More government spending + Increasing debt + massive deficit financing + higher taxes + enormous money printing = double-dip recession… who knew?

Well, we did.

This week we got preliminary numbers for the GDP of the UK. They came in at -0.2. This means that the UK has now had two negative GDP quarters which is the textbook definition of a recession. From the Report:

  • The chained volume measure of GDP decreased by 0.2 per cent in Q1 2012
  • Output of the production industries decreased by 0.4 per cent in Q1 2012, following a decrease of 1.3 per cent in the previous quarter
  • Construction sector output decreased by 3.0 per cent in Q1 2012, following a decrease of 0.2 per cent in the previous quarter
  • Output of the service industries increased by 0.1 per cent in Q1 2012, following a decrease of 0.1 per cent in the previous quarter
  • GDP in volume terms is flat in Q1 2012, when compared with Q1 2011

[emphasis ours]


It’s worth remembering what we predicted last year many times about the UK heading back into recession:

Back in early June 2011 we wrote:

Whilst it isn’t a downgrade or even putting the UK ‘on watch’, it is a shot across the bows of the government’s deficit/debt reduction plans. And as we’ve pointed out before the UK is pretty much at 0 growth when measured properly. We predict that by the end of the year the UK will officially be back in recession – leaving Osbourne et-al cratching their heads as to why they can’t ‘grow’ out of the problem of too much debt.

[emphasis ours]

Back in late June 2011 we wrote:

We’ve been saying for a while now (like here and here) that not only is the UK in a recession when measured properly, but that by the end of 2011 even the official numbers will reflect this. Well today we got a report out from the CBI on retail sales growth – or lack thereof as the case maybe.

[emphasis ours]

Back in July 2011 we wrote:

That roll-over in Q2 GDP has the UK heading right back into re-recession – we stand by our predictions made here, here and here that by the end of 2011 the UK will officially be back in recession.

[emphasis ours]

In short we were dead right. It now looks like the recession officially began around September/October of 2011. But way more important than the fact that we were right is the ‘why’ we were right.

And the answer to that is pretty simple. Contrary to the faux-meme, that the Tories are some how slashing spending/debt, and that is the cause of the recession, the truth is in fact the exact opposite.

  • Spending hasn’t decreased it’s INCREASED.
  • The debt hasn’t been bought down but rather the Tories have ADDED 30% to the national debt since they’ve been in office.
  • The deficit is still some 400% HIGHER than the deficits that the Labour party were planning on running back in 2008.
  • Taxes have going UP not down (20% VAT anyone?).
  • And finally, and for our mind the most important out of the five things, the Bank of England has engaged in massive, unprecedented money printing, which is raw inflation. This inflation has fed through into high prices which has made people poorer relatively and absolutely – and at a company level margins have been compressed so tightly that business are folding left and right. This margin compression was even mentioned in the BoE’s very own minutes.

So there you have it folks, it really isn’t rocket science in predicting this stuff, it’s a simple mathematic equation:

More government spending + Increasing debt + massive deficit financing + higher taxes + enormous money printing = double-dip recession.

And all this with that VERY questionable data – as we’ve talked about here, here, here and here.

So when we predict that the BoE’s response to this official recession will be another massive bout of money printing that simply will never, ever end (until the big reset happens), you only have one question you need to ask yourselves. Will we be right… again?

Link to this article: : http://www.goldmadesimplenews.com/gold/more-government-spending-increasing-debt-massive-deficit-financing-higher-taxes-enormous-money-printing-double-dip-recession-who-knew-6787/

Posted by on Apr 27 2012. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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