Posts Tagged ‘economy’

The Blindness of Modern Economists


Supposedly one of the top ten reasons to become an academic economist is that it gives you a chance to talk about money without ever having to make any. Also, you get to say “trickle down” with a straight face.

The contrast between mainstream academic economics and “real world economics” has always been stark, but today the disconnect is so enormous that it seems the two have nothing at all in common. If you were to ask Paul Krugman and Doug Casey how to fix what ails our economy, you’d get two diametrically opposed answers.

Here are some educated guesses why that may be the case:

Mainstream economics relies heavily on mathematics, whereas real-world economics shuns it. In the hard sciences like physics or chemistry, fields based on immutable natural laws, focusing on math produces the best results. Economics, on the other hand, is a social science and attempts to explain human behavior—arguably the most fickle of actions, and no more mathematically quantifiable than the exact degree of mortification when throwing up on the dress of your 12th-grade crush at a high school reunion. Which, of course, has never happened to anyone we know.
In the hallowed halls of academia, you need not be correct to be useful. In the world of business, if you’re wrong more often than you’re right, you won’t stay in business for long. In contrast, academic economists can and have made very successful careers out of being apologists for the regime. No matter that they’ve been dead wrong in virtually every forecast they’ve ever made: as long as their forecasts align with their peers’, they can collectively claim, for example, that no one could have ever seen the financial crisis coming.
Most academics believe that their work is worth more than the free market gives them credit for. That’s not to say that academics’ work is not important—it is. But there’s a huge difference between thinking and doing, and those who are paid only to think rarely become wealthy. My guess is that academics are bitter about this fact, and believe that because the free market doesn’t adequately reward them, there must be something wrong with it. They correctly understand that oftentimes, the only way for them to obtain a lot of money is to steal it via the government; and because that principle applies to their line of work, it must apply to all others too.
The misguided belief that aggregate demand drives the economy creates a vicious cycle. Mainstream economists believe that aggregate demand—the total demand for goods and services in the economy at a given time and price level—is the wellspring from which all prosperity emerges, and so anything that increases aggregate demand must be positive, even otherwise wasteful government spending. Economists also use these as an excuse to make laughably rosy forecasts. After all, consumers spend more when they think the economy is growing like Jack’s beanstalk, so why not add some more beans while we’re at it? It’s all for the greater good. We initiates, of course, know what awaits us at the other end of that lofty stalk.
Contrast that with real-world economists who are loyal to their investors, clients, or subscribers. If our Chief Economist Bud Conrad constantly made incorrect forecasts in order to help the economy recover, we wouldn’t have any subscribers. That’s why Bud tells it like it is—as he will in the upcoming issue of The Casey Report, in which he evaluates whether tepid GDP growth or soaring stock prices more accurately describe what’s really happening in the economy.

I’m sure I’ve overlooked many other compelling reasons. But regardless of why economists differ, it’s important to understand on exactly which issues they differ, and which understanding is correct.

This week’s contributor is real-world economist Alasdair Macleod, head of research at GoldMoney. In a scathing article, Alasdair explains a few of the common errors mainstream economists make, the origins of those errors, and why they’re wrong.

The dollar – and the USA – is toast

Lord Monckton sees China prepping for final collapse of America

Obama has done it. He has brought America down. It only took him just over four years. The Republicans could have stopped him. They didn’t.

How did the nihilistic left succeed in destroying America? Simple. They learned just a little of the capitalism they hate, and they drove your nation into outright bankruptcy.

And here is what the GOP has to say about it: just about nothing.

The once-mighty United States is now the most indebted nation on Earth. In round numbers, here are just some of the vital statistics as the patient dies:

National debt: $17 trillion, or $50,000 per man, woman and child, or $150,000 per taxpayer. Annual federal deficit: $1 trillion. Medicare/Medicaid/Obama”care”: $1 trillion a year. Social Security: another $1 trillion a year. Defense: two-thirds of a trillion. Unemployment handouts: $2 billion per working day. Debt interest: $1 billion per working day. Federal pensions, ditto.

Now for the big numbers. Your government’s Social Security liability is as big as the national debt: $17 trillion. Its prescription drug liability is $22 trillion. Then there’s the Medicare liability of $86 trillion. Total unfunded liabilities of the U.S. government are $125 trillion.

Net assets for each U.S. citizen are $300,000. The net liability of the U.S. government, shared among its citizens, amounts to almost four times that: $1.1 million a head. And the government’s debt is growing at $1 million every 45 seconds. To cover its annual deficit, it is printing $1 trillion a year of currency that is not backed by any asset whatsoever.

Here is what will happen next. When the crash comes, don’t say you weren’t given fair and clear warning.

First, the dollar will cease – no, make that “is already ceasing” – to be the world’s reserve currency. China, as I have been warning you she would, has realized the dollar is finished. So she is quietly making startling progress with bilateral and multilateral deals to replace the dollar with the yuan as the world’s currency of choice.

Sterling, once the world’s reserve currency, went precisely the same way in 1967 under orders from Moscow, which then largely controlled the governing Socialist Labor party in Britain.

After the Second World War, the Socialist/Communist governments of Attlee and Wilson bankrupted Britain with health-care and welfare programs and nationalization of industries. Inflation rose to 27 percent.

Obama’s copycat policies are different in only one respect. Moscow is no longer calling the shots. International totalitarianism no longer needs direction. Its cruel, hate-filled, destructive mission now advances on autopilot.

Watch some of the straws in the wind. China and Korea have come to a little-noticed agreement that international trade between them will no longer be denominated in U.S. dollars, but in yuan, or Won.

Behind the closed mahogany doors of the world’s finance houses, elaborate and secret preparations are being made for the upheaval and international financial collapse that will follow the deliberate printing-out and consequent implosion of the dollar.

Your GOP representatives should be, but are not, asking the administration to reveal to them the ever-tougher terms on which the Chinese continue – with ever-greater reluctance –to lend money to keep their communist ally in the White House afloat.

Do not believe China cannot afford to let her biggest creditor fail. She can, she will, and she is making careful preparations to do just that.

If you thought the crash of 2008 was bad, think again. The crash that is coming –I cannot put a date on it, but it is not far away now – will be orders of magnitude worse.

So, what should you do to protect yourself and your family? First, get rid of every dollar you have. Dollars are now all but worthless. When the crash comes, they will have no value at all.

In hard times, most financial instruments – currencies, stocks, bonds – are not worth the paper they are printed on. Get rid of them now. Buy silver coins. They will quintuple in price once the crash sets in, and they are small enough to be fungible when the dollar dies.

Buy land, some of it well-wooded, some of it arable, some of it grassland. You will need the timber to power your steam tractor. Gasoline will be a costly rarity. And make sure you can defend yourselves. Starving mobs are no respecters of persons. Do what the Mormons do: Get three months’ supply of imperishable foodstuffs and hide them in the basement.

Absurd though this advice may now seem, there is a real danger that the crash will sudden. If so – perhaps for several months, and even for years – the fabric of civilization, including the food-supply chain, will fail.

It is not my custom to write in millenarian or apocalyptic terms. But the very best that can be said for your current administration is that it simply has no idea what damage it is doing. It is printing money in the vain hope of buying itself time. Yet every fake dollar that comes off the printing-presses makes the problem worse and the solution harder.

At worst, what is now happening to your nation may be deliberate. In that event, your current “president” will go down as history’s greatest villain. In any event, he will go down as history’s greatest incompetent.

Do not believe none of this can happen. Psychiatrists study what they call “normalcy bias.” People expect that everything will carry on and that America is too big to fail. She is not. She has failed. You will pay a heavy price for her failure, unless you act now to defend yourselves against what your government, with the culpable, silent acquiescence of the GOP, is doing to destroy your nation.

Finally, pray. God bless America. It has been nice knowing you. Only when you are gone will the world realize how much it misses you, and – paradoxically – how much it owes you.


David Stockman feels force of Washington fury


It takes a lot for an official who served at the heart of the White House to go beyond the pale in Washington, but a diatribe against all economic policy since 1933 – attacking everyone from Franklin Roosevelt to Milton Friedman – is one way to manage it.
David Stockman, budget director for Ronald Reagan from 1981 to 1985, is the man who will be short of dinner party invitations after becoming the most mainstream figure to argue that all America’s economic problems stem from the welfare state and the end of the gold standard.

Mr Stockman’s new book, The Great Deformation , highlights the enduring conservative appeal of a kind of economic primitivism that harks back to the days when laisser-faire ruled and macroeconomics had not been invented.
“The modern Keynesian state is broke, paralysed and mired in empty ritual incantations about stimulating “demand”, even as it fosters a mutant crony capitalism that periodically lavishes the top one per cent with speculative windfalls,” wrote Mr Stockman in the New York Times article that set off a minor furore in Washington this week.
The reaction, left and the right, was scathing. Jared Bernstein, former economic adviser to vice-president Joe Biden, gave one of the gentler liberal critiques. Mr Stockman, he said, was “about 11.8 per cent absolutely and totally on target” with his criticisms of crony capitalism. But the other 88.2 per cent was “a horrific screed, an ahistorical, dystopic, Hunger Games vision of America based on debt obsession and wilful ignorance of macroeconomics and the impact of market failure”.
The right was not much more impressed. David Frum, a speech writer for former president George W. Bush, called it “primitive” as economics, “silly” as advice, and diagnosed Mr Stockman with a mild case of elderly depression.
“As an insight into the gloomy mindset that overtakes us in older age, it’s a valuable warning to those still middle-aged that once we lose our faith in the future, it’s time to stop talking about politics in public,” he wrote.
Forecasts based on this world view have been spectacularly wrong in the last five years – instead of hyperinflation and a debt crisis, America has price rises of 1.3 per cent and a 10-year Treasury yielding 1.69 per cent. But Mr Stockman taps a strain of market discontent with fiscal stimulus and the US Federal Reserve’s policy of quantitative easing.
“There is nothing [Stockman says] that others haven’t,” says Peter Schiff, chief executive of the broker Euro Pacific Capital, with a similar outlook. “But when someone from the establishment criticises the establishment then everyone has to jump on him and discredit him.”
For the economic mainstream – which argues activist policy helps stabilise the economy, considers the gold standard ludicrously unworkable today, and diagnoses America’s primary problem as lack of demand – the 19th century critics are a challenge as there is some substance to the risks they identify.
There is legitimate concern about the rally in asset prices that has taken the S&P 500 index to a new high, and is spreading to real estate. Equity and property prices fell to long-run measures of fair value during the financial crisis, but not below, and have already moved above them.
“A lot of the inflation is in assets,” says Mr Schiff. “You can see it in the bond markets, you can see it in the stock market, you can see it in real estate. Real estate is already too high.”
The Fed rejects that QE – purchases of assets to drive down long-term interest rates – has formed an asset-price bubble. But concerns about stability have intensified at the central bank and led to debate about when to slow QE down.

If a bubble were to form and then to burst, it would seem to prove Mr Stockman and his colleagues right.High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights.

How the democrats have it all wrong regarding the economy

by Dennis Marcellino

Nearly everyone is dependant on the work of other people to survive and thrive (houses, food, cars, protection, computers, hospitals, stores, electricity, water, etc., etc.). So the good thing to do then in return would be for us to contribute our work for those other people to benefit by. Like it or not, that is the kind of economic system we live in. It is no longer bartering or self-sufficiency on tax-free land. And the exchange of labor is made through money. So we either give ourselves in dependency on job creators, or we work hard to become a job creator ourselves, at least to the point of creating enough income producing work for our self.

A problem though now is that it can be very difficult for many to find jobs. (And some are not able to work, and do need our help. But they are very few. And I’m not including here single moms who through their own irresponsibility either had babies out of wedlock or didn’t properly set up a marriage to support their family. But that reveals the ugly moral side of the current culture that will be left for a separate article.)

I’m going on 65 and I probably wouldn’t be able to find a job, even though I’m highly skilled and highly educated, just because of my age. Therefore I’m lucky that I’ve worked hard to be able to make a living through self-employment. But what about people who aren’t self-employed and can’t find a job? That’s why we need a safety net. But that safety net doesn’t necessarily have to be the government. It could be relatives or churches or private organizations offering work. And it would have to be work that is being offered and not continual handouts, because the Bible says that those who don’t work should not eat.

2Thessalonians 3:6-15, “Our orders—backed up by the Master, Jesus—are to refuse to have anything to do with those among you who are lazy and refuse to work the way we taught you. Don’t permit them to freeload on the rest. We showed you how to pull your weight when we were with you, so get on with it. We didn’t sit around on our hands expecting others to take care of us. In fact, we worked our fingers to the bone, up half the night moonlighting so you wouldn’t be burdened with taking care of us. And it wasn’t because we didn’t have a right to your support; we did. We simply wanted to provide an example of diligence, hoping it would prove contagious.

Don’t you remember the rule we had when we lived with you? “If you don’t work, you don’t eat.” And now we’re getting reports that a bunch of lazy good-for-nothings are taking advantage of you. This must not be tolerated. We command them to get to work immediately—no excuses, no arguments—and earn their own keep. Friends, don’t slack off in doing your duty.

If anyone refuses to obey our clear command written in this letter, don’t let him get by with it. Point out such a person and refuse to subsidize his freeloading. Maybe then he’ll think twice. But don’t treat him as an enemy. Sit him down and talk about the problem as someone who cares.”

Therefore, if we want to be in harmony with God, job creation should be the first order of business. But the present government doesn’t live by God’s ways. It just gives perpetual handouts, which many are willing to take, and that don’t require a labor compensation. But because of the moral problem in our country that I previously mentioned, many are psychologically and emotionally ill and find it hard to work. That’s why it is equally important to address the moral problems in this country. And in this regard, the democrats just hurt the country more.

By the way, a side thought here is that Obama will solve the illegal immigration problem. But not in the way he thinks. He’ll solve it because there will be no extra jobs here for illegal immigrants to come and get because the job market is going to shrink due to Obamacare and taxes and stiff regulations on businesses.

So then what’s the answer? Mitt Romney had it right – the government does what it can to help facilitate the creation of jobs. And let’s face it, most job creation is not in the hands of government, it is in the hands of people – who have enough money and dedication to create businesses that employ people. The democrats obviously don’t get that. What they actually do was just expressed by Mitt Romney as to why he lost. He said that the government gives out “gifts” and then expects votes in return. But the rest of the working people have to pay for those gifts.

No, the answer was what Mitt Romney and Paul Ryan were proposing: create jobs, not handouts.

I said it in a previous article and I’ll say it again … this country shot itself in the foot by voting for Obama and increasing the democrat lead in the senate, and not voting for Romney, who has the proven skills for how to create jobs. Plus he understands good morals.

Byline: Dennis Marcellino is the author of The Plague Of Liberalism ( His other books and DVDs can be seen at

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Posted by Colonel Robert F. Cunningham

An article from Money Morning caught my eye this week, titled, “Faber warns ‘Everything will collapse.’” In response to Bernanke’s stimulus plan (QE3) as well as the Fed’s predilection to print money, economist Marc Faber appeared on Bloomberg TV with ominous warnings about our nation’s financial future: “Eventually we will have a systematic crisis and everything will collapse.”

Faber made no distinction between Democrats and Republicans in this regard, noting that no matter who wins the presidency, the money printing (and dollar devaluation) will continue.

Faber is not alone in his predictions. “A group of [Faber’s] economic peers agree that with more central bank action like QE3, global economic collapse is imminent,” notes the article. “… they have discovered a ‘frightening pattern’ they believe points to a massive economic catastrophe unlike anything ever seen.”
According to Chris Martenson (global economic trend forecaster, former VP of a Fortune 300 and expert on the dangers of exponential growth in the economy), “[W]hat’s really disturbing about these findings is that the pattern isn’t limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well.” He warns these structures could all implode simultaneously. “Food, water, energy, money. Everything,” said Martenson.

But here’s the line that caught my eye: “According to polls, the average American is sensing danger. A recent survey found that 61% of Americans believe a catastrophe is looming – yet only 15% feel prepared for such a deeply troubling event.”

Sensing danger. Yes, that’s it. The volatility and interconnectedness of our food, water, energy and financial systems are causing a lot of people to pause and wonder, “What if …?”

Yet only 15 percent “feel prepared.” My gosh, how do you “prepare” for something like an economic collapse?
With this in mind, I was very interested in attending a regional Sustainable Preparedness Expoin Spokane, Wash., last weekend. I was curious to gauge the tenor of the attendees. Why were they coming? What did they sense was on the horizon?

At the opening of this event, the lines to get in were literally around the block, and then some. Several thousand people – some of whom had come from hundreds of miles away – patiently waited to enter the convention hall to gather information on growing their own food, safeguarding their finances and otherwise becoming more independent and self-sufficient.

Over the course of the one-day event, I spoke to random strangers and asked what concerns they had that brought them to this preparedness expo. The answers ranged from “Agenda 21” to “EMP and the power grid.” But the overwhelming concern – and certainly the most pressing and likely – had to do with finances. “Economic collapse.” “Global monetary breakdown.” “Hyperinflation.” Over and over again, people expressed great concern over the state of America’s fiat currency.

Now quite honestly, I don’t really understand the macroeconomic situation going on today. I’m not an economist, and I don’t even play one on TV. I’m just a concerned rural housewifewho, along with 61 percent of the rest of America, senses that a catastrophe is looming.

The average American understands the complicated tangle of financial spider webs no better than I do. But people a lot smarter than me are issuing warnings that our government’s fiscal insanity is unsustainable. Sadly, most people remain ignorant of the details. And that factor – ignorance – is what our government is depending on, especially right before the elections. After all, if the fragility of our fiat money system were actually known, people would panic. Flat-out panic. And panic, more than anything else, is what our government wants to avoid. Scared panicky people often do scared, panicky things.

This ignorance is encouraged by the blatant media bias (Unemployment drops to 7.8%! The highest one-month change in 29 years!) which persistently downplays danger from terrorism, obfuscates the government’s financial policies and applauds anything (such as Obamacare) that grows government control at the expense of constitutional restraints.

Notably, most of the media are eerily silent on the thought that our whole economic house of cards could collapse around our ears at any moment. That’s why people aren’t “prepared” and why so many remain ignorant. The press refuses to ask the tough questions of our politicians, and so Americans remain in the dark about what dangers the future may bring.

But deep in the American psyche, something is sensing danger. Something is making thousands of people attend preparedness expos wherever they pop up around the country. Something is making people realize that maybe, just maybe, the government is NOT the solution if food, water, energy or monetary systems are interrupted.
In short, mainstream America is waking up to the idea that if they’re going to be prepared for whatever the future holds, they’d better look to themselves rather than their elected officials.

And they’re right. In my opinion, there is too much uncertainty in the world not to be prepared to the best of our ability. To depend on the government at a time like this is lunacy.

The thing to remember about this dawning realization is it is useless unless you act upon it.Preparedness expos are useless if you don’t apply what you find out. Learning about food preservation is useless if you never preserve food. Learning about the fragility of the fiat currency system is useless if you don’t convert your assets into something tangible. Learning about anything is useless unless you apply that knowledge in practical ways.

Right now I feel as if America has the sword of Damocleshanging over it. This Greek legend illustrates the ever-present peril faced by those in positions of power. America’s dominant position may not last much longer if not enough people are prepared to handle the economic sword that could come crashing down on our heads at any moment.

“If our research is right,” concludes Keith Fitz-Gerald (chief investment strategist for the Money Map Press) in the Money Morning article, “Americans will have to make some tough choices on how they’ll go about surviving when basic necessities become nearly unaffordable and the economy becomes dangerously unstable.”
Are you sensing danger yet?

Obama’s Approval in Freefall on Stagnant Economy

As consumers get some welcome relief from painful gasoline prices heading into the Fourth of July holiday, President Barack Obama’s approval ratings on his handling of the economy have also taken a dip for the same reason: worsening economic conditions.

Just 33 percent of Americans now believe the president is doing a “good” or “excellent” job when it comes to the economy, according to a Rasmussen poll.

That’s down from 41 percent at the beginning of May, which could be yet another sign that the president’s re-election chances are tied more to the economy than to any other political issue.

“This election is more than just a referendum on President Obama. It is a referendum on his handling of the economy,” declares Political analyst and Democratic pollster Doug Schoen in an exclusive interview with Newsmax on Friday.

InsiderAdvantage head and pollster Matt Towery agrees with Schoen’s assessment. “Regardless of what poll you’re looking at the president’s not doing well in the economy in terms of just dealing with the economy.”
While falling gas prices appear to be a positive, they are yet another reflection of the difficult global economy, according to Rayola Dougher, a senior economic adviser at the American Petroleum Institute (API) in Washington, D.C.

“What’s happened is much more anemic economic growth than we anticipated — not only in the United States, but most especially in Europe and even in China to some extent,” she tells Newsmax. “So as we’re heading into the second half of this year, we’re having less demand than some had expected, but meanwhile supply is still adequate — more than adequate. Inventories are starting to build. So that price of crude has come down.”

As a result, gasoline prices declined 6 cents this week nationwide, to settle at $3.47 per gallon. Experts say lower crude oil prices and economic concerns have contributed to the decline in retail gasoline prices for several months.

“Gas prices are the political football of the world and they generally never mean anything,” said Towery. “What they’re concerned about is people don’t have any money in their pocket.”

Voters do not have to look hard to see the signs of a worsening economy. Moody’s Investors Service has lowered the credit ratings on some of the world’s biggest banks, including Bank of America, JPMorgan Chase and Goldman Sachs, reflecting concern over their exposure to the violent swings in global financial markets.

The downgrades late Thursday ultimately are a measure of Moody’s view on the ability of the banks to repay their debts. The ratings agency also cut its ratings on Barclays, Deutsche Bank, and HSBC, some of the largest banks in Europe, a region fighting to contain a government debt crisis.

U.S. manufacturing grew at its slowest pace in 11 months in June and the number of Americans filing new applications for unemployment aid fell only slightly last week.

“With more than 8 percent out of work and an equal number under employed or discouraged workers, the American people are hurting and the fall in president Obama’s approval rating, vote share, and ratings on the economy reflect just that,” Schoen explained.

Most Americans already believe that the United States is in a recession, observed Towery.

“People don’t have any money in their pocket and they can’t borrow any money. They don’t qualify for loans,” he said. “The banks will only loan to people who have money in the first place and so we are basically at a complete stalemate in terms of our economy. There’s nothing that anyone can think of that will spur it to go forward.”

Towery acknowledges that the president’s handling of the economy will largely determine his re-election chances.

“I don’t think they expected to see unemployment increase, which basically it has. It certainly hasn’t decreased,” observed Towery. “And I don’t think they also expected that there would be this stagnant sort of situation where not only are things not moving here in the U.S. but all over the world.”

If the election were about personality, Obama would be feeling better about his re-election prospects, said Schoen, adding that the president is extremely likeable.

“If the election were a personality contest there’s every reason to believe president Obama would have a very good chance of getting re-elected, but since it’s a referendum on the economy it makes for a much more difficult and uphill climb for President Obama than anyone would have expected just a few short months ago,” Schoen said.
The Associated Press and Reuters contributed to this report.
© 2012 Newsmax. All rights reserved
Read more on Obama’s Approval in Freefall on Stagnant Economy


As I write this article, the presumed candidate for the Republican Party, Mitt Romney and President Obama squared off in speeches in Ohio. There was one shared theme in their remarks: both candidates addressed the sad state of the economy, as they well should. It is clear that the economy and jobs are the main issues in this battle for the presidency. In fact, they are practically, the only challenge.

After 3-1/2 years of the Obama administration, the economy has faltered more and more with each month’s jobless reports and deficit spending reports. The problem is that there are just no jobs; no obvious reason to believe that there will be jobs, and no end in sight for the soaring federal debt which now holds the figure of $16 trillion in its sights.

Mr. Obama started with his usual rhetoric that the problem has existed for the past decade – clearly meaning George Bush. Never mind that he promised to have us up and running within two years. Forget that his trillion dollar stimulus did not work, and the fact that no one really knows what happened to the money. The unemployment rate has increased steadily while he has been in office. The rate stands at the official figure of approximately 9%, but everyone knows that the real figure is more in the vicinity of 15 to 25%, which rivals the statistics of the Great Depression. The face of America has changed diametrically as people now find it necessary to have multiple families living in one dwelling because it is the only way to survive. The number of people receiving public assistance is higher than ever before. The food pantries provided by churches and community service organizations continuously run short of food and clothing. Credit cards are used as a means of survival by many Americans who have accumulated $15,000 to $25,000 dollars in debt using their credit cards. These are sums of money are not likely to ever be paid off. Americans have lost their homes during Obama’s tenure at a higher rate than at any time other than the Great Depression. The state of our health care is more suspect than ever before.

Of course, Mr. Obama still wants to blame all of this on Mr. Bush. Therefore, I wish to clearly articulate that the economy had already begun to tank prior to the Bush Administration. It is true that we enjoyed plenty of economic prosperity under the Clinton Administration. We reached an all-time high for the Dow at nearly 10,000. Everyone was speculating. Even my students were buying stock. There was the general belief that buying stock was a guaranteed win. Of course, that was the situation just before the collapse of the stock market in 1929. Remember, however, that part of the reason the economy soared under the Clinton Administration was due to the fact that he devalued the dollar. Economists know that devaluing the dollar brings wealth in the short term, but disaster in the long term. Remember that the Clinton Administration began lawsuits against Microsoft for violation of anti-trust; a suspect move as the government has almost never won any anti-trust lawsuits and because they essentially sought to kill the golden goose. Microsoft led the tech sector of the market. They were one of the strongest economies in the world. This lawsuit helped lead to the bursting of the stock market bubble beginning with the tech sector – not a month into the Bush Presidency.

Then a series of disasters befell the Bush Administration: the September 11 terrorist attacks and the Bush campaign to bring Osama Bin Laden to justice. Unfortunately, it was Obama who took full credit for killing of that terrorist who declared war on the United States. The housing ‘bubble’ burst as banks took the position that they could not lose if they lent money to people who could not afford a house, as it would always be worth more by the time they foreclosed on the purchasers. Of course, these banking practices had the full support of the Democrat-led Congress including such infamous members as Barney Frank who refused to accept the concerns of the Bush Administration which warned him 17 times that there were big problems with Fanny Mae and Freddy Mac. Barney Frank testified calmly and directly that Fanny Mae and Freddy Mac were just fine. Without a doubt, it was their collapse that endangered banks worldwide and led to the failure of numerous banks – all of which led to the beginning of bailouts, stimulus packages, home foreclosures and collapse of the housing market.

Perhaps the most worrisome aspect of today’s speech by the President was that he claimed this election would be a battle, not between two candidates, but a battle for the very direction of the country. As everyone knows, the direction of the country has been more toward Socialism and wealth distribution than anything else. In fact, his next sentence declared that the failure to collect taxes at a higher rate from the wealthy was a huge part of the problems we face. Again, it should be quite clear that taking every penny from the rich, including Obama’s money, would not pay our huge deficits nor would it pay for the welfare state that we have created.

At least we can be happy to know that both men agree: it is the Economy. The question is have we realized this too late?

John Wayne Tucker

For Economic Recovery We Go Back In History and Ask – Ludwig von Mises, the great Austrian economist

Posted by Ari Armstrong at 2:42 pm

On “public” radio Wednesday, yet another financial guru was advising Europe to follow the lead of the United States: Bail out troubled banks (such as those of Spain) and forcibly transfer more wealth to cover high debt (as persists in Italy).

Coincidentally, the same evening I read a passage by Ludwig von Mises, the great Austrian economist who eventually settled in New York, transcribed from lectures he delivered in Argentina in 1959. Mises’s advice is as timely now as it was then:

To these people [who say follow the United States] one should answer first of all: “One of the privileges of a rich man is that he can afford to be foolish much longer than a poor man.” And this is the situation of the United States. The financial policy of the United States is very bad and is getting worse. Perhaps the United States can afford to be foolish a bit longer than some other countries.

Mises noted that the usual alternative to financing government spending through taxation is to finance it through inflation (government fabrication of fiat money). Such a policy, he explained, is disastrous, the economic chicanery of Lord Keynes notwithstanding, for it enables the government to go further into debt while devaluing the currency in the marketplace. Fortunately, he argued, it is a policy that can be reversed:

Inflation is a policy. And a policy can be changed. Therefore, there is no reason to give in to inflation. If one regards inflation as an evil, then one has to stop inflating. One has to balance the budget of the government. Of course, public opinion must support this; the intellectuals must help the people to understand. Given the support of public opinion, it is certainly possible for the people’s elected representatives to abandon the policy of inflation.

Obviously most of today’s Argentines have forgotten or ignored Mises’s warnings; annual inflation in that nation proceeds at around 25 percent. How the United States handles its debt of nearly $16 trillion (not to mention its unfunded “entitlement” liabilities) remains to be seen.

If Americans want genuine economic recovery, rather than mountains of government debt and dollars worth dimes, they would do well to ask “What Would Mises Do?”

By Larry Johnson

Like the Titanic as it settled beneath the waves, the U.S. economy is underwater and headed for the bottom again. The jobs report today was not just “bad,” it was alarming. Unlike previous reports, the media, both written and electronic, have caught on and realize that sunny praise sung by the White House about a supposed one-tenth of a percent decline in jobless numbers is total bullshit.

The only good news for Obama is that we may actually be nearing the bottom of the 2008 Depression and the housing market may be on the cusp of turning around. But that ain’t happening in a dramatic fashion in the next five months. The numbers in the latest Bureau of Labor Statistics tells a grim story:

The civilian non-institutional population grew by 180,000 people in the last month. The term–civilian non-institutional population–refers to “persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.”

So you would expect the civilian labor force to increase. Right? I mean, with population growth that “180,000″ number comes primarily from new 16 year olds entering the potential labor pool.

Wrong. The civilian labor force declined 342,000 since March 2012. Got that? Although Barack Obama is jumping around in his cheerleader outfit touting the news that 115,000 jobs were created in April, more than THREE TIMES that number left the labor force. Is that because they won the lottery? Is that because they earned so much money on lucrative business deals that a mass of folks decided to retire? WRONG!

No amount of lipstick will turn this pig of an economy into a bathing beauty. Since last April (2011), the number of people “no longer in the labor force” has increased by almost 2.7 million. Obama likes to thump his chest while claiming speciously that his Administration has created 4.4 million jobs in the last three years. Well Bucko, 2/3rds of that number has left the labor force in just one year. That’s not a record to run on.

What do you folks think?



With President Obama at the wheel of the U.S. economy, the car-racing industry appears to be wrecking, with few signs of getting back on the right track.

That according to a new study examining the financial state of NASCAR, the National Association for Stock Car Auto Racing.

The report notes:

As the unemployment rate began to climb starting in 2008, a rising attendance started to fall, and in 2010 attendance dropped below the 4 million for the first time since 2003. As people either lose or fear losing their jobs, they cut back on trips to the track.
Team sponsorship is expensive, so when the economy slows, and choices need to be made about which costs to cut, advertising through race sponsorship is a likely first place to start cutting and teams can race less often.
The stock prices for the two major track ownership groups, International Speedway Corporation and Speedway Motorsports, Inc., were rising on average from 2002 until 2007, when the stock prices of each firm began to fall. The prices bottomed out in early 2009 as the economy has floundered.
During bad economic times, sponsors, looking for their money to gain a bigger return, choose to focus their attention on the larger, more noticeable teams. This has caused the income gap from rich to poor to expand, leading to a greater concentration of success in a few teams.
When inflation and prices rise, putting a race team together gets more expensive.
The study said unemployment and even the fear of being jobless have a major impact on the industry, explaining if enough people become unemployed, changes can be seen in the choices people make.

“Those without a job will cut back on things they deem to be unessential,” the study said. “Here is where NASCAR begins to feel the pinch. No matter how much you want to see a race, if you have a lack of funds, you cut the trip to Daytona out of the budget. That much we understand, but there are other forces at work that may impact the bottom line of NASCAR more than just those who are directly out of work.

“As the unemployment rate rises, even those who have jobs begin to get a little nervous. Seeing their neighbors and co-workers losing their jobs makes the employed start to wonder, ‘Am I next?’ Thus, they are likely to cut back on extra spending as well. So, next year’s trip to Daytona gets cut from their budget, just in case. Ticket sales start to fall not only because the unemployment rate is rising, but also because people are feeling less secure in their finances.”

The study shows a direct relationship between rising unemployment and lower track attendance
Elizabeth Dyar, strategy and outreach manager of Race Fans 4 Freedom, commented on the report, saying: “This study illustrates that NASCAR has seen a marked downturn since the beginning of the recession, but more importantly the fans of this great sport are suffering the consequences of a bad economy.

“High gas prices, a high unemployment rate and uncertainty over their future has limited the fans’ ability to enjoy and participate in one of our country’s most popular sports.”