Monty Pelerin's World

Economics, Finance and Politics Through The Prism of Classical Liberalism

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Jack Welch Critics Should Shut Up Or Put Up

Jack Welch cast doubt on the probabilities of the latest jobs numbers being accurate. For that Administration defenders (political and media hacks) criticized him.

Mr. Welch is a numbers man and has been proclaimed the best manager America ever produced. Regardless of whether the latter half of the previous sentence is valid or not, Mr. Welch is accomplished and generally knowledgeable. When he speaks it is not without reason or meaning.
For media and political midgets to criticize his comments without acknowledging his point is reflective of their abilities and propensities rather than Mr. Welch’s point.
The point made by Mr. Welch was valid and recognized by others. One who agrees with Welch and makes his point with hard data is Thomas Sowell:
Economist Edward Lazear has cut through all of Barack Obama’s claims about “creating jobs” with one plain and inescapable fact — “there hasn’t been one day during the entire Obama presidency when as many Americans were working as on the day President Bush left office.” Whatever number of jobs were created during the Obama administration, more have been lost.
Director Blue also provides damaging data that sycophants of the current regime find inconvenient.

A SINGLE DEVASTATING GRAPH: The Real Obama Jobs Record

by directorblue
This could be the single best illustration of the unemployment catastrophe Barack Obama’s policies have inflicted upon the population.
Whether you are rich, poor, old, young, fat, thin, female, male, brown, white, Christian or Jewish, Obama’s policies of spreading misery are equal opportunity job destroyers.

…since January 2009, for every person added to the labor force, 10 have been added to those not in the labor force. Here’s a chart showing the dwindling labor force:

…That is, in nearly the four years, since President Obama took office in January 2009, only 827,000 people have been added to the labor force, while during that same time period, 8,208,000 have been added to those not in the labor force.

The chart relies on data available from the federal Bureau of Labor Statistics.

In simple terms, the advertised unemployment rate of 7.8 percent is completely bogus. It ignores all those who have stopped looking for work or are employed part-time but want full-time work.

The real unemployment rate — the true measure of the Obama Jobs Disaster — has hovered around 14 percent ever since he came to office. And unless we course-correct quickly, the tax, Obamacare and deficit cliffs are poised to kill millions of more jobs in 2013.

The Country Loses Ron Paul But Not (Unfortunately) The Federal Reserve

Presidential $1 Coin Program coin for Thomas J...

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Ron Paul at the 2007 National Right to Life Co...

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Ron Paul is looked at by some as a modern day Don Quixote. His perennial windmill was the Federal Reserve, an institution not very well understood by the American public. For those who don’t understand the Fed, watch this video.

Representative Paul is a Republican, but a strange one. He is a RINO (republican in name only), a term usually reserved for liberal Republicans. In fact, he really stands outside both political parties, much as Senator Bernie Sanders of Vermont. He and Sanders could not be more opposite in political philosophy. Both are concerned about the Fed and removing its veil of secrecy if not the institution itself.  Ron Paul aimed at both objectives.

To many, abolition of the Fed is radical and unthinkable. That aim of Paul’s was one reason why so many considered him a political wingnut.  As our economic crisis continues, Paul’s opinion of the Fed begins to appear more rational to many. For much of our history, his position was not so far outside mainstream thinking.

This small collection of quotes, issued by diverse, respected and mostly distinguished historical figures, support in varying degrees Mr. Paul’s position:

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.”Thomas Jefferson, U.S. President.

“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than the aristocracy, more selfish than the bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes.” Abraham Lincoln

“I have unwittingly ruined my country.” - President Woodrow Wilson, upon passage of Federal Reserve Act, 1913

“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the United States for the benefit of themselves and their foreign customers. The Federal Reserve banks are the agents of the foreign central banks. The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board.” Congressman Louis T. McFadden, Chairman of the House Banking and Currency Committee, addressed the House on June 10, 1932. 75 Congressional Record 12595-12603

“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” John Maynard Keynes

“The financial system has been turned over to the Federal Reserve Board. That board administers a finance system by authority of a purely profiteering group. That system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. This (Federal Reserve) Act establishes the most gigantic trust on earth. When the president signs this bill, the invisible government by the monetary power will be legalized. The people may not know it immediately but the day of reckoning is only a few years removed, the worst legislative crime of the ages perpetrated by this banking bill.” - Charles A. Lindbergh, R-MN

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance.” James Madison

You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect to these gentlemen, I advise you to vote for gold.” George Bernard Shaw

“It is well enough that the people of this nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford

Give me the right to issue and control a nation’s money and I care not who governs the country.”Meyer Amschal Rothschild, International banker

“Inflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.” Ludwig von Mises

“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic
inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.” Ludwig von Mises

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Obamanomics in Four Charts

Doug Ross has provided a simple four-chart summary of what has happened under Obamanomics. You might want to show these to your liberal friends and ask them for an explanation.

If you know someone disconnected from politics, unmotivated to vote, or otherwise sitting on the fence, please share with them the following four graphs. And then ask them one simple question, which I’ve listed below.

• Household income fell more in recovery than during recession

• Gas prices have more than doubled since Obama took office:

• Labor Force Participation Rate Goes Backward to 1981

“The [labor force participation] rate dipped in the early part of the last decade but rose again during the Bush expansion and was 66.2% as recently as January 2008… It fell again in the recession, but the most distressing news is that it has kept falling during the last three years of recovery. This is unprecedented, and the big question is why.”

• The ‘One-Time’ Stimulus Became Part of the Federal Baseline Budget

In 2009, Democrats and President Obama pushed a “one-time” Stimulus spending package through Congress in order to jump-start job creation and keep unemployment under 8 percent. It ended up costing the American people $840 billion and unemployment has remained over 8 percent ever since…


Unfortunately, that so-called “one-time” spending spree was built into each and every year’s budget — and is driving America to a Greece-style debt crisis.

That one simple question to ask: Can we survive four more years of this?

* * * * * * * * * * * * * * * * * * *
Please considering sending this article to friends, family members, neighbors and colleagues. We can all do our part before November.

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What If The Young Won’t Work?

Suppose the youth of this nation were unwilling or unable to work. What then would happen to the country? The answer to that question should be obvious. The country would become progressively poorer.

Government, no matter its intentions, cannot create product or wealth. They only redistribute it. If fewer people are willing to work and the population remains the same, then per capita wealth necessarily goes down. The rate at which it declines is a function of many things, although the labor participation rate is among the more important.

Productivity is an important element. People are more productive when they have better tools and equipment to work with. Included among their tools is an education. “Human capital”  is primarily a function of the quality and quantity of education, something that has been in decline for decades. Tools and equipment are a function of past wealth creation or savings. As this diminishes, so too does the productivity of workers.

As the population ages, demographics come into play. An aging population means proportionately fewer people working and more not. Fewer people then must support more. Social security and medicare were both programs that depended upon their funding from those working. They were based on unreasonable assumptions (if you prefer, they were Ponzi schemes from the start) regarding demographics. As a result of rosy assumptions and increased benefits, these program are insolvent and will not last much longer in their current configurations.

Now it appears another factor is coming into play. The participation of youth in the workforce is declining. Bruce Krasting describes the deterioration:

The most disappointing element of Friday’s NFP report was the drop in Work Force Participation (WFP). This important measure of the labor force fell to a 31 year low. A look at the details shows things are even worse than the headline report. Consider this chart of WFP for two groups; workers 22-55 (white) and those 55+ (brown). The lines crossed in 2002. The negative gap has widened every year. It’s fallen off the chart the past three years.

This chart describes a real crisis for America. The long term consequences to the economic health of the country are tied up in this chart. All long-term macro economic analysis of the USA assumes that the current crop of younger workers will evolve to be a productive group for the rest of their lives.

Why are the young not working as they did in the past? That is moot. Some blame our school system, others the ease of living off welfare and still others the moral and cultural decline in the country. I suspect all are factors in the decline. The important point is how this change alters the future.  The standard of living and the per capita wealth of Americans is going down. These results are already showing up in various competitiveness surveys.

If the trend continues, the US will turn into a third-world nation quicker than most anticipate.

The Promises and Achievements of President Obama

I received this email from a reader and believe it is on a topic and of the quality that others might appreciate. The author is Tom Lester. He has no website but can be reached at tlester2010@gmail.com. Tom has graciously allowed his work to appear as a guest post.
I don’t expect to hear about many of these items at the Democrat Convention:
I think most of us want to believe that our President will always be honest with us, never slanting the facts nor engaging in spin to attempt to influence the American people just to assure his re-election.  So from here until election day, I’m going to believe everything  the President has said or is going to say.  Why?  Because he told me so.
  • He’s the smartest man to ever occupy the White House.  Must be true but this is one of the few things he didn’t say because that would come off as narcissistic.  But the main stream media told me that and they, like the President, never lie.  How do I know?  Because they told me so.
  • He’s one of the four greatest Presidents to ever occupy the office.  If you’re one of four that’s obviously not narcissistic.  How do I know?  Because he told me so.
  • He said after a year in office that if he were to grade himself, he’d give himself an A-.  How do I know?  Because he told me so.
  • He said since Congress would not pass legislation he wanted that some were encouraging him to do it administratively; he said he could not because the Constitution restricted such action.  How do I know?  Because he told me so.
  • He said if Congress would pass the $831 billion Stimulus package it would immediately revive the economy with shovel-ready jobs.  How do I know? Because he told me so.
  • He said if Congress passed the Stimulus package it would quickly reduce the unemployment rate to 6%.  How do I know?  Because he told me so.
  • He said the auto bailout was necessary and it saved jobs.  How do I know? Because he told me so.  Did that include the jobs of the employees in the General Motors and Chrysler dealerships that were closed by the Auto Czar?
  • He said Cash for Clunkers was good because it took the old gas-guzzlers off the street.  How do I know? Because he told me so.  Wonder if the buyers of those old clunkers would prefer to have them back instead of the loans they must now pay eating up any savings in gas money?
  • He said he would be the unifying force reaching across the aisle of Congress for bi-partisan legislation . How do I know?  Because he told me so.
  • He said that SB 1070 would cause the Hispanic man buying an ice cream cone for his daughter to be hassled by the police.  How do I know? Because he told me so.
  • He is the only person to be awarded the Nobel Peace for not what he had accomplished but for what he would do.  How do I know?  Because he and the Norwegian Nobel Committee told me so.
  • He said a tax increase was the worst thing to do in a recession as he extended the Bush tax cuts.  In 2010, wasn’t it?  How do I know?   Because he told me so.
  • He said that the rich top 10%, who pay over 70% of the total income tax, are greedy and they need to pay more.  That was 2011, wasn’t it?  How do I know? Because he told me so.
  • He said that America should engage in civility.  How do I know?  Because he told me so.
  • He said that the actions of the Cambridge police were stupid.  How do I know?   Because he told me so.  Did he mean all police?
  • He said that Bush had taken the credit card to China and the deficit he ran up was unpatriotic. How do I know?  Because he told me so.
  • He said that he would cut the deficit by half in four years.  How do I know? Because he told me so.  I didn’t hear him say (There must have been a closed microphone?) that he would need to add $5 trillion before he could cut it in half, and I didn’t hear him say which four years.
  • He said that with his election the oceans would begin to recede.  How do I know?  Because he told me so.  I think our eastern and western states have gained some shoreline, haven’t they?
  • He said the earth would begin to heal.  How do I know? Because he told me so.  Maybe there will be a “earth doctor” at the DNC convention to confirm this fact, you think?
  • He said his would be the most transparent administration ever.  How do I know? Because he told me so.
  • He said he had laser-like focus on job creation in 2011.  How do I know? Because he told me so.
  • He said the Affordable Care Act would only cost the American taxpayers $900 billion and every American would have health coverage.  How do I know?  Because he told me so.
  • He said he would extend the hand of friendship to the Muslim world and bring peace to all.  How do I know? Because he told me so.
  • He said that the private sector was doing okay but he needed to worry about the public sector.  How do I know? Because he told me so.
  • He said that the private sector business owners and entrepreneurs “didn’t build it (their businesses), someone else did that.”  How do I know? Because he told me so.
  • He said that America could become energy independent by developing solar and wind power and that companies like Solyndra needed taxpayer money to make it happen.  How do I know? Because he told me so.
  • He said if the economy wasn’t restored and the unemployment wasn’t at an acceptable level, he would be a one-term President.  How do I know? Because he told me so.  Maybe he’s going to surprise us all at the DNC convention and give his Lyndon Johnson speech:  “I will not seek, nor will I accept…”  Possible?
There is an old Russian proverb that goes something like this, “Judge a man not by his words, but by his deeds.”  Perhaps you like our friends from Missouri should adopt their unofficial slogan of the Show-Me state, which they even use on their license plates.  Now I’m sure he may have shared with you some additional things that I may have missed.  But in the interim, however, you and I will just have to judge him by his words and that should be good enough for every voter because he told us so.

Abbott and Costello Economics

Abbott and Costello explain government’s calculation of unemployment:

COSTELLO: I want to talk about the unemployment rate in America .

ABBOTT: Good Subject. Terrible Times. It’s 9%.

COSTELLO: That many people are out of work?

ABBOTT: No, that’s 16%.

COSTELLO: You just said 9%.

ABBOTT: 9% Unemployed.

COSTELLO: Right 9% out of work.

ABBOTT: No, that’s 16%.

COSTELLO: Okay, so it’s 16% unemployed.

ABBOTT: No, that’s 9%…

COSTELLO: WAIT A MINUTE. Is it 9% or 16%?

ABBOTT: 9% are unemployed. 16% are out of  work.

COSTELLO: IF you are out of work you are unemployed.

ABBOTT: No, you can’t count the “Out of Work” as the unemployed. You have to
look for work to be unemployed.

COSTELLO: BUT THEY ARE OUT OF WORK!!!

ABBOTT: No, you miss my point.

COSTELLO: What point?

ABBOTT: Someone who doesn’t look for work, can’t be counted with those who
look for work. It wouldn’t be fair.

COSTELLO: To whom?

ABBOTT: The unemployed.

COSTELLO: But they are ALL out of work.

ABBOTT:  No, the unemployed are actively looking for work. Those who are out
of work stopped looking. They gave up. And, if you give up, you are no
longer in the ranks of the unemployed.

COSTELLO: So if you’re off the unemployment roles, that would count as less
unemployment?

ABBOTT:   Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don ‘t look for work?

ABBOTT: Absolutely it goes down. That’s how you get to 9%. Otherwise it
would be 16%. You  don ‘t want to read about 16% unemployment, do ya?

COSTELLO: That would be frightening..

ABBOTT: Absolutely.

COSTELLO: Wait, I got a question for you. That means there are two ways to
bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO:  Unemployment can go down if someone gets a job?

ABBOTT:  Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier
of the two is to just stop looking for work.

ABBOTT: Now you’re thinking like an economist.

COSTELLO: I don ‘t even know what the hell I just said!

ABBOTT: Now you’re thinking like a politician.

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