Federal Reserve

Is the Economy Doing Too Well?

"The economy is not like an engine that's going too hard," so let's stop analyzing it like one.

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KEVIN DIETSCH/UPI/Newscom

Unemployment is low, the stock market is booming, and the economy continues to grow.

In short, things are pretty great. But are they too great?

After Federal Reserve Chair Jerome Powell's press conference on Wednesday, The Wall Street Journal published an analysis suggesting that unemployment is well below the so-called natural rate of unemployment, and predicted that "by 2020 the economy will be well into overheating territory, the sort of situation that usually leads to dramatically higher interest rates and a recession."

Federal reserve officials project that the jobless rate will drop to 3.5 percent by the end of 2019, significantly lower than the approximately 4.5 percent natural unemployment rate—that's the term economists use to describe the minimum unemployment that can exist in a healthy market economy.

All this, in the Journal's Greg Ip's view, suggests an economy that's growing too fast and could overheat, leading to a recession.

Mainstream economists typically use the phrase "overheated economy" to describe an economy that has had extended economic growth leading to high inflation because of the greater wealth held by consumers. This can lead to an inflationary spiral and a recession, or so their logic goes. As Ip says, "so long as unemployment is below its natural rate, inflation will tend to go up, not down." To prevent this, central banks such as the United States' Federal Reserve step in to raise interest rates and, effectively, save the economy from its own success.

This reasoning is dubious at best. Inflation is often defined as a general increase in price levels, but that is simply a consequence of inflation. Inflation is really an increase in the money supply, which consequently makes each dollar less valuable, therefore increasing the prices of goods and services. If individuals in the marketplace are wealthier, and thus spending more, there will be no "overheating," provided the resources exist to meet the production requirements.

"I don't think the way to think about price inflation is to look and see what the unemployment rate is," argues Robert Murphy, research assistant professor at the Free Market Institute at Texas Tech University and senior fellow at the free-market Mises Institute. "Yes, you can see correlations, but it's not that the unemployment rate causes price inflation. It misleads people."

Does this mean that there's nothing to worry about? Far from it. The Federal Reserve's policy of artificially holding down interest rates is the real problem.

"Since the fall of 2008 and beyond kept interest rates artificially low, with its easy money policy that created an unsustainable boom. That fueled bad investments and now that the Fed is raising rates, those malinvestments are going to reveal and manifest themselves," says Murphy.

With the low interest rate policies espoused by the Federal Reserve, people are more inclined to borrow in order to invest in long term projects. However, the resources for those projects don't exist, which pulls them away from goods actually demanded, thus leading to malinvestments, which eventually causes a "bust," as the economy purges itself of the unsustainable investments of the boom.

So yes, Ip is right that a recession is a-coming, but it's not because the economy is growing too fast and overheating. As Murphy says, "The economy is not like an engine that's going too hard." So let's stop analyzing it like one.

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  1. Of course, coaching witnesses is only allowed if the prosecution is doing it. 🙂

    1. Damn, wrong thred, how did that happen?

      1. If you’re phone posting, sometimes you can accidentally swipe and it will take you to the next article.

        1. No, I did it on my desktop.

  2. You will never be wrong in predicting that a recession is coming. Just like you will never be wrong predicting that there will be a recovery after the recession. They have the phrase “economic cycle” for a reason.

  3. The Wall Street Journal published an analysis suggesting that unemployment is well below the so-called natural rate of unemployment, and predicted that “by 2020 the economy will be well into overheating territory, the sort of situation that usually leads to dramatically higher interest rates and a recession.”

    Gee, if only there were a way to let the markets determine interest rates instead of some unelected person at the Fed.

    1. Markets do determine interest rates.

      The Fed sets the Fed funds rate which is only the rate banks borrow from each other for maintaining overnight capital requirements.

      But all loans to consumers and businesses are market set.

      1. The Fed essentially sets the price of borrowing for banks. If the Fed lowers rates, all rates come down because that’s how competition in markets work. If the Fed rate drops and Bank A keeps mortgage rates constant, Banks B-Z will lower rates to take business from Bank A.

        The Fed indirectly controls nearly all interest rates.

        1. If the Fed lowers rates

          What rates are you referring to?

          As far as I know The Fed only sets the Fed funds rate. Does the Fed influence rates? Yes, of course. But the market sets all interest rates.

          1. I’m pretty sure he was referring to “the Fed funds rate”.

            In case you are completely ignorant of these things (a forgone conclusion, if you ask me) the Fed funds rate determines how cheaply banks can increase their reserves so that they can increase their lending.

            1. You are saying it influences rates and does not SET interest rates.

              Admit it.

              The key word is “set”. The Fed does not SET interest rates. Don’t be an idiot to bolster some political bias. Admit it for once.

              1. “Gee, if only there were a way to let the markets determine interest rates instead of some unelected person at the Fed”

                That was the original statement.

              2. Jesus you retard, you’re just arguing semantics.

                The point is the same. The Fed controls interest rates.

                1. de?ter?mine
                  d??t?rm?n/Submit
                  verb
                  1.
                  cause (something) to occur in a particular way; be the decisive factor in.
                  “it will be her mental attitude that determines her future”
                  synonyms: control, decide, regulate, direct, dictate, govern; More
                  2.
                  ascertain or establish exactly, typically as a result of research or calculation.
                  “officials are working with state police to determine the cause of a deadly bus crash”

                  The Fed does not “determine” interest rates.

                  1. “The Fed does not “determine” interest rates.”

                    He didn’t say it did, once again it needs to be pointed out that you made a reading error

                    the Fed funds rate determines how cheaply banks can increase their reserves so that they can increase their lending.

                    That’s two failed attempts to argue semantics based on your own misreadings.

                    It is quite clear to anyone with even a modicum of knowledge on this subject that your interpretation of what he said does not actually represent what he said.

                    Please stop trying to argue semantics, or get better at reading comprehension.

                    1. OP

                      Gee, if only there were a way to let the markets determine interest rates instead of some unelected person at the Fed.

                    2. Again, you clearly didn’t read what what was written correctly. I don’t know how many different ways to say it to you.

                    3. determine
                      [dih-tur-min]
                      SynonymsExamplesWord Origin
                      See more synonyms on Thesaurus.com
                      verb (used with object), de?ter?mined, de?ter?min?ing.

                      to settle or decide (a dispute, question, etc.) by an authoritative or conclusive decision.

                      to cause, affect, or control; fix or decide causally:
                      Demand for a product usually determines supply.

                      affect1
                      [verb uh-fekt; noun af-ekt]
                      SynonymsExamplesWord Origin
                      See more synonyms on Thesaurus.com
                      verb (used with object)
                      to act on; produce an effect or change in:
                      Cold weather affected the crops.

                      It is important for you to understand, your selective definition of “determine” is not the only definition, so for yet another reason, you are incorrect, as well as appearing mendacious.

                      Please stop. You clearly have no concern about making yourself appear ignorant, but it is getting difficult to watch.

                    4. So I used more precise wording.

                      The Fed does not SET interest rates – the market does. The Fed influences interest rates.

                      Now STFU. No one can argue with that.

                    5. Thank you for admitting you were wrong, even if it was unpleasant for you and a such, you had to be unpleasant.

                    6. The Fed does not SET interest rates – the market does. The Fed influences interest rates.

                      Now STFU. No one can argue with that.

                      By the way, this was the OP’s point. It is big of you to adopt it and accept you were wrong, but one wonders why if you believe no one can argue with it, that you repeatedly did so, and that people who do want to argue it should “STFU” when you didn’t.

                    7. The OP implied that The Fed sets or “determines” interest rates.

                      That is wrong.

                      I know Paleo-libertarian gold-fool types hate the Fed but don’t lie and say The Fed determines interest rates.

                    8. The OP implied that The Fed sets or “determines” interest rates.

                      So you claim, but you have also claimed that words used there have a specific definition, and you have admitted you were wrong.

                      More importantly, he explained exactly what he meant, so why do you think you can claim he implied something when he explicitly made clear what he was saying?

                      The Fed essentially sets the price of borrowing for banks. If the Fed lowers rates, all rates come down because that’s how competition in markets work. If the Fed rate drops and Bank A keeps mortgage rates constant, Banks B-Z will lower rates to take business from Bank A.

                      The Fed indirectly controls nearly all interest rates.

                      It is fairly clear why you are down to relying on your interpretation. You were wrong about what he said, and the definitions of the words used, so only your subjective interpretation of his intent allows you to slink away with the perrception of saving face, despite your interpretation being wrong, based on the OP’s explanation.

          2. The Feds are part of that market. That’s how markets work.

            1. He’s giving another comedic performance, sit back and enjoy it.

              1. The comedy was how deluded and wrong Austrian economists were in the crisis.

                Despite getting many factors that led up to the 2008 crisis correct they were dead wrong about QE, inflation, and the aftermath.

                I was here telling all the idiot goldbugs why there would not be any inflation.

                And I was right of course.

                1. Bravo!

                  *slow clap*

                2. And how Barry saved the economy thru ztimuluz!

      2. If the overnight rate has no impact on broader interest rates, what’s the point of having the Federal Reserve focus on interest rates at all? Aren’t they just whistling in the dark, then?

        1. Of course all other interest rates are heavily influenced by the Fed funds rate. P’s B knows this. He’s just mendacious.

          1. Wow, I thought he was just stupid.

            1. Why not both.

  4. The Wall Street Journal published an analysis suggesting that unemployment is well below the so-called natural rate of unemployment”

    Gee, if only there were a way to let markets decide who can work in the United States instead of ICE.

  5. “In Greg Ip’s view..”

    Which means it is time for a movie recommendation. Ip Man is a surprisingly good fictionalized biography about the guy who taught martial arts to Bruce Lee. It is a classic story of simple resistance to the Japanese occupation of China during WWII.

    If you like movies about quiet courage in the face of injustice (backed up by being an unbeatable martial arts expert), this one is right up your alley.

  6. I guess we should have elected that hag and kept the economy from booming.

    1. The economy was booming before the Dotard was sworn in, you idiot.

      1. That’s true – it started booming the day after he was elected.

        1. I need to see that chart.

          Employment, GDP, and other measures show a smooth upward trend that skipped over the election. Even the Dow and S&P 500 rose more before the election than after it.

            1. Dammit – SF’d the link.

              1. On the one hand, PB has a point: the economy was growing decently prior to Trump’s election. It went from about 15,000 five years ago to about 18,000 on election day.

                But post-election, it’s gone from 18,000 to 25,000?less time, more than twice the previous growth. And if you only go from the time Trump was in office, the Dow has still seen more gains under him in one and a half years than in the three years prior to his election.

                1. https://fred.stlouisfed.org/series/GDPC1

                  I went to the Fed’s database, and that shows PB has a point: in the past five years, GDP has been pretty much growing steadily. From Q1 2017 to today, it looks like there might be a slight uptick, but that could very well just be noise and not statistically significant.

                  https://fred.stlouisfed.org/series/UNRATE

                  The unemployment rate is also going down steadily, but that may not be as significant as PB thinks it is; in most instances since 1957, the UE rate typically troughs between 3.5% and 5.5%. Usually there’s some leveling off prior to the trough, and on the five-year graph, it kind of looks like it was leveling between November 2015 and November 2016 before dipping again. (Of course, that could again be noise.) Still, PB’s claim that there was no discernible difference pre- and post-election doesn’t appear to hold true (although whether it’s statistically significant is harder to tell).

                  1. Still, PB’s claim that there was no discernible difference pre- and post-election doesn’t appear to hold true (although whether it’s statistically significant is harder to tell).

                    It depends particularly on what timeframe you’re looking at. The overall trend is not particularly striking. There was a grand dip in the Dow right before the election and then a dramatic surge right afterward, but if you smooth those out your overall long term trend bent only slightly upwards – not nearly as dramatically as Trump likes to represent.

                    BUT, “a smooth upward trend that skipped over the election” is not really a very accurate statement, and “the Dow and S&P 500 rose more before the election than after it” is outright demonstrably false (as my link showed). Unless, of course, by “before the election” he meant “since the beginning of time.”

                    1. Unless, of course, by “before the election” he meant “since the beginning of time.”

                      I meant “while President”.

                      If Trump is some fucking hero for a 5000 point Dow rise then Obama is a god for a 10,000 point rise.

                      Of course neither hero/god is true – they are just jackasses occupying a chair. But I am sick of the Trump-tards telling us how great he made the economy. It is a lie.

                    2. Of course neither hero/god is true – they are just jackasses occupying a chair.

                      Obviously.

                      But I am sick of the Trump-tards telling us how great he made the economy.

                      I never said any such thing, and am not a particular fan of Trump’s. I personally think most of the undeniable economic improvement we’ve seen is merely due to having someone who isn’t actively strangling the economy.

                      But your loud protests of objectivity are laughable when you have to game the metrics so hard to make it look like “Obama make economy three times better than Dotard” and then turn around and claim a blase attitude about partisan hero-worship.

                    3. “If Trump is some fucking hero for a 5000 point Dow rise then Obama is a god for a 10,000 point rise.”
                      You slimy, cherry-picking shitbag, Obo started at the bottom. And not even he and his ‘stimulus packages’ managed to keep it from recovering.

                2. The S&P 500 (the Dow is only 30 stocks) tripled under Obama and is only up 30% under Trump.

                  Granted the time periods don’t match but it won’t triple under the Dotard. In fact that 2019/20 recession will make it look flat.

                  1. http://www.macrotrends.net/135…..t-10-years

                    That statement is only true if you’re very generous?that is to say, if you go from the market trough under Obama (March 9, 2009, 6547) to its peak (December 20, 2016, 19,974). If you go from when he was sworn into office to when he exited office, the numbers look different: it goes from a bit under 8,000 to just under 20K?in other words, only 2.5 times (which is still pretty impressive). And if your stopping point is Election Day, Obama sits at about 18.333 at the end of his term.

                    Of course, he did pull us out of a recession, so let’s see how Obama’s peak compares to Bush’s peak:

                    Bush peak: 16,772. Obama peak: 19,974.
                    And, just to compare, let’s throw in the Clinton peak: 17,188.

                    Huh. It’s almost as if being above 25,000 on the DJIA is unprecedented and has never happened before.

                  2. So now “The Economy” has been scaled back to “The S&P 500.” Duly noted.

                    1. So now “The Economy” has been scaled back to “The S&P 500.” Duly noted.

                      You’re the one that tried to tie the economy to the Dow (see broken links).

                      There is not one single measure that has improved more since Trump on a PERCENTAGE basis.

                      Not one.

                    2. So what’s unemployment, chopped liver?

                    3. So what’s unemployment, chopped liver?

                      It was 10+ when Obama became POTUS and 4.8% when he left.

                      Trump is nowhere near that on a % reduced basis.

                    4. If I assume your statistics are correct, then if unemployment hits 2.3% (which it would have to do to reach the 52% reduction), Trump would hit that.

                      Unfortunately, you don’t know your fucking statistics.

                      Unemployment rate in January, 2009: 7.8%
                      Unemployment rate in January, 2017: 4.8%

                      Reduction: 38%.

                      Unemployment rate in January, 2017: 4.8%
                      Unemployment rate in May, 2018: 3.8%

                      Reduction: 21%.

                      A 21% reduction in only a year and a half versus a 38% reduction in eight years. And Trump doesn’t have the benefit of a recovery to help him out. Wow. You sure showed me.

                      And, if you want a source, since you can’t be arsed to provide one: The goddamn BUREAU OF LABOR STATISTICS.

                    5. Broken outbased on time, Trump is crushing Obama. Which was his point, which you are forced to ignore because you’re more about insisting you are correct rather than appearing informed and engaging in honest discussion.

                    6. 8 > 1.5

                      And what about Labfor?

                      Jan 2009 65.7%
                      May 2010 64.9%
                      Jan 2017: 62.9%
                      Jan 2018: 62.7%

                      0.8% > 0.2%

                      Oh, and by the time Barry left, total Labfor decline was:65.7-62.9=2.8%
                      Oddly enough that accounts for virtually all of the unemployment gain of 3%.

                      Huh.

                    7. Palin’s Buttplug|6.15.18 @ 6:13PM|#
                      So what’s unemployment, chopped liver?
                      It was 10+ when Obama became POTUS and 4.8% when he left.
                      Trump is nowhere near that on a % reduced basis.

                      Block Yomama lies.

                      It drops really fast when you take the unemployed off the rolls after they stopped looking for work.

                      These people are still unemployed though.

                      Until Trump became president that is. Then unemployed went to historically low levels.

                  3. “The S&P 500 (the Dow is only 30 stocks) tripled under Obama and is only up 30% under Trump.”

                    Translation:
                    Starting from the lowest point in nearly forever, that lying piece of shit Obama didn’t manage to totally kill the recovery.
                    You slimy, cherry picking shitbag

              2. I can’t remember what happened early this year, that had that sudden peak than fall.

  7. Inflation is really an increase in the money supply

    Then we had the worst inflation ever in 2008-11.

    Oh wait, inflation was nearly non-existent then. The author doesn’t know what inflation is.

    1. No, the author is right.

      Whether the economy will ever show the consequences of pushing that level of liquidity into the market remains to be seen. It’s possible the natural recovery that follows recessions was strong enough. There is a significant lag time between events like the Obama inflation and the consequences from them.

      1. But inflation is still tame 7-10 years after that massive liquidity event.

        So the author is wrong.

        You WANT the author to be right because like most Austrians you were wrong about QE creating hyperinflation. I didn’t and it won’t.

        Classical economists got it right and Austrians were wrong.

        1. Or else maybe growth absorbed the liquidity.

          1. Or perhaps growth delayed the onset,

            1. Any day now. You did say it was a totally open-ended prediction of hyperinflation right? It’s 2100. You’re very old. It finally happens. “Thanks Obama!” you drool sarcastically.

              1. Bend the cost curve down. 6 million jobs created or saved. Our models predicted it and when we ran the numbers through the models they confirmed it.

        2. But inflation is still tame 7-10 years after that massive liquidity event.

          Perhaps that “liquidity event” was papering over a deflationary cycle? Wait – we’re not supposed to use that word . . . “re-flation” is what we have going on. That explains it!

          1. Perhaps that “liquidity event” was papering over a deflationary cycle?

            Of course. It worked then.

            Deflation is the most insidious of all economic diseases.

            Our entire economy is based on stable prices – contracts, mortgages, payroll, manufacturing, etc

            1. Of course. It worked then.

              Given a sufficiently high value of “worked.”

              Booming stock market with no inflation. Low unemployment without wage growth. Looks to me like the deflation-that-didn’t-really-happen is still causing a significant drag on things, and the house of cards hasn’t been fully re-shored yet. Let’s just hope they can get the smoke back in the smoke machine before the next dip hits.

            2. Productivity is the very definition of deflation. Deflation is the only way we get richer, dumbass.

              1. That worked great in the 1930’s!

                1. That’s cute. Confusing destruction of money supply by the Fed with natural deflation. Oh, but those price controls and commodity destruction by FDR sure helped too.

        3. It depends on the underlying economy and also the faith in the currency.

          Problem is more due to the fact that Austrians generally don’t have faith in our currency to begin with. (I think it was Mises) was convinced we were doomed when we went to fiat currency. His prediction was wrong, not because it was illogical, but because he didn’t fully understand that humans are illogical beings. To him, it was theft, and he thought everyone else would see it that way and the dollar would be destroyed.

          He ended up being wrong, but only because retards like you populate the earth.

        4. Classical economists who predicted the stimulus would work? Good job with that. QE did lead to inflation of equities and helped prop up housing. The reason it didn’t spread into broader inflation was that the Fed basically gave with one hand and then took away with another with their reserve requirements.

          But you’re a moron so you won’t understand this.

          1. There is no “inflation of equities” you imbecile.

            Equity are priced on earnings and P/E ratios are right in line with historical norms.

            Quit trying to pretend you know something about this shit you canker sore.

            1. Christ you’re a moron. Equities are priced on forward earnings which is really just another way to account for dividends both paid and unpaid. The PE ratio peaked in 2009 at over 120. Let me guess, you think that was because everyone was in rapture over the messiah with the sharp pant creases.

              But more importantly, I find it amusing that you didn’t touch the fact that the reserves soaked up. Here it is again, not that I think it will make any difference because you’re too stupid to understand what it means.

              1. Earnings took a nose-dive in 2009. That wasn’t “equity inflation” you shit-for-brains. That was a world-wide crisis.

                1. Holy fuck you remain stupid. Do you ever get tired of getting spanked so hard?

                  1. Idiocy. From your own Fool link:

                    To be sure, as economist Martin Feldstein noted, “There is no proof that QE2 led to the stock market rise. … But the timing of [it], and the lack of any other reason for a sharp rise in consumer spending, makes that chain of events look very plausible.”

                    No proof. Check
                    A “sharp rise in consumer spending” Check.

                    Market goes up with a sharp rise in consumer spending. MUST BE THAT GOLDARN QE AND THE FED!!!!

                    1. Consumer spending is 70% of our economy.

                    2. Seriously. It’s right in the quote:

                      …makes that chain of events look very plausible.”

                      And look at major fed announcements. In most cases a leg up initiates after.

                      But we will come back to the numbers AGAIN even though counting scares you.

        5. Obama pushed the federal reserve to artificially hold interest rates low.

          Its why the Great Recession took years to wear off.

          Obama will always be tied to the Great Recession. Along with Booosh.

  8. So how does all this affect my crypto portfolio?

  9. “Government is the science of oppression”.

    1. “and violence is their core competency.”

  10. Government fucks up everything. The 1907 Panic is a great example. Several things coincided to cause a demand for money — SF rebuilding after the 1906 quake and fire, Britain and Germany borrowing to finance their naval arms race, and the twice-yearly shift of money between farms and cities for planting and harvests.

    But US banks were limited to single states — no branch banking. And all money had to be shadowed by deposits with the Feds, who were slow to respond to new requests (this was a holdover from the Civil War, 45 years before, which itself had been for revenue, not any misguided notion of safety). So banks could not shift the money around fast enough to match demand, and thus the panic.

    As usual, government fucked things up and used the resultant fuckup as an excuse for more regulations, in this case The Fed.

    Interesting to note that Canada had no failed banks then or in the 1930s, and they didn’t have such stupid restrictions.

    1. There was also no Federal Reserve in 1907 nor in any of the many panics before then.

      A modern economy has to have a central bank. That is why Austrians are so jacked up.

      1. And there was a Federal Reserve in 1933. Your statement is pure non-sequitur.

      2. Read up on those pre-Fed panics. It is amazingly consistent that each, in large part, was caused or made worse by the actions taken to fix the previous panic.

        The 1919/1920 recession started out as bad as the Great Depression. 25% unemployment, etc. But Woodrow Wilson had had his stroke and could do nothing, and no one else would do anything. That recession was over and turned into the Roaring Twenties within a year and a half, almost certainly because the government refrained from butting in. The same story applies to previous panics and recessions. Canadian banks did not fail while US banks did, primarily because US regulations hog-tied US banks. Over and over, the story repeats itself. Bad regulations case or exacerbate a bust; government freaks out and throws in more bad regulations, not in recognition of the previous ones being part of the problem, but just because.

        You can research this for yourself. Go read about the1907 panic, especially what caused it and exacerbated it; look up those causes, and you will find them stemming from the previous panic. Repeat. It all goes back to government fucking it up, over and over and over again.

        1. —The 1919/1920 recession started out as bad as the Great Depression. 25% unemployment, etc. But Woodrow Wilson had had his stroke and could do nothing, and no one else would do anything. That recession was over and turned into the Roaring Twenties within a year and a half, almost certainly because the government refrained from butting in.—

          In all fairness, the 1919/1920 recession was most likely a product of demobilizing the economy after World War I. Military demobilization plus the shock of removing wartime restrictions would create a pretty sizable economic crisis. When the economy transitioned back to peacetime, it was able to absorb the excess labor supply. That plus the relative economic stagnation of our biggest industrial competitors (Great Britain and Germany) helped enormously.

          Also, I hate it when people think the Roaring Twenties was a boon for everyone in the country. Generally speaking, the decade was good for the urban working class and big industrialists and commercial interests. Rural Americans (especially farmers) didn’t share much of this good fortune due to increased indebtedness and lower agricultural prices, which hurt their incomes. Considering that nearly half of Americans lived in rural areas, I’d say the Twenties weren’t as glamorous as they seem to be.

      3. !modern

        When coding is discussed, whenever someone says “modern”, it means they have no better arguments. I wonder if this applies to economics and politics, too.

  11. I got my mortgage when interest rates were at their lowest, and I’ve invested way too much fabulousness in my house to sell it anytime soon. My job’s probably a goner anyway, but I’ll get a good severance and enough time for a regular recession to recover. Bring it on.

    1. I don’t think anyone believes you have a mortgage or a job. And there isn’t anything you can say that will make anyone believe it, because you constantly lie with abandon.

      1. You mean TANF and section 8 don’t count?

    2. See, Trump is getting rid of dead weight in government.

      Tony will be unemployed soon. Luckily for him, unemployment is at a 40 year low, so he might fool and employer into hiring him immediately.

  12. “by 2020 the economy will be well into overheating territory, the sort of situation that usually leads to dramatically higher interest rates and a recession.”

    Well, then we’d better audit the Fed before then, eh?

  13. I like the new kid.

  14. This misses the clinker. The labor participation rate is at its lowest for this century, which makes today’s unemployment rate even more useless than Obama’s, for the same reason.. Recall that Obama’s employment gains were dismissed as resulting from fewer people in the labor force. We must now do the same for Trump’s numbers, to be honest, right?

    (If you check my link, it’s an interactive graph. Enter whatever time period you want to see. I used 2000 until now, which is a steep downward slope)

  15. Some of this discussion feels like shouting about weather rather chatting about about climate. Personally, the federal debt overhang makes me apprehensive. I realize we’ve been north of the 100 percent debt to GDP ratio (end of WWII) but there was a steady decline until around 1982. And given the way deficits are ballooning and the cliffs for Medicare and Social Security, hell, who knows exactly what to think about interest rates or labor force participation? Yeah, there’s a flood here and a drought there… but what does it mean? My gut sense (neither Classical nor Austrian) tells me the economy looks betters than it really is.

    1. The high debt to GDP after WWII was tied to that event and quickly dropped after the war ended.

      Our current national debt is not tied to an event that might end and we can return to low levels of debt. This debt is because Congress won’t stop spending on stupid shit like the War on Drugs.

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