Christmas and Keynesian Stimulus

Posted by PITHOCRATES - December 23rd, 2013

Economics 101

(Originally published December 24th, 2012)

Christians may not like the Crass Commercialization of Christmas but the Left Loves It

The Left does not have a war on Christmas per se.  For they love the consumer spending part of Christmas.  Which is pure Keynesian.  People go into debt to spend more money at retailers.  They love that part of Christmas.  What they don’t like is the religious stuff.  Especially Jesus.

They don’t like Jesus because He is the God the Christians worship.  Their Lord and Savior.  It’s these Christians that bother the Left.  Because of their opposition to birth control (mostly Catholics), abortion and having fun in general.  The kind of fun adults enjoy.  The kind of things Christians frown on.  Premarital sex.  Gay love.  Drinking and using drugs.  Coarse language and sexual situations on television shows and in the movies.  Things they champion on the Left.  Which makes the Left hate Christianity.  Which they see as nothing but a great killjoy.

It’s the moralizing the Left does not like.  But the one thing Christians don’t like about Christmas, its crass commercialization, they do like.  So the Left will try to band images of Christ from Christmas displays wherever they can.  Despite Christmas being the celebration of Christ’s birth.  But they will gather in Rockefeller Center to party when they light the Christmas tree.  Though they would prefer that we call it the holiday tree.

Retailers often become Profitable for the Year only because of this Temporary Spending Surge at Christmas

So there are two Christmases.  The one where Christians celebrate the birth of Christ.  Wish for peace on earth.  And good will towards man.  And the other Christmas.  The one marked by the orgy of consumer spending.  Much of it funded by one-time Christmas bonuses.  A celebration of demand-side Keynesian economics.  Where people spend their hard earned money instead of saving it.  And when their money runs out they spend even more using their credit cards.

Keynesians have a bunch of charts and graphs showing how great a stimulus this Christmas spending is to the economy.  And mathematical formulas.  They can tell you about the velocity of money. How fast money travels through the economy when it goes from consumer to seller.  The seller then becomes consumer.  And spends the money they just received.  Then the person who receives this money in a sales transaction goes out and spends it as a consumer.  And on and on it goes.  Flying through though the economy at breakneck speed.  Generating a whole lot of economic activity.

Retailers often become profitable for the year only because of this spending surge at Christmas.  In fact, to handle this surge in business they hire a lot of people at Christmas time.  Part-time people.  Proving again that pumping money into the economy creates jobs.  The main tenet of Keynesian monetary policy.  Pump cash into the economy and people will spend it.  Something the Keynesians have been doing since Richard Nixon decoupled the dollar from gold in 1971.  Ending any semblance of responsible monetary policy.  And recessions forever.  At least, that was the plan.

Keynesian Stimulus is nothing more than an Orgy of Temporary Consumer Spending just like at Christmas Time

When the economy slows down and people stop buying stuff businesses have to lay off workers.  So they won’t build stuff that no one will buy.  Laid off workers no longer have money to buy things.  Which causes other business to lay off workers.  So THEY won’t build stuff that no one will buy.  It’s a vicious cycle.  In fact, we call it the business cycle.  The boom-bust cycle.  From expansion to contraction.  From an economy hiring people to an economy laying off people.

Keynesian economics was supposed to remove the contraction side of the business cycle.  By picking up the spending slack.  When consumers stopped spending money the government would step in and replace their spending.  We call it stimulus spending.  Often spending money the government doesn’t have.  So they run a deficit (i.e., borrow money).  Or simply print money.  Which they did a lot of in the Seventies.  Unfortunately, as it turns out, you just can’t do that.  For when you print money you devalue it.  Which raises prices.  As it takes more of these devalued dollars to buy what they once did.

And this is why Keynesian economics doesn’t work.  Because a Keynesian stimulus is nothing more than an orgy of consumer spending.  Just like at Christmas time.  Which happens only for a limited time.  Businesses hire temporary part-time workers at Christmas because this spending does not last.  As it does not last during a Keynesian stimulus.  It doesn’t create any full-time jobs.  Because employers know it is only temporary.  And they know that higher prices will soon follow.  As they do after Christmas when the discounting ends.  Which will reduce future economic activity.  As it does after Christmas.  Once the deals end so too ends the orgy of consumer spending.  Leaving people to deal with the aftermath.  Depleted bank accounts.  A lot of credit card debt.  And a little buyer’s remorse.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , ,

The BLS Employment Situation Summary for November 2013

Posted by PITHOCRATES - December 9th, 2013

Economics 101

There was Much Spending in November where People Gathered to Celebrate the Thanksgiving Holiday

The Bureau of Labor Statistics November’s Employment Situation Summary is out.  The government is trumpeting the 203,000 jobs created and the fall in the unemployment rate from 7.3% in October to 7.0%.  Proof they say that the economy is turning around.  And that their economic policies are working.  So everything is coming up roses.  If you stop reading the Employment Situation Summary there, that is.  For if you read further the economy is still horrible.

A big part of this improvement was the furloughed federal workers returning to work after the government shutdown.  And the Thanksgiving Holiday.  With retail hiring seasonal employees and stocking their shelves for the kick off of the Christmas shopping season.  This year starting on Thanksgiving Day for many retailers.  So you would expect a gain in employment connected to the Christmas shopping season.  Which there has been.  Retail trade employment added 22,000 jobs.  And leisure and hospitality, employment in food services and drinking places added 18,000 jobs.  And air transportation added 3,000 jobs.  Thanks to the biggest travel day of the year falling in November.

So there was much spending where people gathered with friends and family to celebrate the Thanksgiving holiday.  And the mad rush to the stores to begin their Christmas shopping.  There was much traveling, shopping and dining in November.  As there always is.  Though some years are better than others.  There was also new hiring in the automobile and construction industries.  Probably more due to the near-zero interest rates thanks to the Federal Reserve’s quantitative easing.  Basically printing money to drive down interest rates.  To encourage people to buy big ticket items like cars and houses.  Even though they had no plans to do so.

It is only the Decline in the Number of People in the Labor Force that gives us an Improving Unemployment Rate

So new jobs in these areas don’t reflect on the overall economic climate.  Because once Christmas is over business will lay off those they hired for those seasonal jobs.  And once the Federal Reserve stops ‘printing money’ those interest rates will rise.  Perhaps compounded by runaway inflation from so much printing.  So these aren’t good indicators of the economy.  We can gain a better understanding by looking at the higher stages of production.  Where there are large capital outlays required to hire and expand business.  Industries that look at the long-term.  So if they’re not hiring they’re not optimistic about the long-term economic picture.

A lot of economic activity has to happen before a retail store can sell anything.  Raw material industries have to pull resources out of the environment.  Industrial processors have to transform these raw materials so manufacturers can use them.  And once manufacturers build things wholesalers buy them and resell them to retailers.  That’s a lot of costs these industries have to incur to produce things that may sell 6-9 months later.  Or longer.  And if the economy is looking anemic to them they are not going to incur these costs.  Which is what happened in November with some of these higher stages of production.  Mining, logging and wholesale trade showed little to no change.

The civilian labor force declined by 720,000 in October.  With the government shutdown blamed for a lot of these lost jobs.  So when the government opened for business again in November we should have seen a large increase in the civilian labor force.  But we didn’t.  The civilian labor force only increased by 455,000 in November.  Which means that if you factor out the government shutdown there was still a decline in the number of jobs.  And it is only this decline in the number of people in the labor force that gives us an improving unemployment rate.  For once people give up and quit looking for a job because the economy is so bad the Bureau of Labor Statistics (BLS) stops counting them.  Skewing the real unemployment rate.

The Current Economic Recovery is a False One created with the Smoke and Mirrors of Low Interest Rates

This gets to the crux of the Obama economic recovery.  Or, rather, the absence of any recovery.  The government trumpets the creation of 195,000 new jobs per month this year.  But they don’t tell us how many jobs we lost per month this year.  Which we can calculate.  In January of this year there were 89,009,000 people not in the labor force.  In November that number rose to 91,273,000.  A total loss of 2,265,000 jobs this year.  Or a loss of 205,909 each month.  So while they cheerfully report the creation of 195,000 new jobs per month we actually lost 205,909 jobs each month.  If you count those people who left the labor force the BLS doesn’t count when calculating the unemployment rate.  In fact, if you look at the trends this year you can see the trends are going in the wrong direction.

Those in Labor Force vs Unemployment Rate thru November 2013 R1

The most shocking thing about this chart is that there are over 91 million people not in the labor force.  The labor force is the sum of the employed and unemployed persons.  So these are people who could be in the labor force but aren’t.  Because they don’t have a job.  For whatever reason.  On welfare, collecting disability, early retirement, just can’t get a job because the economy is so bad, etc.  So there will always be people out of the labor force.  And a large number is bad.  Because these people aren’t helping to create economic activity.  Which is why the Obama recovery is so anemic.

What’s also shocking about this chart are the trends.  The official unemployment rate has been falling.  Good news, yes?  Well, as it turns out, no.  Because the number of people not in the labor force has been rising during the decline in the unemployment rate.  Making the unemployment numbers questionable at best.  For you can’t have less unemployment if people continue to leave the workforce because they can’t get a job.  And the employment picture isn’t getting better.  It’s getting worse.  And it’s going to keep getting worse until those higher stages of production start hiring.  Which they won’t do until they see a real economic recovery.  And not a false one created with the smoke and mirrors of low interest rates.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Black Friday

Posted by PITHOCRATES - December 2nd, 2013

Economics 101

Black Friday kicks off the Retailer Sprint at the Homestretch of the Retailing Year

The Thanksgiving weekend is over.  As is Black Friday.  It came.  We shopped.  And now it’s gone.  But have you ever wondered why we call it Black Friday?  Why do we call something so many people look forward to and enjoy ‘black’.  A color more associated with death and mourning?  Because of accounting.  That’s why.  Or so goes the myth.

Retailers survive on razor thin margins.  And many are lucky to break even through most of the year.  While occasionally their costs exceed their revenue.  And when that happens a business is in the ‘red’.  Which is a bad thing.  For if a business is in the ‘red’ too long it can go out of business.  Enter Black Friday.  Which kicks off the retailer sprint at the homestretch of the retailing year.  And the day retailers finally get well out of the red.  And comfortably into the black.

Retailers get most profitable in the last month of the year.  Because of Christmas.  As we celebrate the birth of Jesus of Nazareth by buying Christmas presents for our loved ones.  A bit off message for the true meaning of Christmas.  But it’s now part of the American tradition.  Because we love giving and receiving presents.  Something retailers are grateful for.  For it allows them to become profitable (or much more profitable) based on one month’s worth of sales.  After treading water for the first 11 months.

Accessories and Impulse Buying make for a Successful Black Friday

So what is the secret for a successful Black Friday?  It’s a two-prong strategy.  Get people into the stores with deep discounting.  Things stores break even on or even lose money.  And try to get them to buy other things once they are in the stores.  Things that have little discounting.  And higher markups.  They accomplish this through two tactics.  Accessories.  And impulse buying.

Impulse buying is getting people to buy things they did NOT come into the store to buy.  Retailers will space the discounted items strategically throughout the store.  And place items with higher markups on the pathway to the discounted items.  Things that are so good that people say, “That looks like something I want.  And I’m in such good spirits because of the huge savings on that other thing I’ve always wanted that I’ll throw this into the cart, too.  Why not?  After all, ’tis the season to be jolly.”

Unlike impulse buying accessories are not things that we fall in love with when we see them.  Accessories are the things that allow us to enjoy those discounted things more.  Things that are a pretty good bet that we will buy them.  So they mark these items up a lot.  You may buy a discounted television and home theatre system but the cables that connect the pieces together are typically not included.  A laptop needs a bag to carry it in.  Electronic toys need batteries.  Video game systems need video games.  Smart phones need service contracts.  Printers need paper and extra ink cartridges.  Etc.  Things few people rush excitedly to the store to buy.  But often buy them because they increase the enjoyment of those steep discounted items.

It’s a Good Time to Buy and Sell Stocks but a Bad Time to buy Groceries and Christmas Presents

There is one other element needed for a successful Black Friday.  People must have disposable income.  Or they must be confident in their employment.  Such that they are willing to run up their credit cards because they are relatively certain that they’ll have a paycheck for the indefinite future.  If people don’t have this then all the discounting in the world won’t help make Black Friday a success.  So the prevailing economy matters.  As does the economic outlook.  In fact, the success of Black Friday can tell us the true state of the economy.  And how people feel about the economic outlook.

So what has this Black Friday told us about the state of the economy?  That it’s bad (see Black Friday Weekend Spending Drop Pressures U.S. Stores by Matt Townsend posted 12/2/2013 on Bloomberg).

The first spending decline on a Black Friday weekend since 2009 reinforced projections for a lackluster holiday, increasing chances retailers will extend the deep discounts already hurting their profit margins.

Purchases at stores and websites fell 2.9 percent to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation. While 141 million people shopped, about 2 million more than last year, the average consumer’s spending dropped 3.9 percent to $407.02, the survey showed…

For the fourth year in a row, disposable incomes in 2013 have only inched up and job growth remains inconsistent. As a result, low-income Americans will again have a less-merry season than affluent consumers, who are more flush thanks in part to surging U.S. stock markets, which have attained all-time highs. Consumer confidence declined in November to a seven-month low, according to the Conference Board.

“Consumers are generally not in a great mood, feeling very uneasy about the economy and their jobs, and are looking for value this year,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, wrote today in a note to clients. “They have their list and will check it twice, but they are not going to the mall and grabbing a bunch of random stuff because it is on sale or looks nice…”

This kind of so-called mission shopping, where a consumer buys one bargain-priced item and then leaves, will hurt profit margins, Goyal said. It may also explain why the number of shoppers increased and their spending fell, she said…

While traffic at the Mall of America was higher than last year, shoppers planned ahead of time where they were going and what they were buying, said Maureen Bausch, the mall’s executive vice president. There was “a lot of mission shopping, and you don’t normally see that until later in the season,” she said.

That’s bad news for retailers, who normally get about 20 percent of their holiday sales from impulse purchases, said Marshal Cohen, chief retail analyst for NPD Group Inc.

More people shopped but each shopper spent less.  Resulting in an overall spending decline.  The first since 2009.  The last year of the Great Recession.  The worst recession since the Great Depression.  So these numbers are not good numbers.  And they’re not good because of the economy.  Disposable incomes are flat.  People are worried about the economy.  And worried about losing their jobs.  If they haven’t already.  So there is no impulse buying.  Only mission shopping.  Getting the one thing they came in for.  And then leaving the store without buying anything else.  Because they haven’t a dime to spare.  The economy and economic outlook are that bad.

Over 10 million people have left the labor force since President Obama assumed office.  Making for a bleak Christmas on Main Street.  But Wall Street is doing well under the Obama recovery.  While quantitative easing has raised grocery prices (or reduced portion sizes) that perpetual inflation has inflated stock prices.  And real estate prices.  Making it a good time to make money buying and selling expensive assets.  But a terrible time to buy groceries.  And Christmas presents.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , ,

FT198: “Obamacare will fail because you can’t incentivize people to make their lives worse.” —Old Pithy

Posted by PITHOCRATES - November 29th, 2013

Fundamental Truth

Stores used the Incentives of Black Friday to get People to do what they Wanted

A belated happy Thanksgiving.  And a belated happy Black Friday.  We say belated because Black Friday was already here by the time Friday woke from its sleepy slumber.  No more waiting in line Friday morning for those stores to open.  No.  Today if you snooze (i.e., spend Thanksgiving with the family at home) you lose.  Because it’s first come first served.  Which means if you wanted to get some of those deep discounts before they run out you didn’t let anything silly like celebrating Thanksgiving with the family get in your way.

Now everyone loves a bargain.  It’s why we scan the Sunday sales papers.  And search online for the best price.  But in the Obama ‘recovery’ there isn’t a whole lot of spending going on.  As there isn’t a whole lot of employment going on.  Since President Obama assumed office his policies have destroyed some 10 million jobs.  And one thing about unemployed people.  They definitely want a bargain.  Especially if they want a good Christmas for their family during the dark times of the Obama presidency.

But there is a greater lesson Black Friday can tell us other than President Obama is a bad president.  Especially in things economic.  Why are stores opening on Thanksgiving?  Because they’re cruel and evil forcing their workers to slave away during a holiday?  No.  It’s not that.  In fact, some employees love working on a holiday.  For they get paid more working on a holiday than they normally would.  Allowing them to earn extra money to give their families a good Christmas during the dark times of the Obama presidency.  As it turns out shoppers and workers alike like Black Friday.  For it allows each to have more for less.  And that is the great lesson of Black Friday.  Getting people to do what you want by offering them something they want.  Or, in other words, offering them an incentive.

The Kansas–Nebraska Act of 1854 pitted Northern Republicans against Slave-Owning Southern Democrats

Slaves working in the planter South had no desire to be slaves.  Yet they were slaves.  Why?  There weren’t slaves in the North.  Only in the South.  The blacks in the north chose not to be slaves.  While those in the South had no choice.  The planter elite in the South, the ‘Old World’ planter aristocracy, used force.  And having a larger force in Washington than they normally would have (thanks to the Three-Fifths Compromise that counted slaves as three-fifths of a person for representation in Congress) they were able to use the force of government to continue to force blacks into slavery.  The Southern Democrats (i.e., the ‘Old World’ planter aristocracy) were able to keep the black man enslaved until the mid 19th century.  Even using the power of the federal government to override states’ rights in the North.  Using the Fugitive Slave Act to force northern states to return fugitive slaves to their Southern Democrat owners.  The ‘Old World’ planter aristocracy.

This is coercion.  This is how you get people to do what they don’t want to do.  Using the power of the federal government the Southern Democrats kept their slaves in bondage.  Also, using the power of the federal government they forced those in the North who wanted to help ‘fugitive’ slaves to stay free return their slaves or else.  That ‘or else’ being the full weight of the federal government coming down on them with extreme prejudice.  But when the North became more populated control of the House of Representatives favored the larger populated North.  Despite the Three-Fifths Compromise.  Which left the Senate.  And as each state got two senators how the new states entered the union mattered.  For the planter elite to hold their power over the United States.

The Missouri Compromise of 1820 was an early attempt to put slavery onto the path of oblivion.  Those in the North did not want it.  The planter elite in the South did.  So they compromised.  Slavery could remain in the South to appease the planter elite but the compromise prohibited slavery in the new Louisiana Territory that Thomas Jefferson purchased above the 36°30′ parallel (about the southern border of Missouri).  Except in the state of Missouri.  Then came the Kansas–Nebraska Act of 1854 and the idea of popular sovereignty.  Throwing the Missouri Compromise of 1820 out the window.  These two states were both above the 36°30′ parallel.  The Kansas–Nebraska Act of 1854 said the first people into the fledging states could choose for themselves if they would be a slave-state or a free-state.  Which led to a mad rush to Kansas.  And a bloody civil war there.  That eventually led to the American Civil War.  To settle once and for all the issue of slavery in America.  Would the Southern Democrats prevail and keep the black man in bondage?  Or would the Republicans free the slaves?

Obamacare is less like Black Friday and more like Slavery

Even if you flunked your history class you should know the answer to this.  Abraham Lincoln and his Republicans defeated the Southern Democrats and won the American Civil War.  Freeing the slaves.  Of course, the Southern Democrats were not good losers.  They gave us the KKK.  Then the Jim Crowe Laws.  The separate but equal nonsense that didn’t exist in the Republican North.  The old southern aristocracy were not huge fans of the Declaration of Independence or the Constitution.  All they wanted was privilege.  They wanted the Old World in the New World.  And the planter elite fought bitterly to keep that.  Well, not them as much as their fellow southerners they lied to about states’ rights.  Getting them (most of who were too poor to own a single slave) to fight and sacrifice their lives to maintain the institution of slavery.  To maintain the privilege of the southern aristocracy.

So there you have examples of incentive and coercion.  Black Friday incentivized people to hire in for seasonal jobs during the holiday season.  And brought people into stores with deep discounting.  Everyone got something they wanted.  And so they did what the store owners wanted.  People worked for them on Thanksgiving.  And people came into the stores on Thanksgiving.  Both of their own free will.  Now contrast that to slavery.  Where there was no free will.  Only the coercion of the federal government.  Where fear and intimidation compelled slaves to remain slaves.  And their only incentive was to obey their masters to avoid physical harm.

With the Supreme Court ruling the penalty of Obamacare became a tax.  Allowing the federal government to compel people to buy health insurance or suffer the consequences.  A ‘tax’ that will grow in time.  Buy insurance or else.  With that ‘or else’ being the full force and fury of the IRS.  Something most people would find more unpleasant than a colonoscopy.  Without any anesthetic.  No, a letter from the IRS is something no one wants to see in their mail.  For few things will fill you with fear and dread more.  This is the enforcement mechanism of Obamacare.  Which they need because people otherwise wouldn’t spend more for less.  Higher insurance premiums to cover things they will never need (a gay man will never need prenatal care).  And sky-high deductibles that will be like having no insurance.  As everything will be out of pocket until you reach that sky-high deductible.  Which few people will reach unless they have a catastrophic illness or accident.  This is why people are NOT signing up for Obamacare.  Because Obamacare ain’t no Black Friday.  Obamacare is offering nothing the people want.  At prices higher than they ever had to pay for health insurance before.  Leaving them with less to spend on their family.  Forcing them to cut out things they once enjoyed.  Which is why Obamacare will fail.  Because you can’t incentivize people to make their lives worse.  No, to do that you need the fearful power of the state.  Just like the Southern Democrats used to maintain the institution of slavery.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Christmas and Keynesian Stimulus

Posted by PITHOCRATES - December 24th, 2012

Economics 101

Christians may not like the Crass Commercialization of Christmas but the Left Loves It

The Left does not have a war on Christmas per se.  For they love the consumer spending part of Christmas.  Which is pure Keynesian.  People go into debt to spend more money at retailers.  They love that part of Christmas.  What they don’t like is the religious stuff.  Especially Jesus.

They don’t like Jesus because He is the God the Christians worship.  Their Lord and Savior.  It’s these Christians that bother the Left.  Because of their opposition to birth control (mostly Catholics), abortion and having fun in general.  The kind of fun adults enjoy.  The kind of things Christians frown on.  Premarital sex.  Gay love.  Drinking and using drugs.  Coarse language and sexual situations on television shows and in the movies.  Things they champion on the Left.  Which makes the Left hate Christianity.  Which they see as nothing but a great killjoy.

It’s the moralizing the Left does not like.  But the one thing Christians don’t like about Christmas, its crass commercialization, they do like.  So the Left will try to band images of Christ from Christmas displays wherever they can.  Despite Christmas being the celebration of Christ’s birth.  But they will gather in Rockefeller Center to party when they light the Christmas tree.  Though they would prefer that we call it the holiday tree.

Retailers often become Profitable for the Year only because of this Temporary Spending Surge at Christmas

So there are two Christmases.  The one where Christians celebrate the birth of Christ.  Wish for peace on earth.  And good will towards man.  And the other Christmas.  The one marked by the orgy of consumer spending.  Much of it funded by one-time Christmas bonuses.  A celebration of demand-side Keynesian economics.  Where people spend their hard earned money instead of saving it.  And when their money runs out they spend even more using their credit cards.

Keynesians have a bunch of charts and graphs showing how great a stimulus this Christmas spending is to the economy.  And mathematical formulas.  They can tell you about the velocity of money. How fast money travels through the economy when it goes from consumer to seller.  The seller then becomes consumer.  And spends the money they just received.  Then the person who receives this money in a sales transaction goes out and spends it as a consumer.  And on and on it goes.  Flying through though the economy at breakneck speed.  Generating a whole lot of economic activity.

Retailers often become profitable for the year only because of this spending surge at Christmas.  In fact, to handle this surge in business they hire a lot of people at Christmas time.  Part-time people.  Proving again that pumping money into the economy creates jobs.  The main tenet of Keynesian monetary policy.  Pump cash into the economy and people will spend it.  Something the Keynesians have been doing since Richard Nixon decoupled the dollar from gold in 1971.  Ending any semblance of responsible monetary policy.  And recessions forever.  At least, that was the plan.

Keynesian Stimulus is nothing more than an Orgy of Temporary Consumer Spending just like at Christmas Time

When the economy slows down and people stop buying stuff businesses have to lay off workers.  So they won’t build stuff that no one will buy.  Laid off workers no longer have money to buy things.  Which causes other business to lay off workers.  So THEY won’t build stuff that no one will buy.  It’s a vicious cycle.  In fact, we call it the business cycle.  The boom-bust cycle.  From expansion to contraction.  From an economy hiring people to an economy laying off people.

Keynesian economics was supposed to remove the contraction side of the business cycle.  By picking up the spending slack.  When consumers stopped spending money the government would step in and replace their spending.  We call it stimulus spending.  Often spending money the government doesn’t have.  So they run a deficit (i.e., borrow money).  Or simply print money.  Which they did a lot of in the Seventies.  Unfortunately, as it turns out, you just can’t do that.  For when you print money you devalue it.  Which raises prices.  As it takes more of these devalued dollars to buy what they once did.

And this is why Keynesian economics doesn’t work.  Because a Keynesian stimulus is nothing more than an orgy of consumer spending.  Just like at Christmas time.  Which happens only for a limited time.  Businesses hire temporary part-time workers at Christmas because this spending does not last.  As it does not last during a Keynesian stimulus.  It doesn’t create any full-time jobs.  Because employers know it is only temporary.  And they know that higher prices will soon follow.  As they do after Christmas when the discounting ends.  Which will reduce future economic activity.  As it does after Christmas.  Once the deals end so too ends the orgy of consumer spending.  Leaving people to deal with the aftermath.  Depleted bank accounts.  A lot of credit card debt.  And a little buyer’s remorse.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , ,

Happy Birthday, Jesus. And Merry Christmas to Everyone Else.

Posted by PITHOCRATES - December 24th, 2010

Jesus, Mary and Joseph away in a Manger a Long Time Ago

‘Tis the season.  People have their holiday trees up.  They’re wishing their friends and neighbors Season’s Greetings.  Yule tidings.  Or Noel.  Racing all over town for last minute gift buying.  Our halls decked in boughs of holly.  And other things.  Santa Claus.  Rudolph and his red nose.  Snowmen.  All kinds of decorations.  But you won’t see many crèches.  Especially in front of public buildings.  Because Mary, Joseph and Jesus depicted in a manger to commemorate the night Mary gave birth to Jesus in a manger with Joseph at her side is not suitable for Christmas.  That time of year when we commemorate the birth of Jesus.  In a manger.  With Joseph at Mary’s side.  Funny.

Some will fight for the right of Muslims to build a Muslim community center near Ground Zero.  With a mosque inside it to boot.  But they tell us not to say ‘Merry Christmas’ or show images of the nativity because it might offend some people.  Unlike the Muslim tradition of building mosques on conquered territory (as those who attacked us see Ground Zero as.  Conquered).  No, these same people don’t find that offensive.  But saying Merry Christmas is.  Funny.

Sure, it’s a double standard.  It always seems to be with Christianity.  And that’s sad.  For this is a Christian nation.  Based on Judeo-Christian values.  The original colonies had established Christian religions.  And some Jews were instrumental in our founding, too (Haym Salomon perhaps being the greatest American no one knows today).  So we should be able to celebrate the birth of Jesus Christ.  For the words of Christ greatly influenced our Founding Fathers.  You might even say Jesus was present at our Founding.  If in spirit only.

Jesus Christ Could Even Charm an Atheist

Jesus was born a mortal.  And some of His greatest works were done as a man.  The words of Christ that influence millions all over the world today were spoken by a young man of thirty something.  But they were remarkable words.  For they impressed theist and atheist alike.  And greatly impressed the Founding Fathers.  Especially Thomas Jefferson.

Jefferson was probably an atheist.  He hated anything that infringed upon a man’s liberty.  Be it government.  Royalty.  Or religion.  Especially religion.  For he saw religion as another way to oppress and exploit the masses.  Being of English stock and not that distant from the English Civil War (where Protestant fought Catholic), it is easy to understand why Jefferson thought like he did.  Many did.  That said, Jefferson was a big Jesus Christ fan.

He thought Christ was the greatest philosopher of all time.  That His message was the best message ever to mankind.  The Sermon on the Mount said it all.  For the atheist to reconcile his aversion to all things religious and his love of Christ, he made his own Bible.  It was basically the New Testament with all the God stuff edited out.  Jefferson would die still opposed to organized religion, but felt that the world would be a better place if it was a Christian world.  And that’s something coming from an atheist.

Jesus Christ is American as Apple Pie

Jesus Christ wasn’t an American.  But America wouldn’t be the same without Him.  He instilled in us a moral compass.  Which made America special.  And we rejoice in our faith.  So celebrate Christmas.  Wish friends and families a Merry Christmas.  And ask the good Lord to look over our service people serving in harm’s way away from home.  May God bless them and help them get home safe.

And now, how about a little birthday music?

Hark the herald angels sing
“Glory to the new born King
Peace on earth and mercy mild ,
God and sinners reconciled”
Joyful all ye nations rise.
Join the triumph of the skies
With th’angelic host proclaim
“Christ is born in Bethlehem”

From Hark, The Herald Angels Sing sung by Nat King Cole.

Said the king to the people everywhere
Listen to what I say
Pray for peace people everywhere
Listen to what I say
The child, the child
Sleeping in the night
He will bring us goodness and light
He will bring us goodness and light

From Do You Hear What I Hear sung by Johnny Mathis

http://www.youtube.com/watch?v=-6llIRhq74w

Here comes Santa Claus
Here comes Santa Claus
Right down
Santa Claus Lane

He’ll come around
When the chimes rings out
That it’s Christmas morn again
Peace on Earth
Will come to all
If we just follow the light
So let’s give thanks
To the Lord above
‘Cause Santa Claus comes tonight

From Here Comes Santa Claus sung by Gene Autry

So let God and sinners be reconciled.  Let’s pray for peace everywhere.  It shouldn’t be too hard to achieve.  If we all just follow the light.

Merry Christmas.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,