistics website.

The blue line shows U.S. production according to historically accurate accounting methods. It is in a spin doctor-free zone. Growth has been in negative territory for the better part of this decade, part of 2004 being the exception. Since that positive blip in 2004, it’s been a four-year downward spiral. It may not be an “officially recognized” recession, but it’s been one nevertheless.It also closely tracks the 1929-1933 time frame, but thankfully shows nowhere near as severe a downturn in production. Still, four years is an awfully long time. Eight years of predominately negative growth is even longer. I’m one of those who remembers the economy as being troubled well before 9/11. This national catastrophe definitely distracted citizens from things economic.Could we be in or close to a classically defined depression when our pols and pundits are just getting around to admitting the possibilities of recession? Stranger things have happened.

There have been a lot of depressions over the centuries. They do not have to be as severe as the Great Depression to qualify as one. My primary point is that we are now in an extended recession with nothing positive on the horizon. This scenario needs to be watched closely as it is definitely not your father’s recession! We’ll talk more about this next week.

Invest Resourcefully,

Rusty

P.S. You might notice the performance of the “monetary metals” – gold and silver – since year 2000. Gold was below $300 in 2000 and now is more than $900. Silver was around $4.25 and now is above $19. I guess they didn’t take their cues from the dog-and-pony show of Greenspan, Bernanke, and Co. Monetary metals and tangible assets sniff out economic and monetary abuses.

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