People tend to react spontaneously to almost all economic reports that the government releases without taking time to evaluate the details surrounding the news. Most immediately accepted the recently released unemployment numbers with joy and a sense of relief.
Oooh … unemployment went below 6 percent! Aaahh … 248,000 jobs were added, exceeding expectations!
It doesn’t get any better than that, does it?
Well, yes it does. And it should.
But it won’t, because Friday’s “good news” is like the Emperor’s New Clothes. If you’ll stop oohing and aahing for a minute, open your eyes and look closely, it’s as clear as a crisp, sunny day in the fall:
The emperor has no clothes. There’s nothing there. Despite the Obama administration’s rosy pronouncements of glorious economic recovery, the simple fact is that we remain mired in an extended period of stagflation – a confluence of high unemployment, slow economic growth and high inflation that is choking our country.
Credit: AFP/Getty Images
And what’s worse is that President Obama has made no effort to reverse it. In fact, in his nearly six years in office, the president has failed to implement even a single policy to improve our economy. But, you ask, how can that be? Isn’t unemployment down? Isn’t the economy in recovery? Isn’t inflation low?
No, no and no.
Let’s start with jobs. Unemployment isn’t down when you factor in the 730,000 Americans who had to settle for part-time jobs in the last 12 months, and it isn’t down when you consider the millions of others who have exhausted their unemployment benefits and given up looking for jobs entirely – numbers that are ignored by the “wonderful” 5.9 percent the government announced on Friday. A more-accurate level of unemployment is buried in the Bureau of Labor Statistics (BLS). Section U-6 of the BLS states that the unemployment rate is closer to 11.4 percent.
But even if it actually were 5.9 percent, consider this: The number is meaningless.
That’s because we have an annual budget deficit of $600 billion. And to cover that deficit, we need to collect more income tax. Go ahead, do the math: If the average job pays $50,000 a year, and the government collects 30 percent ($15,000) in taxes, we need to add 470,000 new fulltime jobs every month for an entire year to cover that deficit.
And here’s one more thing to think about: Of those 248,000 jobs that were created in September, 238,000 went to people between the ages of 55 and 69. That means people can’t afford to retire, and they’re taking jobs that should go to younger people.
So let’s stop patting ourselves on the back about our labor turnaround. We’re not even close to where we need to be.
As for our “recovering” economy . . . Let’s have a look at the GDP. Gross Domestic Product – the value of all our goods and services in a year – is the best measure of a growing economy. When GDP grows, it means businesses are growing and making money, which means people are working. When GDP slows, businesses are not making as much money, and they’re forced to take preventive measures – including cutting jobs. Right now, America’s GDP is low, averaging 2.6 percent over the previous four quarters. True growth requires that we be at around 4.5 percent. Once again, we’re not even close.
And finally, there’s the nonsense – that’s right, nonsense – about inflation being low. The government may tell you that costs, on average, are rising slowly but let’s face it: Your wallet is telling you something else entirely.
Sure, a 55-inch LED/LCD flat screen TV or an inkjet printer costs less than ever, but how many of those do you buy in a week?
A better measure of inflation is what you pay for meat, dairy, fruit and vegetables, gasoline and health care. Visit your doctor, go to the pharmacy, fill up on gas, go grocery shopping – and then let’s talk about low inflation.
Want the real picture of how much the cost of living is going up? Take a look at the Chapwood Index, which tracks the price changes of the 500 items Americans buy most. You know more – a lot more – about rising costs than your leaders in the White House and Congress.
[sharequote align="center"]Think inflation’s in check? Think again.[/sharequote]
So there’s your truth, despite your government’s success in cooking the books and making everything sound wonderful. We have high unemployment, a lack of growth and high inflation. Put them in a pot, mix well, and you have a soup known as stagflation – the precursor to a crippling, long-term recession.
So what do we do about this?
There are very few ways to pull us out of stagflation. One is to lower interest rates, because low interest rates stimulate the economy. But we can’t do that, because interest rates are currently at historic lows. Another is to expand our balance sheet but given that we are already at unimaginable long term debt levels this isn’t a genuine proposition.
The only viable solution to fixing our economy and to pull us out of stagflation is to hit the control-alt-delete button on the current approach to remedy the situation and pivot. We need to jump from the current worthless monetary approach to a fiscal policy approach of addressing it with strong across the board tax cuts. This may be political suicide for many liberals but it is the only viable approach left in our economic growth arsenal. We have no choice but to cut taxes, and dramatically, across the board – income taxes, corporate taxes, consumption taxes. Cutting taxes means everyone has more money to spend. Consumers use the money to buy goods; companies use it to hire new employees to produce more goods for the consumers who suddenly are more able to buy them.
It’s as simple as that … unless you live in the White House.
The only way to derail this out-of-control stagflation train barreling toward recession is to cut taxes, but President Obama refused to do exactly that when he took office, and he continues to refuse to do it today.
And we, the American people, are the ones who will suffer. We will pay for this president’s obstinacy.
TheBlaze contributor channel supports an open discourse on a range of views. The opinions expressed in this channel are solely those of each individual author.