Government Economists Embarrass Themselves and their Fellow Economists
by Mark Luedtke
As President Obama pushes for another $50 billion stimulus boondoggle, his fifth by my count, and economist after economist warns that the economy is still in decline, the wise men at the National Bureau of Economic Research announced that the recession that began in December 2007 had ended in June of 2009. When they heard the news, 300 million Americans simultaneously spit their Cheerios all over the breakfast table. Writing at mises.org, Mises Institute economist Robert Murphy blushes:
“Some days, it's embarrassing to be a professional economist. On Monday [Sept. 20], the National Bureau of Economic Research (NBER) officially declared that our recession had ended — 15 months ago. Yes, that's right, just as more and more analysts are worried about the economy imploding again, the NBER announces that the recession ended back in June 2009. The whole episode underscores the crudity of mainstream economics.”
Being paid by the government means never having to admit you’re wrong. Murphy offers an analogy of NBER’s analysis technique:
“Let's say you are running and then break a leg. You have to crawl now, but you develop that skill and are able to get from here to there. Are you in recovery from the accident? According to the NBER, yes — so long as you are crawling faster than when you first hit the ground in agony.”
But Doug French, also of the Mises Institute, injects some reality:
“Never mind that the U.3 and U.6 unemployment rates were 9.4% and 16.4%, respectively, in May of 2009, supposedly the last month of the recession while last month’s U.3 and U.6 stood at 9.6% and 16.7%. Real Private Fixed Investment continues to sink. Consumer and business bankruptcy filings continue to climb. One in 8 people in America are receiving food stamps according to Reuters. And in three-quarters of U.S. cities foreclosure filings are on the rise.”
Some recovery. This begs the question: How can NBER be technically correct based on their own definitions but absurdly wrong based on reality?
NBER bases its analysis on Gross Domestic Product (GDP), and the major component of GDP is spending by consumers and government. Imagine that you were allowed to counterfeit an unlimited amount of money. You decide that since the economy is in recession, you’ll print up $1 trillion in new money and spend it. Bam. GDP increases by $1 trillion so the recession is over, right?
Of course not. GDP goes up by $1 trillion, NBER’s definition of recovery is met, but the recession isn’t over. There’s a reason counterfeiting is illegal. You’d have $1 trillion worth of new stuff, but because you put $1 trillion in new currency into circulation, the dollars in the bank accounts and wallets of everybody else would lose $1 trillion in value. Everybody else would be $1 trillion poorer. That’s robbery on a fantastic scale, not recovery.
Yet that’s the scam run by the Federal Reserve and our government. NBER’s statistics are gimmicks to fool us into enabling government to loot more of our wealth to enrich the aristocrats and their bankster cronies. The government prints up new bonds to sell, the Fed counterfeits money and buys some of the bonds, GDP goes up, but every American becomes poorer. The Fed is a racket designed to invisibly steal our money, and NBER is one of its covers.
Some of the bonds are purchased by private individuals, firms and foreign governments too, but the money spent on bonds is sucked from the productive private sector where it was working to enrich everybody into the parasitic political economy making everybody poorer.
All government spending must be paid for either through taxes or counterfeiting by the central bank. And because all government spending sucks real resources - raw materials, equipment, labor, etc. - from the productive private sector into the parasitic political economy, we pay for all government spending a second time through higher prices for all goods and services we buy. Just like during the Great Depression, everything government has done ostensibly to fight this recession has deepened it and made us poorer.
This looting has nothing to do with which party is in power. It’s systemic because the primary function of government is to loot the people on behalf of aristocrats and their cronies, regardless of which party is in power.
Republican tax cut proposals are part of the scam. Because all government spending must be paid for, if government cut taxes, the Fed would counterfeit even more money to pay the difference. This just makes government’s looting more invisible. The ways to stimulate our economy are to allow interest rates to naturally rise so people will save and invest in new production and cut government spending to return real resources to the productive private sector. But contrary to their phony rhetoric, Republicans never cut spending. They haven’t cut spending in a century, and they’re not going to start now. Just like Democrats, they lie to obtain power for themselves so they can loot the people to enrich and empower themselves and their cronies. These looters aren’t letting this crisis they created go to waste.
by Mark Luedtke
As President Obama pushes for another $50 billion stimulus boondoggle, his fifth by my count, and economist after economist warns that the economy is still in decline, the wise men at the National Bureau of Economic Research announced that the recession that began in December 2007 had ended in June of 2009. When they heard the news, 300 million Americans simultaneously spit their Cheerios all over the breakfast table. Writing at mises.org, Mises Institute economist Robert Murphy blushes:
“Some days, it's embarrassing to be a professional economist. On Monday [Sept. 20], the National Bureau of Economic Research (NBER) officially declared that our recession had ended — 15 months ago. Yes, that's right, just as more and more analysts are worried about the economy imploding again, the NBER announces that the recession ended back in June 2009. The whole episode underscores the crudity of mainstream economics.”
Being paid by the government means never having to admit you’re wrong. Murphy offers an analogy of NBER’s analysis technique:
“Let's say you are running and then break a leg. You have to crawl now, but you develop that skill and are able to get from here to there. Are you in recovery from the accident? According to the NBER, yes — so long as you are crawling faster than when you first hit the ground in agony.”
But Doug French, also of the Mises Institute, injects some reality:
“Never mind that the U.3 and U.6 unemployment rates were 9.4% and 16.4%, respectively, in May of 2009, supposedly the last month of the recession while last month’s U.3 and U.6 stood at 9.6% and 16.7%. Real Private Fixed Investment continues to sink. Consumer and business bankruptcy filings continue to climb. One in 8 people in America are receiving food stamps according to Reuters. And in three-quarters of U.S. cities foreclosure filings are on the rise.”
Some recovery. This begs the question: How can NBER be technically correct based on their own definitions but absurdly wrong based on reality?
NBER bases its analysis on Gross Domestic Product (GDP), and the major component of GDP is spending by consumers and government. Imagine that you were allowed to counterfeit an unlimited amount of money. You decide that since the economy is in recession, you’ll print up $1 trillion in new money and spend it. Bam. GDP increases by $1 trillion so the recession is over, right?
Of course not. GDP goes up by $1 trillion, NBER’s definition of recovery is met, but the recession isn’t over. There’s a reason counterfeiting is illegal. You’d have $1 trillion worth of new stuff, but because you put $1 trillion in new currency into circulation, the dollars in the bank accounts and wallets of everybody else would lose $1 trillion in value. Everybody else would be $1 trillion poorer. That’s robbery on a fantastic scale, not recovery.
Yet that’s the scam run by the Federal Reserve and our government. NBER’s statistics are gimmicks to fool us into enabling government to loot more of our wealth to enrich the aristocrats and their bankster cronies. The government prints up new bonds to sell, the Fed counterfeits money and buys some of the bonds, GDP goes up, but every American becomes poorer. The Fed is a racket designed to invisibly steal our money, and NBER is one of its covers.
Some of the bonds are purchased by private individuals, firms and foreign governments too, but the money spent on bonds is sucked from the productive private sector where it was working to enrich everybody into the parasitic political economy making everybody poorer.
All government spending must be paid for either through taxes or counterfeiting by the central bank. And because all government spending sucks real resources - raw materials, equipment, labor, etc. - from the productive private sector into the parasitic political economy, we pay for all government spending a second time through higher prices for all goods and services we buy. Just like during the Great Depression, everything government has done ostensibly to fight this recession has deepened it and made us poorer.
This looting has nothing to do with which party is in power. It’s systemic because the primary function of government is to loot the people on behalf of aristocrats and their cronies, regardless of which party is in power.
Republican tax cut proposals are part of the scam. Because all government spending must be paid for, if government cut taxes, the Fed would counterfeit even more money to pay the difference. This just makes government’s looting more invisible. The ways to stimulate our economy are to allow interest rates to naturally rise so people will save and invest in new production and cut government spending to return real resources to the productive private sector. But contrary to their phony rhetoric, Republicans never cut spending. They haven’t cut spending in a century, and they’re not going to start now. Just like Democrats, they lie to obtain power for themselves so they can loot the people to enrich and empower themselves and their cronies. These looters aren’t letting this crisis they created go to waste.
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