In Praise of Scrooge

Posted on December 16, 2011 by MN Gordon

Federal Reserve Chairman Ben Bernanke did something extraordinarily remarkable on Tuesday…he did nothing.  Following the Federal Open Market Committee meeting, if you can believe it, Bernanke’s Fed statement made no monetary policy changes.

Certainly, this is an exceptional feat.  Remember, Bernanke’s the man responsible for covertly handing out $16 trillion of money created from thin air to U.S. banks, corporations, and foreign banks between December 2007 and June 2010.  Hardly a day goes by that he doesn’t give money to those who didn’t earn it and don’t deserve it.

Wall Street, of course, was disappointed by Bernanke’s inaction.  Surely, with the economy on the wane and the imminent crisis out of Europe, the Fed would come through with a big announcement – like QE3 – to buoy up stocks into the New Year…right?

Unfortunately for Wall Street, in the season of giving, Bernanke wasn’t his usual spendthrift self; he was Scrooge before Scrooge saw Marley’s ghost.  For the rest of us, off Wall Street, who earn and save our wealth in dollars, the additional pause in money printing, may preserve our paper money from turning to toilet paper for – at least – a little bit longer. Continue reading →

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Teach a Man to Fish

Posted on December 13, 2011 by MN Gordon

Food is one of life’s vital essentials.  Procuring enough food to meet one’s daily needs is a rudimentary survival requirement.  So, too, people’s ability to sustain themselves is essential to a functioning economy.

Hunger, for sure, is a great motivator.  Obviously, some of the great advances of humanity have been inspired by an empty stomach.  Moreover, some of the recurring moments of human drudgery are tolerated to earn one’s daily bread.

For this reason, economies that are more open and free generally allow more people to feed themselves.  Conversely, economies that are overloaded with corruption, arbitrary property laws, and authoritarian governments generally have more people who are hungry.  In this respect, an increase in the number of people who are unable to provide their own food may signal that an economy’s breaking down…and that government fraud and central government meddling may have something to do with it.

According to the most recent U.S. Department of Agriculture statistics for September 2011, over 46 million people are now on food stamps.  This amounts to nearly 15 percent of the total U.S. population – an increase of 65 percent since just 2008. Continue reading →

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In Graphs We Trust

Posted on December 9, 2011 by MN Gordon

Federal Reserve Chairman Ben Bernanke can’t seem to catch a break.  Wherever he turns someone is there to knock his job performance.  Senators, Presidential candidates, lowly editorial writers…they’ve all lined up and cast their stones.

But why?  Hasn’t Bernanke done everything – and more – that’s been asked of him?  Hasn’t he done precisely what he’s employed to do?

To clarify, if you didn’t know, the Federal Reserve Chairman’s primary job is to give the world exactly what it wants…an abundance of cheap money.  By all measurements, Bernanke’s done a superb job.  Programs like CPFF, MMIFF, TAF, QE, and QE2 are clearly the work of a master money creator.  Alan Greenspan could’ve never conceived of them…and even if he could’ve, he wouldn’t have had the guts to execute them.

But the world is full of critics and ingrates.  Rather than saying thank you to Bernanke, they want to kick him to the curb.  On Tuesday, for instance, Bernanke had to defend himself against a Bloomberg News article that claimed the Fed secretly loaned or guaranteed over $7.7 trillion to bailout banks during the 2008 financial crisis.

Bernanke said in a letter to Congress that the article, “contain[ed] a variety of errors and mistakes” and that the bailout “was a necessary response to ensure that the crucial mistake made during the Great Depression — failing to prevent a collapse of the financial system — was not repeated.” Continue reading →

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The Metamorphosis of Jon Corzine

Posted on December 6, 2011 by MN Gordon

The economy gained 120,000 jobs in November, said the Labor Department last Friday.  The jobs number included 140,000 new private sector jobs and a loss of 20,000 public sector jobs.  More importantly, the unemployment rate fell to 8.6 percent – its lowest since March 2009.

Based on the headline numbers, the jobs market appears to be improving.  However, a scratch below the surface reveals a more modest picture…

For instance, November’s increase of 120,000 jobs does not keep up with population growth, which is about 200,000 people a month.  To significantly reduce the unemployment rate, new jobs must be created at a rate that exceeds population growth and, by extension, growth in the labor force.  Nonetheless, even with a gap of about 80,000 people last month, the unemployment rate still fell.

How is that possible?

Simple.  The number of people looking for jobs fell by 315,000.  Additionally, the number of people not counted in the labor force increased by 487,000.  Remember, Continue reading →

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