">
Home
Oct 7, 2017 Employment Explosion
June 26, 2017 Why's the FED Panicking?
May 25, 2017 LFPR anyone?
Apr 26, 2017 What's up with the FED?
March 10, 2017 Feb Employment Situation
Oct 10, 2016 Tax Burden
Aug 1, 2016 Here Comes the Debt
June 26, 2016 Moribund US Economy
June 16 2016 Labor Update
Mar 10, 2016 Spring Renewal for Labor Markets?
Feb 21, 2016 GDP Gap
Feb 16, 2016 FED and Monetary Policy
Jan 19, 2016 Employment Gap Age Groups LFPR
Jan 10, 2016 A look at the Employment Situation
Dec 30, 2015 Fed Funds Rate up 25 Basis points...so what?
Dec 15, 2015 Fed Funds on the rise? Has Yellen 'Fell-in'?
Oct 15, 2015 Labor Markets Seven years of misery
Oct 6, 2015 Sept: Horrible Month for Labor
Sept 30, 2015 The FED: Interest Rate Angst
Sept 11, 2015 FED on the Monetary Policy Front
July 31, 2015 Trade and Foreign Exchange Rates
July 20, 2015 Economic Growth?
July 10, 2015 Labor Picture by Age Group
July 2, 2015 Disastrous Month in Labor Rpt
June 19, 2015 Minimum Wage - Income Distribution
Jun 5, 2015 Encouraged Worker Effect
May 8, 2015 Updated Employment Situation for April
May 4, 2015 Languishing Labor Markets
Apr 7, 2015 LFPR Doldrums on the Labor Front
March 8, 2015 Less than Zero Interest Rates - Trade War
2014 Articles
2013 Articles
2012 Articles
2011 & 2010 Articles
Dec 23, 2011 Revisionist History Depression
Dec 10, 2011 Depression & Now Part 1
Dec 5, 2011 Lies, Damned Lies, Statistics
Nov 16, 2011 Taxes Part 2
Nov 8, 2011 Taxes Pt 1
Nov 1, 2011 Demographics
Oct 12, 2011 Fed-FOMC
Oct 6, 2011 Fed's Operation Twist
Sep 30, 2011 What Price Bailouts?!
Sep 9, 2011 Trade Deficit - States
Sept 3, 2011 Unemployment Ongoing Challenge
August 22, 2011 Restricting Oil Supply
August 11, 2011 Credit Rating-Taxes
August 8, 2011 QE3? What to do?
Aug 5, 2011 Employment Update
August 1, 2011 Competitive Free Mkt Capitalism
July 26, 2011 Cradle of Democracy
July 16, 2011 Capital Ratios
July 10, 2011 Unemployment Again
July 1, 2011 QE2 Over-Apres Moi, le Deluge
June 11, 2011 Unemployment
June 8, 2011 Net Worth Collapse
May 18 2011 Credit Collapse '08-'10
May 15, 2011 Fed Miracle-Mayhem
May 10, 2011 Unemployment
Mar 30, 2011 Puppet Show
Mar 18, 2011 Locked-in-Effect
Mar 10, 2011 Bummer Days
Feb 12 2011 Inflation by Decontenting
Feb 6 2011 Unemployment
Jan 14 2011 Money Supply
Jan 12 2011 Trade Deficit
Jan 6 2011 Printing Press Myth
Dec 18, 2010 College Pricing
Dec 7 2010 Debt & Deficits
Dec 2, 2010 J-Laffer Curve
Sep 24 2010 Competition
Sept 23 2010 Trade Deficit China
Introduction
About us
Links of Interest
Straw Poll
Definitions & Miscellaneous
 

 

Economic Newsletter for the New Millennium


December 10, 2011

 
Editor
Donald R. Byrne, Ph.D.
dbyrne5628@aol.com  


Associate Editor
Edward T. Derbin, MA, MBA
edtitan@aol.com  


For a downloadable version, click here

Sad Words Spoken



An examination of the failed financial and economic policies of the last few years: Part I of a three part series; a history lesson from the Great Depression and its similarity to the (current?) Great Recession


“Those who cannot remember the past are condemned to repeat it.”  

George Santayana

 


A few weeks ago the U.S. Department of Treasury released its latest estimate of the budgetary deficit for the fiscal year ending Oct. 31, 2011.
 

U.S. Department of the Treasury – Financial Management Service

http://www.fms.treas.gov/mts/mts1011.pdf


  

Butdget Deficits from 2007-2011.jpg


Once again it revealed an extremely large deficit of which the majority of members of the European Union, now flailing like a beached whale, would be very proud.  Was it budget-breaking? No, since we have had no budget for more than two years even though there was an overwhelming majority of members in both houses of Congress of the same political party as are currently in the White house.  No they are definitely not Tea Partiers.    


Jim's Weekly Column

http://sensenbrenner.house.gov/News/DocumentSingle.aspx?DocumentID=269744  
 
Washington, Nov 18 - 

 “The Democratic- controlled Senate has not passed a budget in more than 900 days.”

Congressman Jim Sensenbrenner – Wisconsin, 5th District


No doubt tax revenues have suffered from the Great Recession.  The problem is that the policies undertaken are a major cause for the continuing economic and financial malaise in which we are mired, chin deep, I might add.  The tax base has not appreciable grown and hence the lagging tax revenues for not only the federal government but a large majority of state and local governments as well. 




Change in Budget Deficits 2008-2011.jpg


All of this despite the history making bail outs from Troubled Asset Relief Program – Federal Reserve site (TARPhttp://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program, and equally futile and outright dangerous Quantitative Easings (QE1, 2, and 3).  With the European Union apparently slipping back into recession, if indeed if they like us, the recession in terms of unemployment has never ended, can QE 4 be far behind?

Unfortunately, these policy failures, dating from August 31, 2008 through November 30, 2011 have added $5,442,696,898,447 to our national debt. 

The Daily History of the Debt Results

U.S. Department of the Treasury, Bureau of the Public Debt

http://www.savingsbonds.gov/NP/BPDLogin?application=np  

These policies have driven up debt as a percentage of Gross Domestic Product from 66% to 100%.  Just as has the European Union, so highly admired by el Presidente of the U.S., gone to the brink of financial bankruptcy, the U.S. is moving rapidly toward a similar position as we squander the  remaining elbow room left as sovereign risk looms larger.  On what has the federal government been spending like a drunken sailor?  What peculiar forms of monetary stimulus has the FED been injecting into the arteries of the U.S. financial system and how much will it cost the citizenry as a result.  



 

 

 



Debt to GDP Ratio.jpg


We here at the New Paradigm Associates implore you to read or if you have already done so, re-read the testimony of Henry Morgenthau, the Secretary of the Treasury and confidant of Franklin Delano Roosevelt (FDR) as well as several commentaries we have cited on this topic.  Again, recalling the words of George Santayana, “Those who cannot remember the past are condemned to repeat it.”   There is a strong similarity to the Obama  policies and those of FDR. 

The Great Myth that FDR saved the nation from collapse, falls apart when the numbers are looked at closely.  That his policies were starkly different tan Herbert Hoover, his predecessor as president of the U.S. of A. also does not stand the test of serious scrutiny.  Besides the testimony of Morgenthau before Congress in 1939, you should read or re-read the more recent studies of the failed policies of the 1930’s confirming the testimony of Henry Morgenthau.  

-------------------------------------------  

http://blog.heritage.org/2009/01/14/were-spending-more-than-ever-and-it-doesnt-work/

Henry Morgenthau Jr. — close friend, lunch companion, loyal secretary of the Treasury to President Franklin D. Roosevelt


“We have tried spending money. We are spending more than we have ever spent before and it does not work.”


“I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot!”


The date: May 9, 1939. The setting: Morgenthau’s appearance in Washington before less influential Democrats on the House Ways and Means Committee.

-------------------------------------------  

http://www.econlib.org/library/Enc/GreatDepression.html

Great Depression

by Gene Smiley

“It is commonly argued that World War II provided the stimulus that brought the American economy out of the Great Depression. The number of unemployed workers declined by 7,050,000 between 1940 and 1943, but the number in military service rose by 8,590,000.”  

-------------------------------------------   


The Editor of this newsletter had an older brother who went from civilian federal government employee as a member of the Civilian Conservation Corps or CCC as it was called directly into the Second Marine Division without ever being employed in the private sector in between!  


-------------------------------------------   

Regime Uncertainty

Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War

http://www.independent.org/pdf/tir/tir_01_4_higgs.pdf  

Despite the encroachments of taxation, regulation, and other government action at all levels that had been occurring for half a century or more (Hughes 1991, 92–135; Higgs 1987, 77–167; Keller 1990), as late as 1932 business people in general and investors in particular remained—certainly in retrospect—relatively free of major threats to the prevailing regime of private property rights.

Then, during the next two presidential terms, the Roosevelt administration proposed and Congress enacted an unparalleled outpouring of laws that significantly attenuated private property rights (Leuchtenburg 1963; Badger 1989). State legislatures followed suit with their “little New Deals” (Leuchtenburg 1963, 198–88; Badger 1989, 283–84) and relentless tax increases (Brownlee 1996, 83, 85). Table 1 lists only some of the more important federal enactments diminishing or threatening private property rights. As financial economist Benjamin Anderson ([1949] 1979), an astute contemporary observer, remarked, “The impact of these multitudinous measures—industrial, agricultural, financial, monetary, and other—upon a bewildered industrial and financial community was extraordinarily heavy” (357).

Anderson was hardly the only contemporary economist convinced that the New Deal measures caused the Great Duration. [Joseph] Schumpeter, one of the world’s leading authorities on business cycles, wrote in the first edition of his Capitalism, Socialism and Democracy, published in 1942.
-----------------------------------------------------


Are we currently on the same path?  Remember the economy collapsed in 1937 after a few years of growth in GNP but very little reduction in unemployment.  In fact the only major reduction in unemployment during the Great Depression was first due to the nearly doubling of civilian employees on the federal payroll and then the draft and military buildup of more than 8 million in the military as WWII began.

Since this is the first in a series of articles, we conclude with some figures on, first the Great Depression, and then on the current (????) Great Recession (officiallly, it ended in June 2009 by a vote of the NBER - National Bureau of Economic Research - a learned and trusted group of academics). 

http://blogs.wsj.com/economics/2010/09/20/nber-recession-ended-in-june-2009/ 


 

Note the similarity.  You would be wise to heed the warning of Santayana!!!


 

U-6 Unemployment Current-WOW.jpg




Great Depression Unemployment Rate.jpg





Great Depression Double Dip Recession.jpg



 




Great Recession Over.jpg