News & Analysis
US Economic Recovery of Lies
Slow-motion recovery keeps unemployment high ... High unemployment isn't going away. The slow pace of economic growth shows the recovery is too weak to generate enough jobs for 15.3 million unemployed people. Layoffs are contributing to the problem. That's evident from an elevated number of weekly claims for jobless aid. Two government reports Thursday offered new evidence on all of those fronts. For many Americans, it doesn't feel much like a recovery. The unemployed face fierce competition for job openings. Those with jobs are watching their paychecks shrink. A growing number of people are at risk of falling into foreclosure. And only people with the most stellar credit are likely to get a new loan. "We're out of recession, but the recovery is not going to bring a whole lot of smiles," said Joel Naroff, of Naroff Economic Advisors. – AP
Dominant Social Theme: Growth is hard to come by and patience wins the day.
Free-Market Analysis: The trouble with economic reporting in the West is that it simply does not tell the truth. This AP story is a good example. Its main point is that the American "recovery" is not going to be strong enough to provide enough jobs for the 15.3 million unemployed. Now this supposition has two problems. First of all there is no "recovery" as it is commonly understood, and second we assume that the 15 million out-of-work figure is based on a 10 percent unemployment rate. In fact, that figure is very much in dispute because of the way American federal government analysts count – and then don't count – the unemployed. Many savvy observers believe that the unemployment rate is twice as high, at 20 percent, and we believe it to be even higher than that.
Anyway, as far as the US recovery itself goes, this is a most misleading conversation within the mainstream press. Even during less severe downturns, Western economies have continually degraded and this is no ordinary downturn as we have pointed out many times. This time around the fiat money system basically collapsed. The entire system has been on life-support for about two years now. What kind of extrication can be expected from such a quandary?
We figured that to save the system, central banks would have to pump an aggregate US$100 trillion into Western economies over a period of time. We're not sure how far along they are, or if they'll reach that figure but the amounts of debt-based money that has been created and loaned out or stuffed into commercial bank coffers is staggering. It hasn't all circulated but watch out (for hyper-inflation) if it does. Of course, that was before this latest sovereign debt crisis. Since central banks do all sorts of things they don't report – engaging in various kinds of swaps and derivatives trading, who knows what the final number may be. Here's some more from the AP article:
The economy grew at a 3 percent annual rate from January to March, according to a new estimate released by the Commerce Department Thursday. The new reading, based on more complete information, was slightly weaker than an initial estimate of 3.2 percent a month ago. Consumers spent less than first estimated. Same goes for business spending on equipment and software. And the nation's trade deficit was a bigger drag on economic activity. Those factors led to slower growth last quarter than first estimated.
Sounds grim? It gets worse. This article was written just as first quarter American growth was revised DOWN – adjusted from an annual rate of 3.2 percent to just 3 percent, according to the Commerce Department. The expected growth rate was to have been about 3.4 percent. It certainly didn't get there.
In fact, there are plenty of statistics that could be marshaled to put this current recovery into focus. But when one starts to do that a trend emerges, and it isn't a pretty one. We recently came across an article in the socialist Monthly Review. The article, "Capitalism, the Absurd System – A View from the United States," was co-written by Robert W. McChesney, whom left-wing Utne Reader in 2008 listed as one of their "50 visionaries who are changing the world".
The article has some fascinating charts, including one that shows GDP growth shrinking from four percent in the 1940s to a little over one percent in the 2000s. The chart is attributed to the Bureau of Economic analysis and we're not sure if it adjusted for inflation. There is another telling chart in the article, showing how wages have fallen. The article describes the trend this way: "Worker productivity is much greater than it was back in 1975, but very little of this increased wealth actually goes to workers themselves. ... The wages of U.S. manufacturing workers have fallen rapidly during the last three and a half decades as a share of value added in U.S. manufacturing. The median wage of all nonagricultural workers has stagnated over the same period."
Given this context, it is interesting to see how the article explains the non-performance of Western capitalism – specifically in the United States – by turning to Marx for enlightenment as follows: "Marx's work provides searing insights on how to understand a society that, at the surface, appears to be one thing but, at its deeper productive foundations, is something else. Marx argued that a core contradiction built into capitalism was between its ever-increasing socialization and enhancement of productivity, and its ongoing system of private appropriation of profit."
Of course Marx never did seem to explain adequately how workers were deprived of their share of a growing pie of profits, and when it comes to explaining how current capitalist trends mighty be countered, the authors are similarly fuzzy: "Mere state ownership of key productive forces is not enough to create a socialist society; the people must exercise a sovereign rule over these productive forces and society as a whole, and the society must be organized to promote collective needs."
As usual, we wonder who exactly will "exercise a sovereign rule over these productive forces." Additionally, we would ask, when it comes to the organization of society "to promote collective needs," exactly who will be doing the organizing. This is always where collectivist solutions tend to fall down. They get hazy about who is going to provide the leadership that will lead the people to the promised land.
We think we can explain all this a little more succinctly using some free-market thinking. The problem with Western economies for at least the past 100 is mercantilist central banking. It is central banks, by overprinting money that cause first booms and then busts. The power elite, rarely if ever mentioned in Marxian analysis, stands behind this public/private central banking system – which began as an Anglo-American invention but has now spread around the world. As US Congressman Ron Paul has pointed out, the central bank is an engine of centralization. After every boom cometh a bust and after every bust more businesses go bankrupt and more of the middle class is washed away.
That's why the AP's statement about the American recovery certainly stretches the truth. (Of course it's not fair to pick on AP – the recovery meme is a promotion of the power elite and is virtually everywhere these days throughout mainstream US media.) The point is that Western recoveries under a central banking regime are inevitably fainter and fainter. Each recovery is weaker than the last while crises grow stronger and deeper.
As we recall Bell feedbacker F. Beard recently pointing out, the system is set up so that people "buy at the top" – take out loans and generally expand portfolios during the good times and then are faced with certain consequences when the economy turns sour. The problem is always the same: Loans are suddenly under water as debtors discover that the equity of their investments is worth less than what they owe. Bank lenders know the inevitability of this. Many borrowers do not.
Is the current economic crisis is some sort of turning point? In the past the power elite has shoveled money at commercial banks and securities firms – and then proclaimed a recovery when the stock market began to move up. Even when the recovery was weak and limited the elite could rely on the mainstream media to forcefully proclaim victory over recession, inflation, deflation, etc.
But with stock markets rising and the media crowing, it was never really possible to examine the extent of the damage in a prolonged or realistic way. That's changed now. The Internet has allowed real discussions of the economic fraud of the so-called modern capitalist system. And the system itself has so badly failed in the past few years that it is probably much more difficult to cover-up the damage this time.
Conclusion: For those apt to defend the system, the next few years likely shall prove both difficult and unforgiving. We anticipate continued conversations about alternative forms of money and different ways of approaching the economy. The elite of course shall suggest further centralization and central banking control. But we have a feeling that this will be a hard argument to make. The mainstream press has lost credibility as regards these matters. Articles such as this one published by the AP will be an increasingly hard sell to an increasingly informed public.
Posted by Weeble on 06/06/10 03:28 PM
I'm with you on the zero government thing Shane.
"What have the Romans ever done for us?" - Courtesy John Cleese (Life Of Brian).
Posted by Shane on 06/06/10 02:32 PM
RE: F. BEARD:
Why should we expect this tradition to change?
"But it is not a necessity."
No its not...but when has that ever stopped govt?
"I can see the United States breaking apart but then it will be competing states."
I've got my fingers crossed!
"The states that have the best balance between government and the private sector will win the competition."
Yes...and let us hope that, somewhere, folks will take this its logical conclusion: ZERO GOVT.
Posted by Weeble on 06/06/10 10:35 AM
Jones Crusher, we meet again. I do wish I lived in more interesting times. If the world again accepted court jesters, it would be a more predictable and balanced setting than the world as we know it to be. Maybe the Oracle can enlighten me, as to when.
I apologize if I threw some Baby Snakes at you the other day, but sometimes I have a hard time controlling my contrivances. I am sorry if I attempted to clean you up with mental floss. Sometimes when I find a tiny hole, I immediately try to fill it up with SMPTE (Society Of Motion Picture and Television Engineers).
Should you want to join the food fight with Fatebeard, in the other room (yesterday's Buffett), you are quite welcome. We are currently throwing rabbit bones at each other, but Fatebeard left for a while. I am not sure if he got something in the head, when I threw a large canjun gorilla tongue at him. (I was not aiming directly for him). The food is a little dried out, but there are a couple of Catholic girls in Joe's Garage next door that can offer you some support (they re married now, so don't even think there will be any Camarillo Brillo going on).
So, to conclude, thanks for getting me to spin both a positive and negative helical analogy / metaphor soup concurrently (2 plates spinning on cue sticks). It was quite rewarding. You are The Central Scrutinizer, and I applaud you coming to battle in a wet t-shirt (or shirt)
Posted by Jones on 06/06/10 04:47 AM
Ah, my nemesis "Weeble" suddenly appears shortly after I make a post... "May you live in interesting times..." Most everything is controlled or contrived nowadays. Including you...
Posted by Weeble on 06/06/10 04:33 AM
Heavens to Murgatroid, I thought it was a figleaf of my imagination! They morph back after a while. Phew, another delusion validated. Defaulting is so yesterday. They are now "too big to default". I feel the SDR is being groomed for the job of "blending the mortgages" so to speak, so nobody is left out (or in).
Posted by Jones on 06/06/10 04:10 AM
What's with the little boxes that are being transposed for punctuation marks?
Reply from The Daily Bell
Posted by Jones on 06/06/10 04:06 AM
Here is a comment on the current Bilderberg meeting that is underway in Spain... "Attendees are reportedly concerned about the potential collapse of the Euro, war with Iran and the rise of political dissent against world government."
Now take that statement in the context of the "You're Being Decieved" video that is currently headlined on the same website that reported on the Bilderberg meeting ...
Click to view link
The elite would love for you to think that the Eurozone economies are falling apart while everything is under control back in Amerika. This is a diversion designed to take people's minds off of how mismanaged and precarious the economy really is in the US.
Check here for a list of the top ten nations likely to default on their sovereign debt. Click to view link
The top two, Venezuela and Argentina, are hardly ever mentioned in the "newz" while number 10, Hungary, was being hyped as a cause of Friday's stock market pullback. Of the so-called "PIIGS" only Portugal and Greece are on the top ten list of nations that are likely to default on their sovereign debts...
Posted by Ted Berthelote on 06/05/10 07:13 PM
"1) Anyone, including governments, should be able to create and issue money subject to the usual laws against fraud and insolvency"
This statement shows an apparant willingness to equate individualism with collectivism, or at least make them interchangable. It gives the lie to all of Beard's claims to preferring liberty to slavery.
Reply from The Daily Bell
Yes, we have brought this up before.
In this case, we notice the phrase,
"subject to the usual laws against fraud and insolvency" -
which presumably the government would generate and enforce.
This would certainly create an "uneven" playing field within a theoretical libertarian construct.
Posted by Chuck on 06/04/10 10:49 PM
I know this is a dead blog, but the numbers came out. 431,000 added, 411,000 hired by government. 20,000 jobs added, and that's juked stats.
Reply from The Daily Bell
You talkin' to us? Dead blog? Five million hits a month up from nuthin' a year ago?
Posted by Acudoc on 06/03/10 11:18 PM
WarrenGary -- Very interested in your research. Thanks in advance if you share it with me.
dennis.spain@Click to view link
Posted by F. Beard on 06/03/10 08:30 PM
"I imagine that if a govt. issues money, it will also pass legal tender laws to force folks to accept it. The two powers are inextricably linked when govt is involved." Shane
Traditionally, yes. But it is not a necessity. I can see the United States breaking apart but then it will be competing states. The states that have the best balance between government and the private sector will win the competition.
Posted by Shane on 06/03/10 08:22 PM
"However, how is government to collect taxes in such a situation?"
Get rid of taxes too.
"I say let the government issue its own money for taxation purposes but without legal tender laws."
I imagine that if a govt. issues money, it will also pass legal tender laws to force folks to accept it. The two powers are inextricably linked when govt is involved.
I think the failed experiment, in America, with [supposedly] constitutionally-limited govt proves my point. RIGHT NOW, we (according to the constitution) are only supposed to have gold/silver legal tender.
I don't imagine any future govt. would be any more likely to abide by its own laws than the current one does.
Posted by F. Beard on 06/03/10 07:47 PM
"My vigilance does not include vigilante-ism. " Weeble
I was not sure how far down to lawlessness you wished to go but however far one goes down, I'm sure liberty favors righteous. (cf Israel in the time of the Judges compared to 1st and 2nd Kings)
Posted by Weeble on 06/03/10 07:13 PM
My vigilance does not include vigilante-ism. Although guns are a necessary part of life, self defence is pretty well where I would draw the line, in a SHTF situation.
I would however condone buying with cash (@ small businesses only) as the current means of hitting them where it hurts. The PE pulled the debt cushion out from under the people, as well as the government, so they created this boil, and then burst it. There are so many people in tent cities, or in foreclosure status, they are now "off the grid: or "out of the matrix:. These people are lucky, in some ways, as they are more likely to use "cash", as they now score low or zero on their credit rating. The PE was not expecting that, I think.
They spent a lot of time and war to "central bank" the world, as well as plasticise the world with Visa/MC/Amex. Iran's central bank is not playing the IMF game. That is why they are next.
Getting back to bullies, what I did in school was "avoid" the bullies. I think pretty well everyone avoided unnecessary confrontation "back in the day". Those that stayed close to them for "protection" or to "keep enemies closer" probably went down a darker path in life.
I am not sure if you are any closer to understanding my point of view.
All is not lost here. The numbers are gaining on the good side. Even the cows know when it is going to rain, and sit down, if you know what I mean.
Posted by F. Beard on 06/03/10 06:25 PM
"I would suggest that liberty favours no-one, so therefore, the bully would get his way, unless the meek defend their inheritance to the earth." Weeble
Perhaps before the invention of the Colt 45, the shotgun, or the long distance rifle. Firearms are great equalizers as many a bully has learned too late.
Posted by Weeble on 06/03/10 05:53 PM
I would suggest that liberty favours no-one, so therefore, the bully would get his way, unless the meek defend their inheritance to the earth.
Posted by F. Beard on 06/03/10 11:43 AM
"My contention is that a town full of village idiots would become slaves, if they accept it, so therefore there needs to be vigilance against on an individual level. i.e awareness of the evil that lurks behind a monopoly or fiat. " Weeble
There are good masters and there are wicked masters. Liberty favors the good ones and tyranny favors the wicked ones.
Posted by F. Beard on 06/03/10 10:16 AM
"Nothing goes according to plan." Weeble
"That is why a planned economy can never work." Weeble
"That is why I feel your utopia is rigid; because it is planned." Weeble
What are you talking about, Weeble? I advocate liberty. There is no plan other than to allow liberty. Still, a one-time reset using the tools of the opposition would be just and might be needed besides.
Posted by F. Beard on 06/03/10 09:43 AM
"I do not eat fish on Fridays, but the miracle of feeding thousands with 1 loaf, is only possible if you keep a little for yourself." Weeble
The Lord is the Master Economist. I suppose it is much more efficient to duplicate a fish than create ones from scratch.
Posted by F. Beard on 06/03/10 09:39 AM
"If altruism is the font of your righteousness and firmness in your conviction on your rigid utopia, then you want to be a side dish? Eat, drink, and be merry." Weeble
First my utopia is not rigid, it is liberty. Truth be told, I'd like to live in a society I could enjoy and be proud of. Our current money and banking system has wickedly distorted society.
I grew up in the 50's and 60's. The expectation then was for continual progress. Yet, it has not turned out that way. I want to know why not.