Why I'm Not Buying Into the Improved Economy Hype

The nation is cheering. Unemployment has almost normalized at 5.5% (thanks, Obama!). It might have taken awhile but we clawed our way out of the depths of despair and are on our way to lift off. Or are we? When you dive into the employment numbers and look beyond them, the picture isn't so rosy.

While the media has been cheerleading the recovery and posting headlines about the unemployment numbers, they haven't been as vociferously posting the macroeconomic data. Whenever the mainstream media endlessly harps on one story, it's a good bet that they're trying to distract you from the real story somewhere else. In this case, it would be the terrible macroeconomic data that's been coming in since the end of QE3.

In fact, since February alone we've seen 48 data misses and only 8 beats. Let that sink in for a minute. That's not even close. And much of that negative data is the kind of misses or month after month negativity that is only seen during recessions, yet the stock market ignores that bad news and only seems focused on the employment numbers.

Labor force participation rate is at historic lows. Defenders of the government numbers will argue that it's because of all the Baby Boomers retiring, but there are plenty of people who have pointed out that "... the participation rate for those 55 and older is as high as it has ever been historically. The participation rate, unfortunately, for those in the 25 - 34 demo, that’s 4% lower than before the crisis." Recent college grads and highschoolers looking for their first jobs are still struggling to find work. Meanwhile, Boomers are finding that they can't retire and have to stay in the workforce for longer than anticipated. 

                                    

Meanwhile, we still have a record number of people on food stamps. A robust recovery would see record low numbers of people needing assistance, not record highs.

Yet another reason to doubt the BS coming out of the BLS has to do with the huge discrepancy in estimated job losses in the energy sector. According to last month's BLS report, only 1,100 energy sector jobs were lost in February. However, Challenger, Gray & Christmas, a notable Chicago-based firm that specializes in outplacements, downsizings, and plant closures, claims there were 16,000 energy jobs lost in February. Sixteen thousand. That's a huge discrepancy. With the months long tumble that oil prices have taken and a recovery in prices far from sight, which number do you think is more believable?


                                  

Paul Craig Roberts, former Assistant Secretary for the Treasury under Reagan, also threw cold water on the latest jobs numbers. Here's his assessment:

"The 295,000 claimed new jobs are highly suspect. For example, the report claims 32,000 new retail jobs, but the Census Bureau reports that retail sales declined in December and January. Why would retailers experiencing declining sales hire more employees?

Construction spending declined 1.1% in January, but the payroll jobs report says 29,000 construction jobs were added in February.

Zero Hedge reports that the decline in the oil price has resulted in almost 40,000 laid off workers during January and February, but the payroll jobs report only finds 2,900 lost jobs in oil for the two months."

Something isn't adding up. Noted economist Peter Schiff, who was out there early and often warning about the 2008 housing bubble, has been documenting weekly (his podcast on the latest jobs report is here) the lack of recovery we're seeing and predicting an even bigger crash in the near future than the one we've supposedly just recovered from. Why another crash? Because the Federal Reserve hasn't reversed course on anything and instead is doubling (tripling?) down on the same failed policies that crashed the economy in 2001 and 2008. But you can only reinflate the bubble so many times before it ultimately pops for good.

Sorry, folks, but you can't print your way to prosperity, which is essentially what the Federal Reserve has been trying to do since the inception of its quantitative easing programs. Only a gang of economists (or Congressmen) would think that piling debt on top of debt, borrowing trillions of dollars, and printing an endless stream of money won't end badly some day. They're just hoping it doesn't happen on their watch, like a game of hot potato and hoping they're not the ones caught holding the potato when the music stops.

For a further explanation of why what the Federal Reserve is engaging in will only lead to further pain down the road, I refer you to this short video of historian and Austrian economist (Austrian as in the Austrian school, not Austrian in nationality), Tom Woods, discussing how Austrian business cycle theory explains these economic booms and busts that everyone else, including and especially those at the Federal Reserve, seem to think just come from out of nowhere.

I'm not an economist but I've been doing a lot of self-study in economics over the last few years. As a former liberal, I realized how woefully uninformed about economics I was previously, which of course explains why I was a liberal. Perhaps I'm wrong and I'm subscribing to the wrong economic theory. But no matter which way you slice it, we're $18 trillion dollars in debt, that's $18,000 billion dollars to put it in different terms (by comparison, Warren Buffet, one of the world's richest men, is only worth $76 billion dollars), with no sign of slowing down.

We have placed the central planners at the central banks on pedestals, almost revering them as deities, and allowed them to perform experiments with unfathomable sums of money, usually in secret because we can't fully audit their books, and think that this small group of humans somehow has enough accumulated knowledge amongst them to make fiscal and monetary decisions for the other 310 million of us. If that seems absurd that's probably because it is. Along the way, your government has been lying to you about the real state of the economy leading people to believe in a recovery that wasn't real.

I hope I'm wrong but anyone with a wit of common sense can see that something ain't right, no fancy economics degree required (probably better that way as those with the degrees are the ones most blind to the realities of the situation!). I suspect in a matter of years, or sooner, we'll know one way or another. Maybe by then you'll be able to throw this blog in my face and I'll humbly eat crow. If not, watch out below!

In Defense of Capitalism

I made the mistake of commenting on an article I saw on Facebook the other day. For the most part, I've more or less learned to refrain from getting into arguments with strangers over Facebook or through the comment sections of articles I read. You have about as good a chance of convincing these people of the righteousness of your argument as you do in convincing Liberace that sequins and gold don't have to be wardrobe staples.

Alas, I have a fatal flaw, though, in that if I see stupid in the world, I feel the need to try and correct it. Hence this blog. Hence my futile efforts at trying to convince some avowed socialists that capitalism, far from being the cause of world poverty and hunger, has actually done more than any other system known to man to lift people and countries out of poverty.

The title of the article was Capitalism and Global Poverty: Two Billion Poor, One Billion Hungry and the little preview snippet of the article read, "The report describes the conditions produced by capitalism—mass poverty, deprivation, social injustice, inequality, oppression—but makes no reference to capitalism. There is simply no mention of the economic system under which the world’s population lives, and thus no discussion of any alternative." Oy vey.

Enter Haley, stage left: "Sorry, wrong. Capitalism has brought more people out of poverty than any other system. Bread lines don't happen under capitalism. Food shortages don't happen under capitalism. Millions and millions of people starved and died under the communist and socialist regimes of China and Russia. Venezuela is lacking basic necessities under their socialist regime. Sorry, you can't blame capitalism for hunger and poverty unless you bastardize the definition of capitalism."

Then the stupid comes: "I believe that polls show that majorities in 'liberated' Warsaw Pact countries miss communism. They thought it was bad - until they experienced predatory capitalism..." I'd like to see these polls and talk to some of those Chinese and Russians who lived under Mao and Stalin and see if they really did enjoy living under those regimes more than current ones. 

This guy here really lets me have it: "Why is that always ignorant people defend capitalism with a counter argument of communism? have you personally ever lived in a real communist country? I gusse not, I am sure you have not even been across the state line." Yeah, sure, as I write this from the Bahamas. And fortunately, no, I haven't ever lived in a real communist country as there are hardly any left in existence anymore because people have figured out that it doesn't work!

Not only does it not work, if only it were as simple as "Oops, this didn't work. Let's try something else." No, when socialism and communism fail, they take millions and millions of people down with it. In fact, apart from WWI and WWII, deaths due to communism and socialism were the greatest cause of death than any other cause in the 20th century. It's estimated that 85-100 million people died under these regimes. How are we even debating this? How are people still even thinking that socialism might be more ideal than capitalism? When capitalism fails (and of course these failures are due to government intervention) mass deaths do not happen. Worst case scenario: greedy companies run shady businesses that bilk people out of their life savings. Irrefutably immoral and reprehensible, but millions of people do not die as a consequence. Moderate case scenario: You can't afford an iPhone 5 and instead have to get the Sprint smart phone instead. Oh the horrors of capitalism.

People aren't literally starving to death in countries where they have a relatively free market. People aren't risking their lives on makeshift rafts trying to get away from their oppressive capitalist country for the shores of their communist neighbor. No! People are seeking out freedom, which is what capitalism, in its pure form at least, represents. Even in its bastardized, corporatist form that we experience today, the results are still better than they ever were under socialism. 

I know there are tomes of economic texts out there and you can find any multitude of economists to support your chosen economic system, but let's put this as simply as possible. Capitalism is referred to as the free market, with "free" being the operative word here. You have a boat. I wish to buy a boat. We trade your boat for my money and bingo! That's the free market. There's no force or coercion involved to complete the transaction. We are both better off because of the transaction or else the transaction never would have occurred. I would have kept my money and spent it on something else and you would have sold your boat to someone else if one of us were unhappy with the terms of the sale. Multiply millions of transactions like this everyday and you have the flourishing of a system where people mutually benefit by acting on behalf of their own self interests. This is how our fledgling country developed from nothing to a world superpower in just over a century.

The problems arise when government starts trying to interfere with these freely entered into arrangements. Take the current example of Uber, for instance. Uber is a popular ride sharing enterprise that is starting to displace taxicabs because of its convenience and affordability. Here you have a person or enterprise trying to bring a service to the market, to fulfill a need or a void in the marketplace that they thought the taxicabs weren't filling. On the other hand, you have tens of thousands of willing customers who have found their business model to be much more appealing than the traditional taxicab and have chosen to spend their money freely with Uber. Everyone wins, right? Wrong. Despite this freely entered into business transaction, the government in some states and cities has felt the need to try and ban Uber or severely limit their business. This is a lose-lose. The entrepreneur loses out on potential income and the consumer loses out on a cheaper, more efficient mode of transportation. The only winner in this equation is the taxi cab cabal who has successfully lobbied the government to drive out their competition. Innovation and ingenuity has been stifled. The government flashed the gun hidden underneath its cloak using the implied threat of violence in order to quash this business venture and bestow favor upon another business or industry. 

Therein lies the problem with systems that rely on an excessive amount of government control. The government's only tool is its monopoly on violence and its implied threats thereof. That's why the communist and socialist regimes of the 20th century had such catastrophic results. Not only because these governments presumed to be above the laws of economics, as if they could avoid those laws anymore than they could avoid the laws of gravity, which had disastrous effects on supply and demand causing shortages of daily necessities resulting in mass famine amongst other things, but because their massive overreach into their economies and the free market required violence to subvert the free will of its citizens. 

It was because of these -what should be obvious- facts that I felt the need to go drop some truth bombs on these severely misguided people. As expected, I'm quite certain I failed to persuade anyone to step into the light. That won't keep me from trying, however. As Ron Paul has famously said, "Speak up, speak often and don't worry about those that at this point cannot understand as they can never un-hear what we tell them." 

As for those who are open to learning more about the free market, capitalism, economics, and history, I have a few recommendations all brought to you by the indispensable Tom Woods who, apart from Ron Paul, is by far my favorite figure in the liberty movement. 

For an introductory tidbit that requires minimal time commitment, I offer a brilliant speech that Tom Woods gave in defense of capitalism called "Why Economic Freedom? Here's Why": https://www.youtube.com/watch?v=TnS2OtzSTq0

If you want to delve a little deeper, any of Tom Woods's books are worth reading but in particular regarding this topic I would recommend Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.  

And lastly, for an invaluable resource at a phenomenal price, there is the Tom Woods's Liberty Classroom: The History and Economics They Didn't Teach You. This gives you a high school or beginning college level introduction to many topics taught by actual university professors. Some of the classes include: The American Revolution, History of Political Thought, Austrian Economics Step-By-Step, U.S. History, and Introduction to Logic. Additionally, each course has a corresponding forum where you can ask the professors questions and get clarification on some of the lectures being taught. They also do a monthly webinar with the professors where you can ask your questions and have them answered live on the spot. How much would you pay to get similar courses and access in college? $5000/year? Would you believe that Liberty Classroom will only cost you 1% of that amount? For the mathematically challenged like me, that's 50 bucks. Fifty dollars gets you an awesome introductory education on topics that are more relevant than ever so you can go into a Facebook debate armed with information, for whatever good it will do you ;) A superb value if I ever saw one. 



 





 

WWE's Kane, Tom Woods, and Taxation

I've been enjoying being back in the US again for the last couple of months for many reasons. Those who have bothered to read my bio, which is displayed next to every post of mine, might have noticed that my profession is as a yacht crew member. I live and work on a big boat and travel the world while catering to the whims of the world's rich and not-so famous. It's pretty cool--usually.

A couple of the things that I've enjoyed doing while being in between seasons in the US recently is getting my daily dose of liberty from two of my favorite truth-tellers and liberty lovers, Peter Schiff and Tom Woods. Peter Schiff has a daily radio show from 10am-noon every weekday and Tom Woods has just started his own radio show in the last month which airs directly after Peter's; best 150 minutes of my day! Normally when I'm abroad, either the internet connection is too slow, non-existant, or I'm too busy to listen in to the shows during the day, so I've really relished this opportunity these last 2 months to regularly get information on current events from people I trust.

The other day on the Tom Woods Show, he hosted WWE wrestler "Kane", real name Glenn Jacobs, who has recently become more and more vocal about his libertarian viewpoints, appearing on radio shows and writing op-eds in newspapers, most notably on the subject of the Internet Tax Mandate, known elsewhere by the Orwellian title of the Marketplace Fairness Act.

As most of Woods's interviews are, this was engaging and enlightening with well thought out questions which were answered intelligently by Jacobs. They covered much of the usual ground, including how Jacobs became a libertarian and what his colleagues in the locker room thought of him and his view points. About midway through, Jacobs touched upon an important point that resonated strongly with me and with Woods as well. He mentioned that as part of the WWE he is employed as a subcontractor and not as an employee of the company and as such is not subject to tax withholding. Tom mentioned that he is in a similar situation since he has no set income stream like wage workers and salaried employers have and therefore has to file quarterly taxes like many other self-employed workers have to.

I count myself in this group. My husband and I have our own S-corporation and are employed as subcontractors to our boss. We formed this business a little over two years ago once we got married since my husband is Australian. Previously, I was issued a 1099 by my employers and paid taxes that way. My husband was not required to pay US tax.

Jacobs mentioned in his interview that if he ever were elected to be President or, more appropriately, Dictator for a day, the first thing he would do would be to eliminate federal tax withholding. If you get a regular paycheck from a company or corporation, your paycheck is automatically deducted a certain amount for Social Security, Medicare, and various other taxes. If you're making $48k/year, you don't get $1000/week as a paycheck (for the sake of simplicity let's assume only 4 weeks in a month). You probably only get about $800 of that. But you don't even notice the amount that's taken away from you. Psychologically, it was never yours to begin with so you don't even miss it.  Maybe you never even see a paycheck, you just get a direct deposit.

Now imagine getting your entire $1000 paycheck every week like clockwork. Instead of $3200/month, that's an entire $4000/month, wow! That's almost an entire extra mortgage payment per month! You see your bank account accumulating quickly, you see those student loans getting paid down, you see a nice beach vacation in your future with the kids, you see trading in the car you've had since college for a newer model, you see being able to help your brother with a small loan, you see putting down an appropriate 20% down payment for a new home. Oh but wait, March comes around and June and September and December and greedy Uncle Sam needs his handout. But instead of just $200 dollars that you give each paycheck, you realize that those little $200 increments that you might not have noticed too much when it was getting taken out of your paycheck every week and was never "yours" to begin with have now added up to $2400, which you noticed very much as it sat in your bank account and were mentally imagining how you could spend it. But <poof!> just like that it's gone, never to be seen again! Beach vacation, gone! New car, gone! college loan payments, never-ending! New home, not in this decade!

I should know, this is what happens to me four times a year. I've joked to numerous friends and family how I could single-handedly support the economy if I were allowed to keep that money myself. We wouldn't have needed to bailout Detroit and the auto giants over there if I and everyone else like me had those several thousand dollars per quarter back in our bank accounts with which to spend how we see fit (possibly on new cars).

When Jacobs and Woods were both talking about mandatory withholding, I was standing there with my earbuds in my ears, hands in the air, shouting "Preach!" Can you imagine how pissed people would be if they saw that huge chunk of change leave their bank account four times a year? And yet nobody bats an eye when a small portion is taken every week or two weeks. Trust me, psychologically it makes a HUGE difference when you see how much you could have had, what you yourself could be doing with your own money, and then you have to give it away to anonymous bureaucracies for unknown purposes. If you'd never questioned the system before, it might seriously give you pause for a second to wonder if the government really knows better than you do how to spend your money. You might recognize and realize a) how much they're actually taking from you  and b) what you could have spent that money on yourself if the government hadn't decided it was more important for them to have it. Maybe, just maybe, if people were able to keep their whole paycheck they would have enough money to save for their own retirement and wouldn't be forced to pay for someone else's. Maybe, just maybe, if people were able to keep their whole paycheck we wouldn't have had to force banks to make subprime loans to questionable buyers who couldn't afford to put a down payment down on a house because those people might actually have had the money with which to put a down a reasonable down payment. But our government thinks we're all too stupid to be trusted with our own money.

Yes, safety nets, yes roads, blah blah blah. But what about all the useless bullshit that we have to pay for? Bridges to nowhere, corporate subsidies, illegal wars, bogus university "research" studies, 800,000

"non-essential" government employees, etc. Ah yes, but you see, overlord Nancy Pelosi would have us believe that "the cupboard is bare" and "there are no more cuts to make" in terms of our federal spending. So too bad to all the peons out there who thought that they'd worked hard for their money and deserved a new home or who worked hard for their money and wanted to take a vacation for the first time in years. No, you must keep working hard, citizen, but not for your own benefit. You must keep the piggies in Washington happy.

If it were up to me, I'd have a bubble sheet like they do with private sector fundraisers where you can direct where you want your money to be spent. I'm betting that most people would not elect to have their hard-earned money going towards the studies of duck genitalia or training Chinese prostitutes to drink more responsibly. But as soon as you start talking about cuts in government, you immediately get accused by both politicians and citizens alike of hating the poor, wanting to throw granny off the cliff, or wanting terrorists to attack America. We the People have been fooled into thinking that our federal government only has 5 programs, Medicare, Medicaid, Social Security, food stamps, and defense, and that any proposed cuts in government will automatically leave any or all of those programs vulnerable. They've fooled us, with the help of our complicit media, into thinking that every dollar we send to the federal government is sacred and if we spend even .50 cents less than what we're spending now, the country will self-implode. In other words, no vacation for you, citizen! If you'd rather take your money and go on vacation than send it to the federal government, you're just a greedy, heartless SOB who hates poor and sick people. That's just a fact.

I'll tackle more on taxation in another article. In the meantime, do a little experiment yourself. If you actually get a paycheck, a physical paycheck where you can see what they're withholding from you, do the math yourself. Figure out how much money gets withheld per paycheck, then figure out how much money gets withheld over a 3 month time frame (quarterly). And then ask yourself if you think it would make any difference seeing this money in your bank account month after month and then having to write a check and send it all away. Or does it not make a difference to you one way or another? Let me know in the comments below!

In case you missed it above, here is the link where you can listen to the Tom Woods interview with WWE wrestler "Kane".

Syria and Presidential War Powers

At the moment, I'm not going to get into ALL of the reasons why a war, err, excuse me, "military action" on Syria is a bad idea. Aside from the fact that we'd be fighting on the same side as Al-Qaeda, whom we went to war with due to their actions exactly 12 years ago today, there is lots of conflicting info about who actually released chemical weapons. Not to mention there is no exit strategy, the tens of billions of dollars it will probably cost, the hypocrisy, and we're not even sure if the outcome will be favorable to the US. But I digress.

Nonetheless, the official line from the war propagandists like John Kerry, President Obama, Rep. Peter King, Senators John McCain and Lindsey Graham, and many others insists that despite Obama's decision to turn the matter over to Congress, that the President still has the authority to launch an attack on his own. It's merely out of his kind benevolence that he's going to let We the Peons have a say and then, after that, maybe he'll listen to us or maybe he won't and he'll rain some peace bombs down on Syria anyway. 

Despite what they'll have you believe, he and all the other warmongerers in Congress and in the media are still dead wrong when they claim that the president has the authority to act without Congressional approval. They'll take advantage of the fact that most people either haven't read or have forgotten what was written in the Constitution and that according to our founding document, while the president is, in fact, the Commander-in-Chief of the military, that it is still Congress who must vote to decide whether to send those in uniform into battle. Once Congress votes to use military force, then the Commander-in-Chief can determine in what manner to use it, but not beforehand.

If the first round of BS doesn't pass the smell test, next the propagandists will throw out some half-baked historical precedent (which upon closer examination is usually mostly false or taken way out of context) or issue (true) claims that previous presidents have done the same thing many times so 100 wrongs must make a right, right?

Whatever it is, whatever slippery sophistry they try and sneak pass the American public does not change the fact that they are wrong. Take a look here at this article about presidential war powers by Tom Woods, written specifically as a rebuttal to all the hawks out there who are beating the war drums over this situation in Syria. Woods has a PhD in History from Columbia University and is also a Constitutional scholar. In this article, he rebuts some of the most common arguments the neocons use in order to convince the public that the President can go to war whenever he wants.

Why should you believe Tom Woods over some of the other intellectuals out there with (or without) fancy degrees and impressive credentials? Well, I think primarily because when he makes his arguments, he goes out of his way to cite the Founders themselves via their own words at the Constitutional Conventions or in the Federalist papers. It is in those words, letters, and papers that the true intent of the Framers becomes clear. Everyone else, of course, ignores these sources and hopes most people don't know about them because they unequivocally refute the lame arguments the opinion-makers try and thrust upon us to justify their illegal or immoral acts.

Bookmark Tom's page so that you can use it as a rebuttal the next time you hear someone mindlessly parrot what the talking heads fallaciously told them on TV to further their own agenda. And while you're at it, don't forget to sign-up for Tom Woods's Liberty Classroom where you can continue learning about the history and economics they never taught you in high school or that you've since forgotten. For only $99/year you can get an in-depth education on myriad subjects like Constitutional History, Logic, Western Civilization, and more. That's great value considering you'd pay thousands of dollars at a university to learn almost the same thing.

It's time to arm yourself with information and knowledge to combat the ceaseless lies and propaganda that come from our government and our media. Much to the dismay of The Powers That Be (TPTB), Americans are slowly but surely wising up to their schemes and are seeing through their smokescreen. Are you one of them?