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Make-believe America: the US is said to have full employment, misleading statistics

Without growth in wages and salaries or in consumer debt, consumer demand cannot drive the economy and business profits.

Alex Christoforou

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This article was originally published on Paul Craig Roberts Institute for Political Economy.

Americans live a never-never-land existence. The politicians and presstitutes make sure of that. 

Consider something as simple as the unemployment rate.  The US is said to have full employment with a January 2018 unemployment rate of 4.1 percent, down from 9.8 percent in January 2010. 

However, the low rate of unemployment is contradicted by the long-term decline in the labor force participation rate.  After a long rise during the Reagan 1980s, the labor force participation rate peaked in January 1990 at 66.8 percent, more or less holding to that rate for another decade until 2001 when decline set in accelerating in September 2008.  

Today the labor force participation rate is the lowest since February 1978, reversing all of the gains of the Reagan years. 

Allegedly, the current unemployment rate of 4.1 percent is the result of the long recovery that allegedly began in June 2009.  However, normally, employment opportunities created by economic recovery cause an increase in the labor force participation rate as people join the work force to take advantage of employment opportunities. A fall in the participation rate is associated with recession or stagnation, not with economic recovery.  

How can this contradiction be reconciled?  The answer lies in the measurement of unemployment.  If you have not looked for a job in the last four weeks, you are not counted as being unemployed, because you are not counted as being part of the work force. 

When there are no jobs to be found, job seekers become discouraged and cease looking for jobs.  In other words, the 4.1 percent unemployment rate does not count discouraged workers who cannot find jobs.

The US Bureau of Labor Statistics has a second measure of unemployment that includes workers who have been discouraged and out of the labor force for less than one year.  This rate of unemployment is 8.2 percent, double the 4.1 percent reported rate.   

Source: Bureau of Labor Statistics

The US government no longer tracks unemployment among discouraged workers who have been out of the work force for more than one year.  However, John Williams of shadowstats.com continues to estimate this rate and places it at 22 or 23 percent, a far cry from 4.1 percent.

In other words, the 4.1 percent unemployment rate does not count the unemployed who do show up in the declining labor force participation rate. 

If the US had a print and TV media instead of the propaganda ministry that it has, the financial press would not tolerate the deception of the public about employment in America.

Junk economists, of which the US has an over-supply, claim that the decline in the labor force participation rate merely reflects people who prefer to live on welfare than to work for a living and the current generation of young people who prefer life at home with parents paying the bills. 

This explanation from junk economists does not explain why suddenly Americans discovered welfare and became lazy in 2001 and turned their back on job opportunities.  The junk economists also do not explain why, if the economy is at full employment, competition for workers is not driving up wages.

The reason Americans cannot find jobs and have left the labor force is that US corporations have offshored millions of American jobs in order to raise profits, share prices, and executive bonuses by lowering labor costs.

Many American industrial and manufacturing cities have been devasted by the relocation abroad of production for the American consumer market, by the movement abroad of IT and software enginering jobs, and by importing lower paid foreign workers on H1-B and other work visas to take the jobs of Americans. 

In my book, The Failure of Laissez Faire Capitalism, I give examples and document the devastating impact jobs offshoring has had on communities, cities, pension funds, and consumer purchasing power. See also this. 

John Williams of shadowstats.com questions whether there has been any real growth in the US economy since the 2008 crisis that resulted from the repeal of the Glass-Steagall Act.  Williams believes that the GDP growth rate is an illusion resulting from the understatement of inflation.  Just as unemployment is under-counted, so is inflation.  

Two “reforms” were introduced that result in the under-measurement of inflation.  One is the substitution principle.  When the price of an item in the basket of goods used to measure inflation goes up, that item is thrown out and a cheaper substitute is put in its place. 

The “reformers” argue that consumers themselves behave in this way. Thus, they claim this practice is reasonable.  However, the old way of measuring inflation measured the cost of a constant standard of living.  The new way measures the cost of a falling standard of living.

The other reform is to classify some price rises as quality improvements rather than as inflation.  The consumer has to pay the higher price, but he is said to be getting a better product, and so it is not inflation. 

There is some truth to this, but it appears it is over-used in order to report low inflation rates.  Both of these reforms are suspected of being motivated by holding down Social Security costs by denying cost-of-living (COLA) adjustments to Social Security recipients.

If inflation is under-measured, the use of the measure to deflate nominal GDP in order to arrive at real GDP leaves some price rises in the GDP measure. Therefore, price rises or inflation are counted as increases in real goods and services.  John Williams suspects that most of the GDP growth reported since the alleged recovery is simply price rises, not increases in real goods and services. 

The historically high stock averages are another feature of make-believe America.  The high price/earnings ratios do not reflect strong fundamentals, such as high rates of business investment, strong growth in real retail sales fueled by strong growth in consumer incomes.

The Federal Reserve has used an increase in consumer debt to fill in for the missing growth in consumer income for so long that consumers have no more room to take on more debt.  Without growth in wages and salaries or in consumer debt, consumer demand cannot drive the economy and business profits. 

What explains the high stock prices?  The answer is the trillions of dollars the Federal Reserve has created in order to stabilize the large “banks to big to fail” and bail out their extremely poor investment decisions. All of this liquidity found its way into the financial sector where it drove up the prices of stocks and bonds, enriching equity owners and denying retirees any interest income on their savings.

The values of financial instruments are supported by money creation, not by underlying fundamentals.  Yet, the stock averages are treated as proof of economic recovery and America’s first place in the world.

As I said, it is never-never-land in which we live.

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Canadian Lawmaker Accuses Trudeau Of Being A “Fake Feminist” (Video)

Rempel segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career

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Via Zerohedge

Canada’s feminist-in-chief Justin Trudeau wants to support and empower women…but his support stops at the point where said women start creating problems for his political agenda.

That was the criticism levied against the prime minister on Friday by a conservative lawmaker, who took the PM to task for “muzzling strong, principled women” during a debate in the House of Commons.

“He asked for strong women, and this is what they look like!” said conservative MP Michelle Rempel, referring to the former justice minister and attorney general Jody Wilson-Raybould, who has accused Trudeau and his cronies of pushing her out of the cabinet after she refused to grant a deferred prosecution agreement to a Quebec-based engineering firm.

She then accused Trudeau of being a “fake feminist”.

“That’s not what a feminist looks like…Every day that he refuses to allow the attorney general to testify and tell her story is another day he’s a fake feminist!”

Trudeau was so taken aback by Rempel’s tirade, that he apparently forgot which language he should respond in.

But Rempel wasn’t finished. She then segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career. This from a man who once objected to the continued use of the word “mankind” (suggesting we use “peoplekind” instead).

The conservative opposition then tried to summon Wilson-Raybould to appear before the Commons for another hearing (during her last appearance, she shared her account of how the PM and employees in the PM’s office and privy council barraged her with demands that she quash the government’s pursuit of SNC-Lavalin over charges that the firm bribed Libyan government officials). Wilson-Raybould left the Trudeau cabinet after she was abruptly moved to a different ministerial post – a move that was widely seen as a demotion.

Trudeau has acknowledged that he put in a good word on the firm’s behalf with Wilson-Raybould, but insists that he always maintained the final decision on the case was hers and hers alone.

Fortunately for Canadians who agree with Rempel, it’s very possible that Trudeau – who has so far resisted calls to resign – won’t be in power much longer, as the scandal has cost Trudeau’s liberals the lead in the polls for the October election.

 

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Tucker Carlson summarizes the Trump and Russian collusion saga [Video]

Tucker Carlson excoriates the slander against President Trump, but goes farther to call out the establishment elite in their crimes.

Seraphim Hanisch

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Speculation this week has been rather strong that Special Counsel Robert Mueller III is about to release his report concerning his investigation in to the allegation that Donald Trump and his campaign colluded with elements of the government of the Russian Federation to…?

What, exactly?

That is where things get a little unclear. The narrative line says to “influence the 2016 presidential elections”, or “to steal the election from Hillary Clinton” – but that is about as far as any official narrative line goes. This ambiguity, masquerading as clear language, has created a further belief among a very large number of Americans that what actually happened was that this collusion actually extended into some form of vote-tampering, and amazingly, a recent poll Tucker Carlson mentions in his video we offer here says that some 53% of Americans actually believe that somehow the election results were altered by the Russians.

The question Tucker Carlson leads his report with is, “did the President betray his country?” However, as one goes through the list of events, insinuations, fabrications, attacks and nonstop innuendo that has led the US and Russian relations to their worst point since the Cold War, for no specifically stated and verified reason, one wonders who is doing the betrayal.

Now, in one sense, America owes no allegiance to Russia. But Russia also owes no allegiance to America, and the idea that Russia should is part of this effort by the American establishment. That establishment seems to believe that all the world should owe allegiance to the United States, at least as shown by words and actions of the Americans vis-a-vie foreign policy matters. But the truth is much closer to President Trump’s own notion of a brotherhood of nation-states rather than hegemony. He stated this noble thought in his first UN address in 2017:

Being in a brotherhood relationship with Russia and China is apparently beyond the pale for the American political establishment, hence, the Russia collusion investigation and over two years of nonstop slander, ostensibly designed to keep this from happening.

This is one reason why the notion that Mr. Mueller will actually release a report now is being met with a lot of distrust. We have heard rumors from DC for probably well over one year that the “report was imminent”, but nothing ever came of it. Even this week, Vox reported that the Mueller office asked for an eleven-day filing deadline extension for some reason.

To be blatantly speculative, the likelihood is that the report is every bit of a non-event as the pro-Trump crowd believes it is. However, bringing a stop to the President’s hoped-for policy is something that must not happen. The chances are therefore that whatever is released (if anything) will also be somehow curiously coincidental with some very similar allegation coming from somewhere that shows that while Mueller didn’t find anything, someone else did… and then the full-on media blocking has a new basis for continuing its efforts to disrupt and even destroy the work of the current administration.

As a parenthetical side note, Tucker Carlson is known for excellence in reporting and following stories like this one. What is particularly striking in this video is the directness with which he calls out other examples of very bad policy and actions that resulted in zero punishment for the people who did it. In particular, he calls out the whole 2003 Iraq War noting that the narrative of “weapons of mass destruction” was similarly false, costing thousands of American lives (not to mention the hundreds of thousands that died in Iraq) and a trillion dollars wasted, yet the chief players in that event, such as John Bolton still hold important posts in US government today. The bitter truth is that there remains a strong “untouchability” in Washington, and there is nothing that is likely to change that except President Trump.

Perhaps that is the reason for the resistance to his presence there.

 

 

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New Zealand weapons ban dream move of leftist activists

The American left is sure to pick this up and start screaming for an “assault weapons ban” because this supports their agenda so well.

Seraphim Hanisch

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Reuters reported on Thursday, March 21 that the Prime Minister of New Zealand enacted a sweeping change, banning weapons of the type that were used in the massacre of at least fifty Muslims, who were gunned down on livestream while in Friday prayer services in Christchurch last week. We quote from the Reuters piece below, with added emphasis:

New Zealand will ban military-style semi-automatic and assault rifles under tough new gun laws following the killing of 50 people in its worst mass shooting, Prime Minister Jacinda Ardern said on Thursday.

In the immediate aftermath of last Friday’s shootings at two mosques in the city of Christchurch, Ardern labeled the attack as terrorism and said New Zealand’s gun laws would change.

“On 15 March our history changed forever. Now, our laws will too. We are announcing action today on behalf of all New Zealanders to strengthen our gun laws and make our country a safer place,” Ardern told a news conference.

“All semi-automatic weapons used during the terrorist attack on Friday 15 March will be banned.”

Ardern said she expected the new laws to be in place by April 11 and a buy-back scheme costing up to NZ$200 million ($138 million) would be established for banned weapons.

All military style semi-automatics (MSSA) and assault rifles would be banned, along with parts used to convert weapons into MSSAs and all high-capacity magazines.

Australia banned semi-automatic weapons and launched a gun buy-back after the Port Arthur massacre in 1996 in which 35 people were killed.

Ardern said that similar to Australia, the law would allow for strictly enforced exemptions for farmers for pest control and animal welfare.

“I strongly believe that the vast majority of legitimate gun owners in New Zealand will understand that these moves are in the national interest, and will take these changes in their stride.”

This is undoubtedly going to be real red meat (or perhaps real vegetables) for the anti-gun lobby in the United States. This is because New Zealand strongly resembled the US in terms of firearm rights and the penetration of numbers of guns in the populace of this remote island nation. Reuters continues, with statements that would probably surprise, even horrify some gun owners in the States, but which are doubtlessly useful for the application of pressure on such individuals:

New Zealand, a country of fewer than 5 million people, has an estimated 1.2-1.5 million firearms, about 13,500 of them MSSA-type weapons.

Most farmers own guns while hunting of deer, pigs and goats is popular. Gun clubs and shooting ranges dot the country.

That has created a powerful lobby that has thwarted previous attempts to tighten gun laws.

Federated Farmers, which represent thousands of farmers, said it supported the new laws.

“This will not be popular among some of our members but … we believe this is the only practicable solution,” a group spokesman, Miles Anderson, said in a statement.

The main opposition National Party, which draws strong support in rural areas, said it also supported the ban.

The changes exclude two general classes of firearms commonly used for hunting, pest control and stock management on farms.

“I have a military style weapon. But to be fair, I don’t really use it, I don’t really need it,” said Noel Womersley, who slaughters cpoliticalattle for small farmers around Christchurch.

“So I’m quite happy to hand mine over.”

To be absolutely fair, the attack on the mosques was an awful event, made the worse by the shooter’s deliberate attempts to politicize various aspects of what he was doing and what he “stood for” as an attack ostensibly against US President Donald Trump, some seven thousand miles away in the United States.

The immediate reaction of the people interviewed, some among them related or friends with the victims of the massacre, was to embrace the weapons reform laws:

Nada Tawfeek, who buried her father-in-law killed in the attacks, Hussein Moustafa, on Thursday, welcomed the ban.

“It’s a great reaction. I think other countries need to learn from her [Prime Minister Jacinda Ardern],” Tawfeek said.

Mohammed Faqih, a member of the Islamic clergy who flew in from California and attended the funerals for some victims on Thursday, said he was “extremely grateful” for the gun ban.

“I wish our leaders in the States would follow on her footsteps and do the same thing,” he said.

One can expect there to be quite the outcry among American liberals about gun control, especially if anything remotely resembling this event takes place or is thwarted in coming days in the US.

It may seem very cold and cruel to focus on the political angle of this story rather than the human tragedy that it is. However, in this situation we have seen signs that the most vile form of human tragedy has actually taken place – the murder of dozens of innocent people for a mere political point. Indeed this thought has been noted and vilified already, as Mr. R.X. Dentith, writing for the New Zealand website Spinoff here quoted:

American paleo-conservative Rush Limbaugh was one of the first to note: “There’s an ongoing theory that the shooter himself may, in fact, be a leftist who writes the manifesto and then goes out and performs the deed purposely to smear his political enemies, knowing he’s going to get shot in the process. You know you just can’t – you can’t immediately discount this. The left is this insane, they are this crazy. And then if that’s exactly what the guy is trying to do then he’s hit a home run, because right there on Fox News: ‘Shooter is an admitted white nationalist who hates immigrants.’”

…[P]eople like Limbaugh… can’t stomach the idea the terrorist action in Otautahi might be motivated by the kind of rhetoric Limbaugh helps disseminate – tend to think there is a culture war going on, and they are on the losing side.

This war has many names, and the enemy is easily identified: it is the battle against Cultural Marxism; the fight against Toxic Feminism; the resistance to Identity Politics; and the fear of the Great Replacement, the thesis at the heart of the terrorist’s own manifesto.

The Great Replacement thesis posits that the majority white European countries are being “invaded” by non-white, non-European peoples. Not just that, but due to declining birth rates in the West, this “invasion” constitutes a wholesale replacement of the white population over time.

Mr. Dentith tries further to knock down this notion of the Great Replacement. However, he misses a much more basic point.

Someone who goes and takes human lives and broadcasts them for any reason is not a mere political operative. The person who does this is a very sick, deranged human being indeed. Evil is certainly appropriately used here.

However, evil is often quite cunning, and despite the intellectual arguments about the reality or non-reality of any particular manifesto statement, in this case, the killer played the media with infernal intelligence, and they took the bait. It is possible that Prime Minister Ardern also took the bait, in this most awful of bad situations, and to give her credit, she took swift actions to try to “correct” what was wrong.

But the problem here was not the type of weapons used. The problem is the fact that they were used by a person who thought these fifty people’s lives were worth nothing more than a bit of policy change. One of the worst examples of human evil in recent times, this incident shouts to the world that there is a problem, but the problem remains unsolved, even though many people will hand over their firearms out of a genuine wish for compassion to those lost and the hope that somehow this action will prevent a future incident.

But the logic of this emotional reaction is nil. And what is worse is that the American Left knows this, but does not care. The movers and shakers of liberalism will likely milk the actions of sincerely horrified New Zealanders for all they are worth to try at affecting change in American constitutional rights.

And the innocent dead will not rest in peace, because the real problem has not even been examined.

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