Duct Tape Economics

Posted on January 14, 2014 by MN Gordon

The Labor Department laid a sulfurous egg last Friday.  By their calculations, just 74,000 jobs were created in December.  The pros thought it would be 200,000.  What do they know?

This marks the slightest increase since January 2011.  Somehow, even with the feeble increase in jobs, the unemployment rate fell 0.3 percent to 6.7 percent.  This is the lowest it has been since October 2008, when the economy slipped.

To the casual observer things appear to be getting better.  Certainly, on the surface, a 6.7 percent unemployment rate is an improvement.  But a scratch below the surface reveals the decline in the unemployment rate is the result of discouraged workers leaving the labor force.

In fact, the labor participation rate, the percentage of working-age Americans who have a job or are looking for one, fell 0.2 percent to 62.8 percent in December.  That marks a 35-year low.  Moreover, it means there are plenty of intelligent and capable people out there who’ve given up on the daily grind. Continue reading →

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Some Lessons Cannot Be Learned from an iPad

Posted on January 10, 2014 by MN Gordon

Some Lessons Cannot Be Learned from an iPad
By Dennis Miller, Editor, Money Forever

My wife Jo and I spent a weekend last fall at our daughter Holly’s house, enjoying time with our two young grandchildren, three-year-old Brock and eight-year-old Braidyn.  With two young boys, the house can get pretty loud.  Not only do they run and shout like all little boys, the noisy games they play on my iPad also cause quite a racket.  My wife grins when she sees me reach up and turn my hearing aids off… Ah!  Relief from the noise.

When I was Braidyn’s age, my great-grandmother was still alive.  She would sit on her front porch swing with her walker set to the side, and we would snap peas and shuck lima beans together.  I remember her telling me her childhood memories about life after the Civil War.  As I watched my young grandsons, I thought to myself: I wonder if my great-grandmother, who was born in 1860, or my grandmother, who was born 1890, ever looked at me and wondered what the world would be like when I got to their age. Continue reading →

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So Long Ben, and Thanks for All the Memories

Posted on January 7, 2014 by MN Gordon

Outgoing Fed Chair Ben Bernanke took a moment last Friday to bid farewell.  With his final speech as Fed Chair, he endeavored to clarify exactly what he’s been up to over the last eight years.  Many topics were touched upon; strangely, trashing the currency wasn’t one of them.

More insightful to Bernanke’s time as Fed Chair, however, is not his outgoing speech.  Rather, it’s a speech he gave several years prior, as a Fed Governor, where he laid down his rules for combating a deflationary depression.  Hence, we’ll pause a moment to review the Bernanke doctrine, as excerpted from his November 21, 2002 speech: “Deflation: Making Sure ‘It’ Doesn’t Happen Here.”

“The U.S. Government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost,” explained Bernanke.  “By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. Government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the price in dollars of those goods and services.” Continue reading →

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Tree Branch Economics

Posted on January 3, 2014 by MN Gordon

One trouble with government programs is they debilitate people.  Recipients believe they are getting a benefit when, in effect, they are being harmed.  Time and time again, under the influence of a benevolent hand of government, otherwise able and intelligent people are immobilized.

Take unemployment benefits, for instance.  Millions of capable people, through no fault of their own, lost their jobs over the last half decade.  But what’s worse, because of this, they inadvertently became dependents of the state.

At first they may have been demoralized to be on the dole and eager to get off of it.  They went from jobless to state dependency by accident.  Overtime, however, they were disabled by the government’s administered benefits…they couldn’t escape.

Regrettably, many good accidental dependents were just dumped from their extended unemployment benefits.  In fact, it’s estimated that 1.3 million Americans lost unemployment benefits last Saturday when a federal emergency program started during the Great Recession expired.  Moreover, as the year progresses even more people will be hung out to dry… Continue reading →

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