Full Employment Is Not Something We Should Strive For

The reason that people work and have jobs is not to make money.  This may seem to be the case on the surface but in reality making money is only a side effect of being employed.  We strive to earn money because we are confident that the money we earn in exchange for our labor will allow us to demand goods and services that we want and need. Ideally we all agree to produce a good or service because someone else demands it.  In reality government involvement in markets causes workers to spend time performing tasks that are wasteful.  Tasks that do not generate a good or service that is being demanded in the real economy.  The reason that governments do this is not because they are malicious, but rather because governments do not operate on a profit/loss mechanism like the private sector does (We shall save this idea for an article in the future).

Thus, full employment is not an indicator of economic prosperity.  For example, the government could use tax dollars to hire thousands of workers to dig holes.  They could then hire thousands more to fill the holes back in.  The workers would receive pay for this, but society as whole would actually be worse off than before the project started. Money and labor has been channeled into a process that is of benefit to noone.

An economy runs best when the most efficient producers of goods and services rise to the top and the least efficient producers are bankrupted due to incompetence and inability to compete.  What we are describing here is capitalism.  If we lived in a more capitalistic economy, humans would progress much faster.

The problem facing our modern economy is primarily government interference in markets.  This interference disrupts our overall efficiency and causes more people to have to work than ever before while at the same time our standard of living continues to decline.  Everyone now needs a job because the currencies of the world are being devalued gradually over time.  At the same time there are more government employees than ever who perform tasks that are of questionable usefulness to the greater good of society.  These 2 factors combined causes more household members on average to have to work (Father, Mother, Children) whereas this was not the case in previous generations in the USA.  But jobs are not what we need.  We need the highest quality goods and services at the lowest prices possible.

Below are steps that we could take to improve our collective standard of living:

     -Free market money (money or moneys chosen by the market, not by official decree and legal tender laws)
     -Absence or minimization of government regulation (businesses would be regulated solely by consumer choice)
     -No bailouts or secret loans from the Fed to businesses in distress
     -No income tax loopholes to benefit one group at the expense of another

If we were able to make those bullet points mentioned above a reality, two things would happen.  First, our standard of living would increase.  Secondly, leisure or "free time" would also increase.   The consequence is that people would not need be concerned about having both mom and dad and the children of a household all employed.  Mom (or Dad) and the children would be able to stay home.  Leisure time would increase as technology improves and performs the tasks faster and more efficiently than humans.  Folks would have to do less work to generate more output.  This is a very important point to remember.  Again I'll restate, the reason we go to work is not because we desire money, its because we desire goods and services that we need.  Somewhere along the way, we collectively decided that money was an end in and of itself which is not the case.  If you were stranded on an island like Tom Hanks in "Castaway" a billion dollars would not help you.  Remember this the next time you hear a government official talk about creating jobs.  This is not something to be desired for all of the reasons stated above.

Take Your Ball And Go Home

In our current system, your financial power is the most imporant power that you have. How you choose to allocate your wealth has more of an impact and "voice" if you will, than any action that you could ever make inside of a voting booth.

Do not allow this final, and important power to be taken away from you as a citizen. If we as a people collectively go broke due to financial calamity, what would the ruling class need to consult with the general public for? The answer: Nothing. Consider making moves now to protect yourself from paper ponzi schemes. Take personal responsibility for managing your assets. Do not rely on a 3rd person or group of persons to safe guard YOUR savings. If there is any counterparty risk in your "porfolio", consider the idea that this portion of your savings could be taken to zero with no notice, just like the unfortunate people who held accounts at MF Global. There are more bankruptcies on the way. Use this time that we have to make whatever financial preparations you can. Talk to your loved ones and find out what they are doing. Hope for the best.

Its Perfectly Legal For Congress To Execute Insider Trading (But Not Legal For You)

Unfortunately, there is no practical way to stop insider trading. Humans have a natural tendency to network and share information with others.  There is no reasonable way to prevent this no matter how many laws are enacted.  If the thought of insider trading bothers you, you should probably avoid trading in markets altogether and find other productive ways to invest or conserve wealth.  The truth is that the American markets are more corrupt now than ever. If you dont like that congressmen and women can make insider deals with impunity, simply pull your funds from the market. Stop dumping money into IRA's and 401K's. Just because an employer matches your contribution does not make it a "no brainer" decision to participate.  Employer participation just means that both you AND the employer are throwing money into the bottomless money pit. The only way to win this in the long run is to not play the game.

For more details see this 60 minutes expose which lays out the truth for all to see.  After hearing this, why would any sensible person wish to participate in such a system?  The average American is a guppy among sharks in this financial world. 

Why GDP (Gross Domestic Product) Is A Misleading Representation Of America's Output Of Goods And Services

GDP or Gross Domestic Product, a widely relied upon economic statistic, measures spending, not production. GDP = private consumption + gross investment + government spending + (exports − imports).

If we break down the components of that equation, we can see that the GDP of the United States is primarily driven by defecit spending, consumer borrowing.  The final output is hindered however by a massive trade deficit.   The trade deficit is represented by the last portion of the equation (exports - imports).  Exports minus Imports is certainly a negative number in the United States in 2011.  Because (exports - imports) is always a negative number, to generate a postive GDP America has to perpetually expand defecit spending and the issue of credit. 

America's ability to export has been weakend by outsourcing of labor to markets.  Specifically markets where the currency is artificially supressed in order to compete with other exporting nations for the demand of USA consumers.  Obvious examples of suppressed labor markets would be China and India.  Our ability to import is strong due to the artificial overvaluation of the US Dollar.  The overvaluation of the dollar is protected at all costs by the United States military industrial complex.  Our leaders know that we as a nation of consumers cannot afford a lower global demand for dollars as this would almost certainly collapse the American standard of living that we all have become accustomed to.

Media reports will tell the general public that GDP was up x percent this year when common sense would tell us that with unemployment being as high as it is, there's no way the USA's actual productive capacity is increasing. The reason GDP has been positive in the last few years is simple.  Deficit spending, credit expansion, and money printing.  We are producing less goods and services each year and compensating for this loss with the printing press.