We are in the Worst Economic Recovery since that following the Great Depression because of Keynesian Economics

Posted by PITHOCRATES - February 15th, 2014

Week in Review

We are in the worst economic recovery since that following the Great Depression.  Why?  Because of Democrats.  Who are all Keynesians.  And that’s a big problem as all of our worst economic times were given to us by those who adhere dogmatically to Keynesian economics.  That school of economics that gave us the Great Depression.  The stagflation of the Seventies.  The dot-com bubble.  The bursting of the dot-com bubble.  And the dot-com recession.  As well as the subprime mortgage crisis and the Great Recession.  In all of these events the Keynesians in power followed Keynesian economic policies to avoid recessions.  And then to pull us out of recessions when their avoidance didn’t work.  Then doubling down on the things that didn’t work previously.  In particular artificially low interest rates.  Which have been around zero for the last 5 years.  And massive federal spending to stimulate the economy when the private sector wasn’t spending.  Two pillars of Keynesian economics.  Neither of which have done anything to help improve the worst economic recovery since that following the Great Depression.

This is the problem with all the ‘noted’ economists the government likes to cite.  They embrace poor economic principles.  Proven wrong over and over again.  They can come up with some impressive looking charts and graphs but their analysis is all wrong.  And the fact that we’re in the worst economic recovery since that following the Great Depression proves it better than any chart and graph.  They’re wrong.  And continue to be wrong.  Yet they provide the economic policies for our country.  Some of the greatest nonsense you will ever hear.  Things you wouldn’t do in your business.  Or in your personal life (see Student Loans Are A Drag On The Economy And Society by Josh Freedman posted 2/11/2014 on Forbes).

While loans are intended to expand college access to a broader population, the nature of risk that they entail also produces the opposite result. Low- and middle-income students worried about the consequences of taking out a loan will be more likely to decide that college attendance is not worth the risk…

Studies have found that high debt levels not only deter access at the beginning, but can also drive students away from completing college once they have already started… students who start college but do not graduate are stuck with loan repayments and no college degree. They still have to repay their loans but do not have the economic boost of a college degree to help them have enough income to cover this cost.

First of all, why is it when it comes to a college education no one ever demands that we lower the cost.  Like we do with greedy oil executives who keep the price of gasoline high.  Why is it no one attacks the greedy people in higher education that keep education so costly?

The problem is too many people are going to college for the wrong reason.  There is a reason why there is a list of the best party colleges every year.  Because a lot of these kids want to go to these schools.  Which explains why colleges in Colorado are seeing a spike in out-of-state applications.  Because these kids want to go to a college where they can party with legal marijuana.  And to make that partying easier they’re majoring in easier degree programs that the college assured these kids would provide them a comfortable living after graduation.  So they can get that profitable tuition out of these kids.  Often times paid for by these kids’ student loan borrowings.  So the colleges are misleading a lot of these kids to make a buck.  Leaving them saddled with a lot of student loan debt if they quit.  Or even more student loan debt if they stay in until graduation.  While getting a degree that can’t get them a job.

A second issue with increasing levels of student loan debt is the effect on the economy… Individuals with more student loan debt were less likely than individuals without student loan debt to purchase homes or cars.

Yes, having too much debt is a bad thing.  It reduces your disposable income.  Preventing you from purchasing a house or a car.  Yet these same economic advisors have no problem with raising taxes and devaluing the currency (i.e., printing money) to pay for all of the government’s stimulus spending.  Higher taxes reduce our paychecks.  And devaluing the currency raises real prices.  Reducing what we can buy with our smaller paychecks.  No, a Keynesian has no problem with debt at the federal level that affects everyone.  But student loan debt is just a terrible thing for those kids who dropped out of college or who didn’t get a degree that an employer could use.

In the wake of the financial crash, households have been trying to deleverage, or pay down their debt so they can have a healthier financial outlook, reduce the amount of their income that they use to service their debt, and begin investing and consuming again…

A look at the data suggests that student loans have slowed down households in the process of paying down debt. Since 2008 — the peak level of household debt — households lowered their levels every type of debt except student loan debt. Student loans have continued to grow throughout this process of deleveraging.

Of course the one thing missing from this analysis is the horrible economy President Obama’s Keynesian policies have given us.  Since he became president he has destroyed some 10,948,000 jobs.  Based on the number that were out of the labor force in the January 2014 BLS jobs report (91,455,000) and how many were out of the labor force when he entered office (80,507,000).  This is why people are struggling with debt levels.  There are no jobs.  If there was a robust economy flush with jobs people wouldn’t worry about taking on debt to invest in the future.  As long as they got a useful college degree in a high-tech economy.  And not something useless like women’s studies or poetry.

But aren’t people facing poor job prospects just taking out more loans to avoid working as baristas at coffee shops that drip the coffee super slowly for no apparent reason? This does not appear to be the case from the debt data. Student loan debt has grown at almost exactly the same rate since the crash as it had been the previous five years — i.e. steadily and without fail.

Student loan credit level has been steadily rising because the cost of a college education has been steadily rising.  Again, where is the outrage at our greedy educators getting rich by loading up these kids with student loan debt for a degree they can’t use in a high-tech economy?

…the loan system allows colleges to raise prices, which causes more students to take out loans. States, facing budget pressures, have also pulled back on investment, putting even more risk on students and further increasing the need for loans.

Again, where is the outrage at our greedy educators who keep raising tuition, forcing these kids to take out more and more student loan debt?

The risk and burdens that come from forcing students to take out debt up front and pay it back later is problematic from head to toe (tassel to hem, one might say). To create a better system of higher education, we need to look at alternatives to the current debt-financed model.

So the solution is for the taxpayer to foot the bill for these useless college degrees at these party colleges?  How is that going to solve any problem?  All that will do is allow more people to go to a college in Denver where they can get high for 4 years.  And then go to work as a barista at a coffee shop that requires no 4-year degree.  How does that make anything better?  Other than get more young people to vote Democrat.  Then again, perhaps that is the only objective of Keynesian economics.  Which is why those on the left embrace these failed policies with a religious fervor.  Because it helps them win elections.  Even while they’re destroying the economy.



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American Children fall behind other Children throughout the World in Math and Science

Posted by PITHOCRATES - January 5th, 2014

Week in Review

More people are going on to college than ever before.  And we have the student loan debt to prove it.  As recent graduates threaten to default on their loans as they can’t get a job with their worthless degrees in the humanities and social sciences.  Expensive degrees colleges sold them.  Promising them fulfilling careers.  But a degree in minority studies or French literature ain’t going to go far in a high-tech economy.

And that’s the problem.  People are going to college for the wrong reason.  To party.  They want to have fun.  And take the easier degrees so they aren’t weighed down by too much school work.  It’s so bad that high-tech companies are using the visa system to fill job openings.  As they can’t find American graduates that have the same qualifications as foreign graduates.  Who actually take math and science.  And get the education businesses are looking for (see Distinguishing Science from Nonsense by Arthur Caplan, Ph.D., posted 12/31/2013 on bioethics.com).

As Americans enter 2014 there is grave concern among our political leaders that we are lagging behind other nations in terms of our children’s’ scientific literacy.  This past December an international survey confirmed—too many American kids don’t understand science and they continue to fall behind children from other nations, many much poorer than we are in science and math skills.

Students in the United States slipped deeper in the last international science literacy rankings amid fast-growing competition abroad.  American teens scored below the international average in math and roughly average in science, compared against dozens of other countries in the 2012 Program for International Student Assessment (PISA).  We trail Germany, Estonia, Latvia, Singapore, Hong Kong, Britain, Latvia, Viet Nam and many more.  (http://www.oecd.org/pisa/keyfindings/pisa-2012-results.htm)…

A key reason for the poor performance of our children with respect to science is that American culture is both ignorant of and disrespectful to science…

As I write this there are two women in ICUs in different parts of the U.S. on life support despite having been pronounced dead by medical experts… Neither the media or the medical profession seemed to be able to explain that brain death is truly death.  Nor did the public seem inclined to listen, believing somehow that a miracle might occur.

At the same time as these cases emerged a poll was released by the Pew Foundation showing that a third of Americans do not believe in evolution…

And as I write this flu season has begun across the country.  The CDC estimates that last year 381,000 Americans were hospitalized due to the flu. They also estimate that, the flu vaccine prevented 79,000 hospitalizations and 6.6 million illnesses.  Yet a tiny cabal of kooks and know-nothings has gotten so much attention that barely half of all Americans get a flu shot…

The nutritional supplements industry is a thirty billion dollar business that has no solid evidence for efficacy and oodles of instances in which death and disability are linked to poorly manufactured or mislabeled products…

I could go on but the point ought to be clear.  Children are not going to flourish at science in a society that treats science either as something you can believe in selectively, something that is simply one point of view or something about which anyone can have a credible opinion no matter how ill-qualified, dumb or misinformed.

If we want to have a brighter economic future then we need to start thinking about science education outside of our schools.

Absolutely.  Because our schools aren’t teaching science.  They’re teaching our kids about global warming instead.  So they will grow up frightened.  And vote Democrat.

The teacher unions support Democrats.  And Democrats protect teacher unions.  So is it any surprise that they are programming our children to be good Democrat voters instead of teaching them good science?  Filling their heads with politicized science like global warming.  For it is politicized science when a consensus closes a subject to debate.  That is something that just doesn’t happen in good science.  If it were then physicists would just take a vote on what better reconciled general relativity and quantum mechanics.  Loop quantum gravity or string theory?  Of course, physicists don’t reach a consensus to determine which science is the right science.  But that’s what climate ‘scientists’ do.  And Al Gore.  And our public schools.  And our universities.  They say there is a consensus and the scientific debate is settled.  We are warming the planet.  And the only way to save the planet is with massive government regulation.  With Democrats in power to write ever more regulations.

The reason why Americans are falling behind in math and science is because the Democrats use education for political ends.  Not for educating our children.  For they couldn’t win an election if they did.  They need a crisis.  Like global warming.  A crisis and an ignorant electorate.  Which their friends in education give them.  And because they do children from Germany, Estonia, Latvia, Singapore, Hong Kong, Britain, Viet Nam and many more are now smarter than American children.



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A Poll of Entrepreneurs shows President Obama as one of the most Anti-Middle Class Presidents Ever

Posted by PITHOCRATES - October 19th, 2013

Week in Review

This is the worst economic recovery since that following the Great Depression.  And it’s not George W. Bush’s fault.  Despite what he did to increase the size of government.  No.  The anemic recovery is due to President Obama.  And his anti-business policies (see Not open for business posted 10/12/2013 on The Economist).

America is not producing as many start-ups as it did a decade ago and those that have been created are providing fewer jobs—less than five each, compared with an historical average of about seven. Start-ups created 2.7m new jobs in the 2012 financial year compared with 4.7m in 1999.

The financial crisis clearly bears a lot of the blame for reducing America’s stock of capital and animal spirits. But it is only a partial explanation. The decline in the number of firms going public began in 2001. And these problems are continuing to delay the recovery despite the federal government pump-priming the economy and keeping interest rates near zero.

So there you have it.  Federal government pump-priming and near zero interest rates do NOT stimulate economic activity.  As these are the bedrock of Keynesian economics then Keynesian Economics does NOT work.  This is a problem for America.  Because President Obama and the liberal left are dyed-in-the-wool Keynesians.  And why are they Keynesian extremists despite the historical record of Keynesian failure?  Because Keynesian economics empowers Big Government.  That is, Keynesian economics favors those in power.  Not the people.

Three years ago John Dearie and Courtney Geduldig, who both worked for the Financial Services Forum, which represents America’s biggest financial institutions, came up with an inspired idea. Why not ask entrepreneurs themselves what is going wrong? Both big multinationals and established small firms have lots of representatives in Washington, DC. Entrepreneurs are too busy inventing their companies to spend time lobbying. The pair organised meetings and conducted lots of polls. Across a vast and diverse country they heard the same message from everyone they asked: entrepreneurship is in a parlous state. And everyone pointed to the same problems. The result is a new book, “Where the Jobs Are”, which should be dropped onto the heads of America’s squabbling politicians.

The first worry is over human capital. Entrepreneurs repeatedly complain that they cannot hire the right people because universities are failing to keep pace with a fast-changing job market. Small firms lack the resources to provide training and are consequently making do with fewer people working longer hours.

The problem with our educational system is that it teaches our young to become Democrat voters.  Not prepare them for a high-tech economy.  Our public schools teach our children about the evils and unfairness of capitalism while lauding the goodness and fairness of government.  Turning them from their parents who are selfishly destroying the planet with their global warming to the government.  Who is expanding further and further into the private sector to save the polar bears.  And when our kids get to college our system of higher education takes it up a notch.  Attacking the history and the culture that made America the greatest country in the world.  So our college graduates can tell you every bad thing America has ever done but they lack the math and science skills that our high-tech economy so desperately needs.  Forcing businesses to turn to immigrants for those skills.

Immigrants are responsible for launching about half the country’s most successful start-ups and producing a striking number of its patents. But the authorities do their best to drive them out of the country once they have been educated or to break their spirits on the visa treadmill…

The second problem is the complexity and cost of government. Entrepreneurs the world over complain about regulations and taxes. But America’s have lots to gripe about: in 2009-11 the Obama administration issued 106 new regulations each expected to have an economic impact of at least $100m a year. Besides this business founders suffer from the constant political uncertainty generated by a combination of ambitious new legislation, such as Obamacare, and ideological trench warfare. The Vanguard Group, an asset-management firm, calculates that since 2011 Washington’s bickering politicians have imposed, in effect, a $261 billion uncertainty tax that has cost up to 1m new jobs.

Any administration that raises taxes and issues 106 new regulations is no friend of small business, jobs or the middle class.  Therefore President Obama is no friend of small business, jobs or the middle class.  No matter how much he says that he is.  If you want to know why this is the worst economic recovery since that following the Great Depression it’s because of the Keynesian in the White House.  And the Keynesians in Congress.  That are waging a war on small business, jobs and the middle class.

The financial crisis has worsened the third problem: raising money. Over 70% of new businesses are launched using savings or assets—particularly houses. The crisis reduced the average net wealth of American households by about 40%. Business founders repeatedly mention other problems too. Venture capitalists are increasingly risk-averse. The Sarbanes-Oxley act imposes additional costs of $1m a year on public companies. Investors no longer bother with “growth stocks” because there is more money to be made in making lots of big trades in established firms. The dramatic decline in the number of firms going public since 2001 is worrying because, over the past four decades, more than 90% of jobs created by start-ups came into being after they went public…

Fixing the small-business problem should be at the top of the political agenda. Some 22m workers are either unemployed or underemployed, or have given up looking for work. If it continues to generate new jobs at its current anaemic rate, America will not return to pre-recession employment levels until 2020. The country is lucky that entrepreneurship is part of its DNA. It seems perverse to put unnecessary obstacles in the path of people whose ambition is to found businesses and hire new workers.

Yes, we should put fixing the small-business problem at the top of the political agenda.  Which the Republicans recently tried by defunding Obamacare.  And reining in out of control spending.  But as this would be a check on the growth of government the Democrats shut down the government before letting that happen.  For they will have their taxes, regulations and spending.  And the middle class be damned.  For theirs is a government of the ruling elite, by the ruling elite and for the ruling elite.



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Democrats want to keep Student Loan Interest Rates low so more Students can get Worthless Degrees

Posted by PITHOCRATES - May 19th, 2013

Week in Review

A lot of people hate corporations.  Where business people get rich by exploiting the people.  But at least they make something that people willingly buy.  Because it makes them happy.  Like a smartphone.  No.  Corporations are NOT exploiting people to get rich.  But you know who are?  Our universities (see Republicans advance bill to tie student loan rates to markets by Elvina Nawaguna posted 5/16/2013 on Reuters).

Republicans in control of the House Education and the Workforce Committee voted on Thursday to advance legislation tying student loan interest rates to the financial markets, a plan they said would give borrowers a better sense of how much they must repay.

Currently, interest rates on subsidized Stafford loans are set by the government. The rates are due to double on July 1 to 6.8 percent from 3.4 percent, and while lawmakers across the aisle agree that an increase should be averted, they disagree on how to prevent it.

Republicans on the committee rejected amendments by Democrats to maintain the current rates for another two years…

Lawmakers have recently expressed growing concerns about American students’ loan debt, which according to the U.S. Consumer Financial Protection Bureau now exceeds $1 trillion. The average student borrower owes about $27,000, and delinquency rates are increasing as new graduates struggle to find jobs…

They’re struggling to get a job because our universities are selling these kids worthless degrees.  “Come to college,” they tell our kids.  “Borrow money.  Don’t worry about that student loan debt.  For you will be able to easily pay it back, buy a house and a new car with your degree in gender studies.”  Or insert any other liberal arts degree that has no market value in a high-tech economy.  An economy so high-tech that these college kids can’t live without their smartphones keeping them connected to Facebook and Twitter.  But these same kids don’t want to learn how to make the next smartphone.  Or write the next ap to run on it.  Because that’s just too hard.  And that’s not what college is about.  College is for having a good time.  Which they can do more often if they’re not burdened down with some complicated math or science degree.

With such high unemployment numbers we shouldn’t be subsidizing anyone to go to college unless they are going to get a degree that has market value in our high-tech economy.  Because a trillion dollars in student loan debt is enough.  Especially when these kids can’t get a job with the worthless degree these universities conned them into buying.  Just to bring more money into the university.  To provide generous pay and benefit packages for their administrators and professors.  While they badmouth the U.S. to their students.  To get them to vote Democrat in the next election.  So they can keep the cheap money spigot open to lure more unsuspecting kids into going deep into debt buying more worthless degrees.



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