Here Comes The Double Dip Pt. 3

[joewp]

As for the government (federal government, at least), they're a different story. They're the entity which creates the money in the first place, so they are not revenue constrained. Imagine a household which can create its own money, and get people to accept it, and you get the picture.

Wake up, Oily. The Federal government does not create its own money. The Federal Reserve does, at interest.
Forbes: Does the Fed Create Money?

Not only do the Fed’s monetary additions increase the money supply, but the effect can be vastly multiplied through the fractional reserve system.

Also, the process of creating bank reserves always first involves the purchase of an asset by the central bank. The Fed issues electronic credits to banks in exchange for bank assets, including Treasuries. Its purchases drive up the demand for those assets, bringing about rising prices. In fact, Bernanke has clearly stated that the purpose of his “quantitative easing” program is to raise the rate of inflation, which in his mind is too low.

The US government does not create money, the Fed does, and the commercial banks create up to 100 times more.

Obviously, your cornucopia is fantasy based, not fact based.

[Armageddon]

Oily thinks the Fed is Federal also.

[OilFinder2]

Back down to the 360K's!

U.S. jobless claims drop 27,000 to 365,000

The number of people who applied for jobless benefits fell last week for the first time in a month to just slightly above a four-year low, according to the latest government data.

Jobless claims declined by 27,000 to a seasonally adjusted 365,000 in the week ended April 28, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 392,000 from an original reading of 388,000.

Economists surveyed by MarketWatch had projected claims would fall to 378,000.

After sinking to a four-year low of 361,000 in February, claims reversed course over the past month and reached the highest level since last November. Most economists believed a late Easter holiday and spring break, when many school workers can seek temporary benefits, triggered a spike that would soon recede.

[...]

[AgentR11]

Wake up, Oily. The Federal government does not create its own money. The Federal Reserve does, at interest.

I think you misunderstand the Fed... the only reason it can do its job is because of direct congressional authorization. The Fed serves at the pleasure of the government, but is somewhat insulated from short term political pressures, and has a very specific mandate with regard to keeping inflation in check and performing its function of lender of last resort (seems like first resort these days...).

If the Fed were truly private, there would be no reason in the world for them to support extremely low interest rates, they'd withhold their buys until the rate climbed to provide real profitability, but surprise surprise surprise, that's not what they are doing.

This whole meme of "The Fed is a private bank ripping us all off" is just utter nonsense.

If anyone is getting ripped off, its the other REAL private banks who are locked into a very low interest rate realm, with a disconnect between reported inflation and purchasing power degradation.

[ralfy]

According to this writer, most of total money supply isn't created by central banks but by commercial banks:

http://www.webofdebt.com/articles/dollar-deception.php

Another shows that most of total money supply comes in the form of derivatives, much of it unregulated:

http://www.creditcontraction.com/

(See the liquidity pyramid.)

Finally,

"Revealed – the capitalist network that runs the world"

http://www.newscientist.com/article/mg2 ... world.html

Given the transnational nature of top corporations and the idea that the level of financial speculation that they are engaged in may be far removed from interest rates and even fractional reserve policies, it is very likely that corporations and not governments "run the world."

[Armageddon]

People Not In Labor Force Soar By 522,000, Labor Force Participation Rate Lowest Since 1981

it is just getting sad now. In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.

http://www.zerohedge.com/news/people-no ... owest-1981

[TheAntiDoomer]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

[dolanbaker]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

No it hasn't, many of the manufacturing jobs have already been exported and with ever increasing automation, there is an ever decreasing demand for workers (full stop!)

[Daniel_Plainview]

ZH is having a field day with all of the horrible economic news

--- Real U-3 Unemployment Rate: 11.6%

The widely accepted definition of the labor pool, that used by the CBO and all other government forecasting agencies, assumes a 90,000 growth in the labor force every month as it has to keep in line with the growth of the US population! The implication is simple: using a real labor force participation rate long-term average of 65.8%, the real unemployment rate in April was 11.6%, based on the 5.4 million additional workers that should be counted as part of the U-3 which then means that the real number of unemployed is not 12.5 million but 17.9 million, which in turn implies a 11.6% unemployment rate in the US. This also means that the spread between the propaganda, and the real number is now 3.5%: the most it has been since the early 1980s.

--- St. Louis Fed's "Not In Labor Force" Data Is Now Officially Off The Chart

The April "Not in labor force" seasonally adjusted print: 88,419,000. And yet, the maximum reading permitted by St Louis Fed Not in Labor Force (LNS15000000) graph: 88,000,000. The data has now officially dropped off the chart. No further commentary necessary.

--- Huge Miss in April Unemployment

This is really bad news ... we could be heading into a serious recession. And crude oil is pricing as though we're headed into a deflationary recession/depression.

This is scary.

Where's OF2? We need some good news.

[Plantagenet]

Number of people hired in April =115,000

Number of people classified as discouraged no longer counted as being unemployed = 500,000.

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

When more than four times as many people leave the unemployment rolls by being reclassified as "discouraged" as leave it by getting jobs, its clear that the Obama administration is cooking the books.


The Obama administration is cooking the books on the unemployment number

[Daniel_Plainview]

Wow, if this is true, this is the worst employment report since 2009:

Full-time jobs plunge an epic 812,000!

The US is increasingly becoming a population of part-time workers, as full time jobs disappear for good, and are offshored abroad at best. April confirmed everything we had been warning about: in the month, full time jobs dropped to 114,478 from 115,290, an epic drop of 812,000 in full time jobs which was the biggest since... March 2009! The offset? Why a surge in part-time jobs of course, which increased by 508,000 in the month of April. So while seasonally adjusted, birth/death recasted jobs may have increased by 115,000, the real quality jobs, imploded, which unfortunately is merely a part of a longer-term secular trend as part of the new part-time normal.

This is depressing. The US is undoubtedly hemorrhaging jobs in massive amounts. Very sad.

[Daniel_Plainview]

Mish: Payroll Disaster: Nonfarm Payroll +115,000 Establishment Survey But -169,000 Household Survey, Labor Force Drops by 342,000

The Civilian Labor Force fell by 342,000.

— Those "Not in Labor Force" increased by 522,000. If you are not in the labor force, you are not counted as unemployed.

— Those "Not in Labor Force" is at a new record high of 87,419,000.

— By the Household Survey, the number of people employed fell by 169,000.

— By the Household Survey, over the course of the last year, the number of people employed rose by 2,237,000.

— Participation Rate fell .2 to 63.6%

— There are 7,853,000 workers who are working part-time but want full-time work

— Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.


This month was another disaster. Actual employment fell by 169,000 and the only reason the unemployment rate dropped is the civilian labor force fell by 342,000. These numbers are well past the point of believability and will be revised at some point in my opinion.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

What a disaster.

[Lore]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

No it hasn't, many of the manufacturing jobs have already been exported and with ever increasing automation, there is an ever decreasing demand for workers (full stop!)

This is true, it shows up in the numbers for young workers, which are especially bad, entering into the workforce, or at least trying to.

[AgentR11]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

THAT is not a "retirement tsunami"; that's an "I'm 50, can't get a job, and if it weren't for food stamps and the local shelter, I'd starve to death in the United States."

Retirements are of course a factor in continual drawdown, and is keeping the unemployment percentages from being catastrophically bad; but there is absolutely no getting around millions of people being fired, who are not retired, do not want to retire, and will never again hold a solid job. EVER. They are done, and do not want to be done, and they are NOT counted in the unemployment percentage because they have been without work for too long, despite their desperate attempts to find work.

[Plantagenet]

Yup. The retirement tsunami has begun with the baby boomers, the labor shortage is beginning.

No it hasn't, many of the manufacturing jobs have already been exported and with ever increasing automation, there is an ever decreasing demand for workers (full stop!)

This is true, it shows up in the numbers for young workers, which are especially bad, entering into the workforce, or at least trying to.

Maybe anti-doomer thinks all those young people who can't find jobs when they graduate from college and then get reclassified as "discouraged workers" are actually retired?


Hey old timer! Thanks to Obama, I'm retired now too!

[OilFinder2]

Uh, yeah. Look at the chart. All it did was reverse the increase of March (actually, the March increase was a little bigger than April's decline). Little net change the past 2 months. Typical doomer spin.

Wow, if this is true, this is the worst employment report since 2009:

Full-time jobs plunge an epic 812,000!

[...]

Right. And by that reasoning, March would have been the *best* employment report since long before 2009.

[TheAntiDoomer]

Once Again Zero Hedge is Completely Clueless

http://bonddad.blogspot.com/2012/05/onc ... etely.html

In a new post up today, Zero Hedge claims that (from Zero Hedge):

"The seasonal addback in April was +22K, a rapid break from the last 3 years when April saw a negative seasonal adjustment following the traditional huge positive adjustments in the January-March period, which in turn means that the record warm winter give back has not even started! As a result, the seasonal addbacks in 2012 are now a massive 4,499,000 jobs: jobs that have not been added but are expected to materialize based on historical seasonal patterns."

Read that again. Yes, in fact the geniuses at Zero Hedge essentially admit that they can neither read a report, nor do simple third grade math. In FACT, only the January report has added jobs through the seasonal adjustment. In February the NSA number was +902,000 (vs a +259,000 seasonally adjusted number), ie the seasonal adjustment SUBTRACTED 643,000 jobs in February AND in March, the NSA number was +811,000 (vs a +154,000 seasonally adjusted number), ie the seasonal adjustment SUBTRACTED 657,000 jobs in March, and finally for April, the NSA number was +896,000 (vs a +115,000 seasonally adjusted number), ie the seasonal adjustment SUBTRACTED 781,000 jobs in April. Thus, the seasonal "addbacks" for the year are now a NET of 862,000, not 4.5 million (which will come out over the remainder of the year). Quick intelligence test for Zero Hedge, you do realize that the seasonal adjustments essentially zero out every year right?

Chalk this up as yet another reason to NEVER, EVER listen to Zero Hedge when it comes to interpretations of statistical reports.

[OilFinder2]

^
Thanks for posting that AD. This means Cog still isn't getting his $100 back!

[joewp]

Wake up, Oily. The Federal government does not create its own money. The Federal Reserve does, at interest.

I think you misunderstand the Fed... the only reason it can do its job is because of direct congressional authorization. The Fed serves at the pleasure of the government, but is somewhat insulated from short term political pressures, and has a very specific mandate with regard to keeping inflation in check and performing its function of lender of last resort (seems like first resort these days...).

No, not really. The Fed is owned by the regional reserve banks, which are in turn owned by the commercial banks. And since the dollar has lost 97%+ of its purchasing power since 1913 (most of that decline since the 1960s/70s when we went off the silver/gold standard officially), the Fed is a complete failure in its mandate, and being the "lender of last resort" is a banker term that equates to running from bank to bank ahead of the bank examiner with a barrel full of nails covered with a thin layer of gold coins to "prove" the individual bank's "solvency".

If the Fed were truly private, there would be no reason in the world for them to support extremely low interest rates, they'd withhold their buys until the rate climbed to provide real profitability, but surprise surprise surprise, that's not what they are doing.

Um, those low interest rates are for the banks. The absolute percent doesn't matter, the banks make money off the spread.

This whole meme of "The Fed is a private bank ripping us all off" is just utter nonsense.

Only to people who don't understand the fractional reserve/fiat money created as debt system the Fed was designed to perpetuate, in violation of the Constitutional mandate that only Congress has the power to coin money(make silver and gold into coins, i.e. commodity-backed money).

If anyone is getting ripped off, its the other REAL private banks who are locked into a very low interest rate realm, with a disconnect between reported inflation and purchasing power degradation.

Oh really? I didn't notice that the banks were suffering at all.

[AgentR11]

Congress has the power to print money. Unless you are suggesting that every congressional power must be physically exercised exclusively by an elected congresscritter, they can hire/appoint whoever they want to run the presses. They chose to use a federal reserve bank to do so. Since its inception it has smoothed out the suffering that banking crashes create very effectively. I don't think you want to even imagine how bad things could have been in '08 without this system.

And the low interest rates are for everyone. Savers and borrowers; commercial banks do make money off the spread of course; that's the business they are in; but if the Fed were truly private, it would never go to the lengths it is to keep interest rates down near zero. Ask anyone with substantial dollar savings what they think of the interest rates they are getting on their CDs... Ask anyone that's refinanced recently if they think rates are high.

I know the gold bugs just desperately want to fall back to a gold standard, believing some mystical true value of the dollar is important; but the only thing that would happen in a true gold standard is the US reserves would be emptied five seconds after any significant arbitrage opportunity presented itself. That, *OR* (gold bug fantasy) the price of gold would be set so high in dollars that no arbitrage would happen in the next decade, and thousands of gold holders would instantly realize huge gains when they go to exchange their gold for dollars.

Moan all you want, the gold standard will *NOT* be coming back. There's tons of room on those paper notes for more zeros; and the ebt/debit cards we all use now don't even care how many zeros are behind the whole numbers in your account balance. I've said it before, no one in Japan suffers horribly at the thought of paying 500 Yen for a burger. No one in the US will suffer horribly at the thought of $500 for a burger when that time comes. They're just zeros. Relax.