Last night a friend of mine sent me a link to a blog that is hosted and written by David Stockman. David Stockman was the former budget director for Ronaldus Magnus until for some reason he was taken to the woodshed and fired. Oh, I know what it was. He disavowed supply-side, which was his own creation. Anyway, Stockman has run a bunch of numbers and has been able to put all of this in context and has concluded that the actual unemployment rate in the United States of America is not 5.5%, and it's not 12.5% or 13%. It is 42.9%.
Let me share with you a little bit of how he gets there.
It's a long blog post. I can't... I'm not even gonna try to summarize most of it. I'm just gonna get to the meat of it as it relates to this. But it's an all-out assault on Keynesian economics and the Federal Reserve and the damage that both have done and continue to do to the US economy. But here's the focal point on unemployment. "In fact," he writes, "the Census Bureau survey takers and the [Bureau of Labor Statistics] numbers crunchers have not the foggiest idea as to what the real world’s potential labor force computes to, and how much of it is deployed on any given day, month or quarter."
That's economics-speak for they don't have any idea how many people are working. The "world's potential labor force," meaning how many people in the world have an opportunity to hold a job and go to work at it. Nobody knows. They have no way to compute it. And how much of that force is "deployed," that's just military lingo for how many people getting up and going to work every day. "Accordingly," he writes, "printing money and pegging interest rates in pursuit of 'full employment', which is the essence of the Yellen version of monetary central planning..."
Jessica Yellen is the chairman of the Fed. "[T]he essence of the Yellen version is completely nonsensical," and it's political, by the way, getting an unemployment rate 5.5%. You know what statistically full employment is. This is why this doesn't make any sense. Traditionally, statistically full employment has been 4.7%. Everybody involved in economics from the government on down has agreed that if at any time the US unemployment rate is 4.7% then our economy is roaring.
We got people working and working overtime, and it's as near to full employment as it's possible to get. Well, I'm telling you: If that's true about 4.7%, there's no way we're at 5.5%. This is just my gut reaction to all this. This is why this is fascinating. Now, Stockman is ripping into the money supply people and Obama because they're pegging everything they're doing to that. They're printing money, giving it to the stock market, pegging interest rates at near zero in pursuit of full employment.
Read the rest here...