| SEN PAUL: | I don’t know of anybody on this panel who tries to maximize their tax burden. I mean my question for Mr. Harvey : Do you take any deductions on your taxes? |
| MR. HARVEY: | Obviously I do. |
| SEN PAUL: | Do you choose to maximize your tax burden or minimize your tax burden? |
| MR. HARVEY: | Uh minimize it. |
| SEN PAUL: | Do you think you’re a bad person for doing that? |
| MR. HARVEY: | Absolutely not. |
If historical cases of hyperinflation — real, and now virtual — have one thing in common, it is the instinct among its victims to blame the symptoms rather than the disease. During both the German and the Diablo 3 hyperinflations, “intrigue and artifice” were believed to be at work.
Economically, the tipping point in the transformation of inflation into hyperinflation is characterized by a profound drop in the outstanding demand for money: when holders of money expect the supply of money to increase — particularly without any sense of timing, bounds, or other guidance — monetary demand in the present drops in favor of surrendering money for vendibles.
The focus of possessors of money, therefore, devolves into an effort to capture known, present purchasing power against the likelihood of its decline in the near future. Saving, in any event, delaying consumption, is chastened; and if a cycle of declining purchasing power and rapidly rising prices ensues, ultimately the propensity to hold money declines precipitously and may fundamentally disappear.
This was demonstrated when, in a message board entry prefaced by stating “Sell Equipment before Patch 1.0.5 Hits!” (a patch is a piece of software added to an operational program or application as bugs are found, changes desired, or ways of improving performance discovered), a player warned that,
Blizzard just announced that the drop rates for [certain] items are going to be doubled … if you haven’t already, you should consider converting your current gear to cash … since real $ [are] the best hedge against gold devaluation[.][11]
If historical cases of hyperinflation — real, and now virtual — have one thing in common, it is the instinct among its victims to blame the symptoms rather than the disease. The Austrian economist Hans Sennholz noted that during the German hyperinflation, “intrigue and artifice” were believed to be at work.[12] Similarly, a handful of Diablo 3 players, frustrated about the decimation of their purchasing power, expressed increasing suspicion of manipulation and conspiracy theories.
I thought this was a fun little read about hyperinflation in an in-game marketplace.
The U.S. economy is worse. It’s plausible to attribute the reason to different reasons and people. However, the claim that U.S. employment figures have improved lately is completely false.
In July, there were 155,013,000 in the U.S. civilian labor force. In August that dropped to 154,645,000—meaning that on net 368,000 people simply dropped out of the labor force last month and did not even look for a job.
There were also 119,000 fewer Americans employed in August than there were in July. In July, according to the Bureau of Labor Statistics, there were 142,220,000 Americans working. But, in August, there were only 142,101,000 Americans working.
Despite the fact that fewer Americans were employed in August than July, the unemployment rate ticked down from 8.3 in July to 8.1. That is because so many people dropped out of the labor force and stopped looking for work. The unemployment rate is the percentage of people in the labor force (meaning they had a job or were actively looking for one) who did not have a job.
Yet, most media outlets today are stating the more Americans are employed because of 96,000 new jobs. The vast majority of mainstream media outlets fail to mention that 368,000 working age Americans dropped out of the labor force. That’s a massive net decline in employment. People who are unemployed but who are not collecting unemployment checks are essentially be written off as not being in the labor force (and thus not counted in the official unemployment figures). I’m not sure if this happening because of ignorance or willful negligence. Regardless of the reason, it reduces my trust in news outlets that don’t prominently report the data relating to decline in the labor force participation rate (when citing U.S. economic health).
The Labor Department counts a person as not in the civilian labor force if they are at least 16 years old, are not in the military or an institution such as a prison, mental hospital or nursing home, and have not actively looked for a job in the last four weeks. The department counts a person as in “the civilian labor force” if they are at least 16, are not in the military or an institution such as a prison, mental hospital or nursing home, and either do have a job or have actively looked for one in the last four weeks.
In July, there were 155,013,000 in the U.S. civilian labor force. In August that dropped to 154,645,000—meaning that on net 368,000 people simply dropped out of the labor force last month and did not even look for a job.
There were also 119,000 fewer Americans employed in August than there were in July. In July, according to the Bureau of Labor Statistics, there were 142,220,000 Americans working. But, in August, there were only 142,101,000 Americans working.
Despite the fact that fewer Americans were employed in August than July, the unemployment rate ticked down from 8.3 in July to 8.1. That is because so many people dropped out of the labor force and stopped looking for work. The unemployment rate is the percentage of people in the labor force (meaning they had a job or were actively looking for one) who did not have a job.
The Bureau of Labor Statistic also reported that in August the labor force participation rate (the percentage of the people in the civilian non-institutionalized population who either had a job or were actively looking for one) dropped to a 30-year low of 63.5 percent, down from 63.7 percent in July. The last time the labor force participation rate was as low as 63.5 percent was in September 1981.
Since the labor force participation rate is at a 30 year low, we can reach a few conclusions.
I lean towards the second option. The U.S. economy is in shambles and most of the economic and business reporters are misleading the American public about the employment health of the U.S.
Singapore and Hong Kong both have low tax rates and simple tax codes; they both keep growing economically despite having no natural resources. Maybe there is a correlation between the two facts?
Daily chart: internet economies. Britain’s internet economy is now bigger than its construction and education sectors. But Europe as a whole punches below its weight, mainly because its internet economy is held back by a lack of a single digital market.
From Zerohedge:
The unemployment rate drops to 8.2% for one simple reason: the number of people not in the labor force is back to all time highs: 87,897,000.
Nassim Talib (author of Fooled by Randomness and The Black Swan) talks about the U.S. economy and states that Ron Paul is the only person who understands the structural issues of the economy:
“Only one candidate, Ron Paul, is saying the right things for the issues we are facing,” Taleb said. “I’m a risk-based person. From my vantage point there’s only one candidate representing the right policies.”
Taleb said he believes in an America that is resilient. “You don’t achieve that through bailouts,” he said. “You need the economy to stay vital. You need a rate of failure. What is fragile should break early.”
He said Paul’s plans, including making drastic cuts in government, ending corporate bailouts and abolishing the Federal Reserve can “cure the fundamental issues. He’s against the issue of novocaine. If you have a severe problem, you do root canal. That’s the only choice you have. You have to start with a government budget that is in control. You don’t gamble with future generations’ money.”
Unemployment in America is very bad and unemployment figures are understated because of the amount of capable workers that are counted as dropping out of the labor force (probably because they couldn’t find a job). The graphs and quote below is from Zerohedge:
A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
What do the NAR, Consumer Confidence and CBO forecasts have in common? If you said, “they are all completely worthless” you are absolutely correct. Alas, the market needs to “trade” off numbers, which is why the just released CBO numbers apparently are important… And the fact that the CBO predicted negative $2.5 trillion in net debt by 2011 back in 2011 is largely ignored. Anyway, here are some of the highlights.
- 2012 Deficit: $1.1 trillion; 2013 Deficit: $0.6 - yes, we are cackling like mad too…
- Unemployment to remain above 8% in 2012 and 2013; will be around 7% by end of 2015; to drop to 5.25% by end of 2022.
- This forecast is utterly idiotic and is completely unattainable unless the US workforce drops to all time lows and the US economy generates 300,000 jobs a month for 10 years
- Needless to say, CBO assumes the best of all worlds in this meaningless forecast
- But here is the kicker: “Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent” translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%. Thank you
Chile used to be the poorest of the three countries and now it is comparatively rich. Argentina has enjoyed a bit of growth. Venezuela, by contrast, used to be the richest of the three nations but has stagnated and now is in last place. …
Chile has reduced the burden of government a lot in the past three decades, Argentina has reduced the burden of government a little, and Venezuela has gone in the wrong direction and increased the burden of government.
