Global Freight Data Indicates No Economic Recovery

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By JC Collins

Contrary to establishment propaganda, there is no economic recovery taking place.  There are many leading indicators to support that statement, none more so than global freight data.  The International Transport Forum, in its December, 2013 Statistics Brief, titled “Shifting Economic Mass Towards Emerging Economies Shown in Global Freight Data”, clearly defines how the performance of the advanced (western) economies remains weak, while the performance of the emerging economies are becoming stronger.

Full Brief can be read at:

The bulk of the “emerging economies” can be considered to be the BRICS countries, namely Brazil, Russia, India, China, and South Africa, and smaller economies which float in the peripheral of the larger BRICS economies by way of trade agreements and the ever increasing currency swap agreements.  (Note: The currency swap agreements are meant to increase stability in international trade by side stepping the unstable U.S. dollar.)

When global freight increases, it means that economic growth is strong.  When global freight decreases, it means economic growth is weak, or moving in the opposite direction towards stagnation.

What the latest Statistics Brief shows is that global freight volume remains relatively the same.  What we are in fact seeing is the rebalancing of exports and imports between the western economies and the emerging economies.   Due to the continued weak performance of the western economies, imports to the U.S. are down by 24% since the crisis of 2008.  In Europe, they are down by 15%.

Export ChartUSA external trade by sea, percentage change from June 2008 (Tonnes, monthly trend, seasonally adjusted) (Source: International Transport Forum)

This decrease in imports can be explained by a decrease in demand by consumers in those economies.  A decrease in demand by consumers can be explained by a decrease in disposable income.  A decrease in disposable income can be explained by a decrease in full time jobs, realistic wages, and a continued increase in the evermore debt creation cycle and taxation through inflation.

Though there has been an increase in exports from western economies since the crisis of 2008, that very increase has started to wane in the last 2 quarters of 2013, as the QE debt injected into the system by the Federal Reserve is starting to have the opposite effect of what was intended.  It was said that QE (Quantitative Easing) would stabilise wealth, when in fact it is a merciless killer of wealth.

Don’t be confused by the term Quantitative Easing.  It is simply a fancy way of saying “money printing”, or continued “debt creation”.  The end is always a collapse of the currency through hyperinflation.  Always.  The obvious example that comes to mind is Weimar Germany, between June 1921 and Jan 1924, when the Mark was destroyed as Germany found itself caught in the money printing trap.  Before the onset of hyperinflation, Germany had suspended the Mark’s convertibility into Gold.  The U.S. did the same thing to the dollar in 1971.

The U.S. dollar has been the reserve currency of the world since 1944, and as such, has managed to keep itself alive after its severing from gold by schemes such as the “Petrodollar” arrangement with OPEC and by exporting its inflation to the emerging economies.  This is now coming to an end, as reflected in the rebalancing of exports and imports between the western economies and emerging economies.

The exports from western economies make up a portion of the imports of the emerging economies. The growth of the BRICS countries had increased the demand for goods traded in U.S. dollars.  Mainly because the U.S. dollar is still the world’s reserve currency and global trade transactions have been done in the dollar reserves held by those countries.

As stated above, the currency swap agreements between the BRICS countries and the rest of the world are meant to eliminate the risk of the unstable U.S. dollar.  As such, as we see the emerging economies continue to unload their U.S. dollars, we can expect to see a further decrease in exports from the U.S.

At the same time, imports in the emerging economies continues to increase, but not from western exports.  The emerging economies are beginning to trade directly with each other.  And they are ever increasingly trading in their own currencies, as per the currency swap agreements.

Global Freight Data not only shows that there is no economic recovery taking place in the western economies, but also shows early signs of a decrease trend in exports from the western economies.  This will only lead to further stagnation and further isolation of the U.S. dollar in world trade.  Eventually the full brunt of the dollar hyperinflation will come home to American shores.  This will decimate an already broken economy.   – JC