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  • From: Don Bowen <don.bowen AT earthlink.net>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] As I foretold you ...
  • Date: Thu, 25 Mar 2010 06:50:00 -0700

Lynda wrote:
Yes, I can't figure how the recession is over when the unemployment numbers keep rising. Must be the "new" math they teach in public schools.
Unemployment and the start or end of a recession have little connection. The start or end of a recession is measured by increases or decreases in GDP. If GDP increases so many quarters in a row then the recession is over according to the numbers. GDP has fallen dramatically so small increases will do little to improve employment numbers.
There is little in the numbers to indicate employment will improve anytime soon. Due to policy makers deliberate decisions in the late 80s the so called FIRE (Financial, Insurance, Real Estate) industries were supported and others allowed to slip to low wage and minimal oversight countries. 70% of the US GDP was in consumption, mostly of goods from low wage countries and paid for with a bubble economy financed by the return of monies sent to the producing countries.

GDP may be stabilizing and increasing slightly thus being a technical end of the recession but employment may never return. There are just too many shocks waiting on the sidelines to hammer down any real recovery. You will see one when you visit the gas pump. Oil is remaining over $80 and pump prices will be over $3 in most of the country this summer. Manipulated inflation numbers and high unemployment mean no increase in transfer payments or wages for the next several years.

As for unfounded fears of hyper inflation, there is little chance of that for several years. The amount of money destroyed from middle class balance sheets and money pushed into the casino economy is not available for circulation and the afore mentioned downward pressures on incomes will remove more money from circulation. Deflation is the real concern now as house prices continue to fall and companies push products with heavy discounts.

--
Don Bowen KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html





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