How American Government’s Supposed to Work

Posted on October 8, 2013 by MN Gordon

It appears things are finally reversing course.  After years of expanding, the bull market in government may have finally hit an inflection point.  This is great news.  For a reduction in the size of government compared to the overall economy will be beneficial to everyone.

Short term adjustments and restructuring will have to occur if the shutdown continues long enough.  Federal workers will lose their jobs and will have to find new ones in the private sector.  We won’t pretend this will be easy.  Nor will we pretend it will be pain free.

Nonetheless, we’re confident many federal workers will soon find themselves in more engaging and useful endeavors.  Many of them are good, intelligent and enterprising individuals who happened to end up in a bad trade.  How were they to know that following 9/11 and the 2008 financial crisis the government would so grossly overstep their authority?  Right now could be their golden opportunity to get out with their dignity intact.

Take Lisa Braswell, for instance.  She’s was furloughed last Tuesday from her job as a management analyst at the National Institute of Health. Continue reading →

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Ground Control to Major Tom: Reserves Are in Jeopardy

Posted on October 4, 2013 by MN Gordon

Ground Control to Major Tom: Reserves Are in Jeopardy
By Jeff Clark, Senior Precious Metals Analyst, Casey Research

When you hear about the “gold reserves” a mining company has in the ground, the natural assumption would be that they’re talking about a fixed number of ounces.  After all, gold doesn’t decay, and neither does it grow legs and move someplace else.

But assumptions are dangerous.  In fact, industry-wide, reserves are likely to fall fairly significantly in the near future.

When the gold price falls, it doesn’t just have a short-term impact on producers—slashed earnings and forced write-downs—it can affect the number of economically mineable ounces a company carries on its books, or even what it can mine in the future. Continue reading →

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Committed to Mass Public Spending

Posted on October 1, 2013 by MN Gordon

Yesterday President Obama said a government shutdown “would throw a wrench into the gears of our economy.”  Here at the Economic Prism we say, “Bring it on.”  For a wrench caught in the gears is just what’s needed…especially if the wrench can then be used to bolt down the top hatch on the national debt.

You see, Congress has raised the debt ceiling 79 times since 1940.  That’s more than once per year.  Obviously, the debt ceiling hasn’t done much to control spending.  Rather, the debt keeps growing like a metastasized cancer…with a doubling time of about 7 years.

Currently, the debt ceiling’s set at $16.699 trillion.  Even so, it was shattered months ago.  The Treasury just hasn’t owned up to it yet.

In fact, the US Debt Clock shows the debt at $16.9 trillion…well over the legal limit.  But regardless of your opinion of the current debt ceiling battle between the House and President Obama, one thing everyone can agree on is that government deficits, and the massive accumulation of federal debt, will drag the prosperity of future generations down like a ball and chain attached to a prisoner’s ankle. Continue reading →

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End Stimulus Now!

Posted on September 27, 2013 by MN Gordon

A dreary jobs market, stagnant GDP, declining household income, falling wages, workforce reduction, anemic production…  You name it.  The economy’s clunking down the road like an old Cutlass Supreme.

No matter what fixes are made, the thing can’t seem to fire on all cylinders.  A blown head gasket’s replaced and the very next day the spark plugs are fried.  Replace those and a piston ring blows.

Now, five years after the death of Lehman and the subsequent Great Recession, the recovery’s as lethargic as a junk yard dog.  Perhaps it needs a good kick in the rear to bare its teeth and put up a fight.  But where would the kick come from?  We have a few ideas…

From our perch, we see an economy that’s larded over with too much debt and funny money.  If you recall, all the stimulus was supposed to boost demand and GDP growth.  Before long, new jobs would appear faster than they could be filled and a new era of prosperity would be upon us.

What a crock of horse puckey that’s turned out to be. Continue reading →

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