The economic news has been better lately. New claims for unemployment insurance are down; business and consumer surveys suggest solid growth. We’re still near the bottom of a very deep hole, but at least we’re climbing.New claims for unemployment are down? Does Krugman realize how many people dropped out of the labor force?
Thanks to Zerohdege, the civilians not in labor force:
estimates the real unemployment rate:
A couple of behind-the-scene facts: from October to February, an epic 700k people have left the work force. If you actually adjust for the fact that the labour force participation rate has plunged this cycle to a 27-year low the unemployment would be sitting at 12% today.At least Krugman acknowledges inflation without complaining about deflation:
And things will be much worse if the Federal Reserve and other central banks mistakenly respond to higher headline inflation by raising interest rates.Speaking of the Fed, let's take a look at its record setting balance sheet:
If the Fed is really planning on ending QE2 on June 30, the market collapse will be epic. And, yes, this should not come as a surprise to anyone.Even though Bloomberg broke news today that the Fed may stop QEII in June, I doubt it will stop immediately. It will be a gradual withdraw. Zerohedge is right that the market would collapse and Bernanke, though disillusioned by Keynesianism, is not stupid enough to let that happen.
I should note that the above chart uses the Austrian money supply measurement. Courtesy of Mish, here is Rothbard's definition of the Austrian money supply measurement:
The True Money Supply (TMS) was formulated by Murray Rothbard and represents the amount of money in the economy that is available for immediate use in exchange. It has been referred to in the past as the Austrian Money Supply, the Rothbard Money Supply and the True Money Supply. The benefits of TMS over conventional measures calculated by the Federal Reserve are that it counts only immediately available money for exchange and does not double count. MMMF shares are excluded from TMS precisely because they represent equity shares in a portfolio of highly liquid, short-term investments which must be sold in exchange for money before such shares can be redeemed. For a detailed description and explanation of the TMS aggregate, see Salerno (1987) and Shostak (2000). The TMS consists of the following: Currency Component of M1, Total Checkable Deposits, Savings Deposits, U.S. Government Demand Deposits and Note Balances, Demand Deposits Due to Foreign Commercial Banks, and Demand Deposits Due to Foreign Official Institutions.Just a few tidbits to end the week with:
The Fed's official M2 money supply update:
Did You Know that Arkansas was the first state to ever default on its debt? Doug French explains in a speech given to the Naples Mises Circle:
The last time a US state defaulted on it debt was in 1933, when Arkansas stiffed $146 million worth of bondholders.I guess states defaulting is not such an unheard of phenomena.
Though I don't really consider myself an anarchist, I love this passage from William O. Reichert:
anarchism draws its inspiration not from the modern world of science but from the idea of nature as it has always been interpreted during the previous periods of enlightened thought. Nature, on this view, is not a defective system that needs to be discarded but a highly ordered living process that merely needs to be relieved of its artificial restraints to become the magnificent thing it is. Just as ecology seeks to right the balance of physical nature by allowing it to revert back to its natural patterns of growth, so anarchism seeks to right the balance of human society by allowing people to express their inner social inclinations. There is a vital truth contained in ecology, according to Bookchin, and this is that "if we wish to advance the unity and stability of the natural world, if we wish to harmonize it, we must conserve and promote variety." If Bookchin's theory appears strikingly similar to the theory of laissez-faire formulated by the enlightened thinkers of the eighteenth century, we should not be surprised, for the philosophical foundations of all anarchists stem from the same source.And I can't sign off without mentioning Gary North's great article on why gold, contrary to popular belief, lacks intrinsic value.