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Dangerous Economic Misconceptions

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http://www.zerohedge.com/article/guest-post-dangerous-economic-misconceptions

By Giordano Bruno

Neithercorp Press – 09/07/2010

For many years, economics in the U.S. has been approached with a ‘game show’ mentality. Wild and backwards speculations on financial growth have become the norm. The daily ‘Wall Street Journal’ and ‘Washington Post’ musings of international bankers and their servile lackeys are treated as divination, rather than the bamboozle they actually signify. If you play along and contribute to the mechanics of the great casino, then you are treated as a “serious” economist or analyst, regardless of how many times your advice has been completely off the mark, or how many middle-class nest eggs you destroyed in the process. If you question the conclusions of the pundits and talking heads, or, God forbid, question the validity of the system itself, you are immediately marginalized as a “kook” or “conspiracy theorist”. The workings of the mainstream financial world are more inbred than Hollywood and Washington D.C. combined.

Cable news providers like MSNBC and CNN have set the American people up for fall after fall; sometimes because they were blinded by their own bells and whistles, sometimes because they deliberately and blatantly lied in order to create engineered market sentiment. In the wake of the initial credit market collapse of 2008, these people, who didn’t see it coming and denied it was happening, still have their jobs, still have their TV shows and news columns, and, are still generally blowing smoke up our posteriors.

It’s not that the inhabitants of this country continue to trust the MSM (some do; seniors on prescription medication, yuppies on prescription medication, ignorant day traders who are often self-medicated, etc.), it’s just that the well established opposing views and arguments we in the Liberty Movement are exposed to by honest alternative news sources have not been properly presented in a forum that is widely visible to the average citizen. When was the last time you saw a Ron Paul, a Peter Schiff, a Gerald Celente, or a Max Keiser, etc. on a MSM financial program for any longer than ten minutes? When have we ever seen the opposing view given respectful consideration in a fairly moderated debate? Would any high level ghoul from Goldman Sachs, JP Morgan, or the private Federal Reserve, submit to an unbiased hour long televised discussion with any analyst from our side of the line?

On the few occasions in which Ben Bernanke was cornered in the highly controlled environment of Congressional hearings, he was either completely unable or unwilling to give a coherent response of any substance to the questions of Ron Paul. Anytime these men are taken out of the protective element of the worshipful MSM shell and actually challenged, their arguments fall apart.

In some fields of research, dishonesty and misconceptions can cost lives. In economics, dishonesty and misconceptions can cost MILLIONS of lives. Mainstream financial analysts (and the MSM in general) have lost all sense of responsibility for what they do, and thus, continue to put our society at risk and continue to lose vaster portions of their audience year after year. The problem is that the vacuum left behind by this mass exodus from the MSM has not yet been correctly filled with principled alternative news providers. We are growing everyday, but the information void is still ever present, and the memory hole continues to be exploited by global bankers. Some people don’t know where to turn, and have instead given up on looking for the truth altogether.

My only option has been to continue drilling away at the root points of disinformation, along with many other uncompromised researchers, and hope that consistency and perseverance win the day by accumulation and attrition.

With that strategy in mind, we will now examine the instabilities behind our current recession/depression. We will then follow by deconstructing the most prominent economic misconceptions surrounding them (often perpetuated by the MSM), along with those misconceptions you will probably hear in the near future…

Did Someone Say “Recovery”?

There are a handful of exceptions in history, but those aside, one of the safest generalizations one can make, is that governments lie. Why do they lie? Simple; because they are afraid of how the public might react if they knew the truth. Governments are often composed of men with a strong sense of self-interest, and an even stronger sense of self preservation. This drives them to put their own agendas over the wellbeing of the people they are supposed to serve. And, if it’s safe to bet that governments lie, it’s an even safer bet that international bankers, who have no principled ties to any country, lie more!

During the Great Depression, government officials, mainstream financial analysts, and global bankers, released press notices and interviews every year for over a decade, all claiming that “recovery” was just around the corner, that good times were back again. Then, we witnessed a world war. A third of the planet was leveled, but America (unlike most countries) came out with its industrial base still intact, and so, we called it a recovery (actually just a reallocation of world assets into one of the few un-scorched nations left) and happily skipped on our way towards the comparably decadent 1950’s.

Today, we face a far more dangerous scenario than the Great Depression ever was, but the strategy of skewed statistics and denial by the elites has remained pretty much unchanged. Unsupported talk of recovery fumes from every word and every pore of the establishment media, and the investment community to some extent has even been convinced that if they “wish” for recovery hard enough, if they think happy thoughts, it will materialize, all without any effort, any sacrifice, any suffering, like magic. Unfortunately, fairy dust and fiat alone are not going to undo the slowly accumulated damage that our economy has sustained for the past several decades. Below, are the reasons why…

Employment Near Great Depression Levels

In the past week, the Obama Administration has preemptively claimed victory on two fronts; a military pullout in Iraq, and the American economy (and conveniently right in time for Labor Day I might add). Of course, he “exaggerated” the pullout in Iraq. There are still 50,000 troops on the ground, and the troops he did pull out are merely being replaced with private mercenary contractors like those from Blackwater. So, in Iraq, nothing has changed. The administration’s proclamation that they have “stopped the bleeding” in terms of the economy is a similar misrepresentation of the facts. Its not that they have stopped the bleeding, America has almost bled out!

Counting U-6 measurements of those not considered by the Labor Department as unemployed because they are either off jobless benefits or are working part time, the jobless rate of the U.S. has hovered near 20% for over a year at least. During the Great Depression at its peak, unemployment reached 25%, but even this comparison is misleading. The population of the U.S. during the 1930’s was around 122 million, meaning far less working age adults than there are today in our population of 310 million people. In fact, the actual number, not percentage, of unemployed and underemployed today far exceeds that of the Great Depression. The number of desperate people, the critical mass of poor in a country, can have a far more insidious effect on its social environment than the abstract historical “percentage”, at least in my view.

Given the real state of unemployment, why has there been such euphoria over the economy in the past few days? Well, August private employment numbers from the Labor Department of 67,000 jobs created “beat Wall Street estimates”, that’s why. Set aside the fact that 121,000 temporary government jobs were cut equaling an actual net loss of 54,000 jobs. At least the privet sector is alive, right? Wrong. Here’s the rub…

Mainstream analyst estimates have become an incredibly pervasive delusion among investors and the public lately, a delusion that now has the financial sector dancing to whatever tune the government and the central banks wish to play.

Analysts forecast monthly unemployment reductions or increases based on….? Certainly weekly unemployment benefits filings are a part of the prediction process, and perhaps a few other statistics which are questionable themselves, but at bottom, these estimates are a blind guess involving very little concrete math. A guess completely subject to the whims of the analysts themselves. This “guess” is then for some reason treated as a legitimate reference point by the entire market for determining the health of the economy. It becomes a purely fabricated psychological indicator with no basis in reality. Want to pump up the stock market for a couple weeks? Why not guess lower job creation than is liable to occur. Or, if you are the Labor Department, tweak the numbers up a little above estimates and then “revise” them down in another month or two after everyone has forgotten. Bankers and economists projected 40,000 new private sector jobs created in August. Labor Department numbers were 27,000 above that. Result: stock market jubilee and a declaration that the recovery is in full swing.

The market has become so addicted to the use of arbitrary monthly analyst estimates that they have forgotten to look at the bigger picture, the real and fundamental reference points compiled over decades and used for gauging the actual state of the economy. Below is a graph from Clusterstock which very clearly and concisely illustrates EXACTLY how our jobs market is doing by comparing the percent of job losses to peak employment today, along side the same statistics from every recession after WWII:

chart-of-the-day-the-scariest-jobs-chart-ever2.jpg

Far more of this at the link.

An interesting piece, although I disagree with one part about the concrete math, even if it's based on concrete maths it's still nothing more than a guess there are too many variables to compute. See Talebs Black Swan to understand why.

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Here's another dangerous economic misconception:

HPCers know what they are talking about and do not suffer from economic misconceptions and don't suffer from confirmation bias

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Here's another dangerous economic misconception:

HPCers know what they are talking about and do not suffer from economic misconceptions and don't suffer from confirmation bias

Confirmation bias is very dangerous, never listen to anyone especially when you see conformation of your own bias.

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meh

Confirmation bias is a tired bull scare tactic.

Confirmation bias is what has been going on in the MSM for the last 10 years.

Confirmation bias is something that sometimes worries me - I suspect I am HPC red misted and my more logical self consideres the opposing view.

So I leave HPC for a while and consider buying.

Then I look at the current situation objectively and think....

"F00kinell - property is f'd innit"

and I start posting again on HPC

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meh

Confirmation bias is a tired bull scare tactic.

Confirmation bias is what has been going on in the MSM for the last 10 years.

Confirmation bias is something that sometimes worries me - I suspect I am HPC red misted and my more logical self consideres the opposing view.

So I leave HPC for a while and consider buying.

Then I look at the current situation objectively and think....

"F00kinell - property is f'd innit"

and I start posting again on HPC

+1. What you have to remember is that HPC is the antithesis of confirmation bias. i come here to make sense of all the other dross that is posted, printed, written, spouted on TV, radio, in the papers, by the BBC, politicians, estate agents, BTL'ers, the guy down the pub...

Need I go on?

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For many years, economics in the U.S. has been approached with a ‘game show’ mentality. Wild and backwards speculations on financial growth have become the norm.

Aint that the truth.

I first got interested in the markets in 1999, i was an optimistic 16 year old at the time (yes, i was an odd teenager) and watched a lot of CNBC. I remember they used to be constantly going on about DOW 40,000, incessantly. I kept wishing i was a bit older with a bit of money to invest lest i miss the boat. Its easy to see how people get caught up in the hysteria. Obviously over the next few years the FTSE and DOW halved in value and i started to question if TV was as responsible and impartial as is made out. I guess now im far far more cyanical than average, which makes me even more mad at the main stream media.

Shame to see CNBC is still the stock market equivalent o 24/7 Property ladder, but not surprising.

Yes. we all know on here the BBC/CNBC et al are complete propaganda peddlers, unfortunately, most people still view it as credible, almost entirely because it simply is mainsteam.

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Here's another dangerous economic misconception:

HPCers know what they are talking about and do not suffer from economic misconceptions and don't suffer from confirmation bias

scepticus, showing your true colours at last!

You seem to be done with the pseudo-monetary babbling, thank God for that.

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scepticus, showing your true colours at last!

You seem to be done with the pseudo-monetary babbling, thank God for that.

yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics in the (in)capable hands of yourself and similar posters, and I feel completely confident you'll make a terrible hash of it like you have to date.

I shall return under a new name once you are all thoroughly discredited by the implosion of the condems idiotic recovery plan and most of you are out of work and have burned through your STR funds, and my various other predictions have been vindicated.

Failing that you can all have a good laff at old sceppy, the deluded post-keynsian babbler and raise a toast to the final vindication of good old austrian economics.

LOL LOL LOL.

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+1. What you have to remember is that HPC is the antithesis of confirmation bias

I disagree with quite a bit of what's on here, and even I worry about confirmation bias !

This place is probably as close to a monoculture as you can get on t'interwebs

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yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics in the (in)capable hands of yourself and similar posters, and I feel completely confident you'll make a terrible hash of it like you have to date.

I shall return under a new name once you are all thoroughly discredited by the implosion of the condems idiotic recovery plan and most of you are out of work and have burned through your STR funds, and my various other predictions have been vindicated.

Failing that you can all have a good laff at old sceppy, the deluded post-keynsian babbler and raise a toast to the final vindication of good old austrian economics.

LOL LOL LOL.

If this is truly goodbye I would like to congratulate you on some very prolific posting...

I did a thread a little while back on "fishing for deep deep lurkers" People who joined HPC a long time ago and have hardly posted anything.

People like you though, are the polar opposite. - 5412 posts in under a year

I salte you sir - truly awesome.

Edited by sbn

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yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics in the (in)capable hands of yourself and similar posters, and I feel completely confident you'll make a terrible hash of it like you have to date.

I shall return under a new name once you are all thoroughly discredited by the implosion of the condems idiotic recovery plan and most of you are out of work and have burned through your STR funds, and my various other predictions have been vindicated.

Failing that you can all have a good laff at old sceppy, the deluded post-keynsian babbler and raise a toast to the final vindication of good old austrian economics.

LOL LOL LOL.

Don't worry dear boy, we'll spot you again when you come back. All we need is for the next cretinous punk to come along and try to convince us that currency debasement and HPI is not only normal but a good thing and we'll know you're back.

In the meantime, good luck to you. Don't come back too soon...

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I disagree with quite a bit of what's on here, and even I worry about confirmation bias !

This place is probably as close to a monoculture as you can get on t'interwebs

From day 1 - your online persona has reeked of 'excess' Narcissism! :lol:

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yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics

I banned myself from posting here for a year - go for it. :P

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yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics in the (in)capable hands of yourself and similar posters, and I feel completely confident you'll make a terrible hash of it like you have to date.

I shall return under a new name once you are all thoroughly discredited by the implosion of the condems idiotic recovery plan and most of you are out of work and have burned through your STR funds, and my various other predictions have been vindicated.

Failing that you can all have a good laff at old sceppy, the deluded post-keynsian babbler and raise a toast to the final vindication of good old austrian economics.

LOL LOL LOL.

Well I for one hope you stay.

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yes, I am certainly coming to the conclusion that its time for me to move on to more worthwhile persuits.

I shall be leaving the pseudo economics in the (in)capable hands of yourself and similar posters, and I feel completely confident you'll make a terrible hash of it like you have to date.

I shall return under a new name once you are all thoroughly discredited by the implosion of the condems idiotic recovery plan and most of you are out of work and have burned through your STR funds, and my various other predictions have been vindicated.

Failing that you can all have a good laff at old sceppy, the deluded post-keynsian babbler and raise a toast to the final vindication of good old austrian economics.

LOL LOL LOL.

Jesus H Christ

Haven't you realised yet that all economics is just guesswork and that NO ONE really understands what is going on.

If two professors of economics disagree then my opinion is just as likely to be correct as theirs is, or even

God forbid - yours

:)

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Jesus H Christ

Haven't you realised yet that all economics is just guesswork and that NO ONE really understands what is going on.

If two professors of economics disagree then my opinion is just as likely to be correct as theirs is, or even

God forbid - yours

:)

...yes ...economics is not a science ...it's an art.... :rolleyes:

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Well I for one hope you stay.

Aye, me too.

It's no fun debating with people who you always agree with. You don't get to see things from an alternative perspective either.

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Don't worry dear boy, we'll spot you again when you come back. All we need is for the next cretinous punk to come along and try to convince us that currency debasement and HPI is not only normal but a good thing and we'll know you're back.

In the meantime, good luck to you. Don't come back too soon...

I think you've been reading the writings of a different poster.

Sceppy is more than capable of defending his views, but I can't recall him saying that currency debasement or HPI were good and normal. Discussing NIRP and cashless societies, maybe, but that's a different kettle of fish!

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I think you've been reading the writings of a different poster.

Sceppy is more than capable of defending his views, but I can't recall him saying that currency debasement or HPI were good and normal. Discussing NIRP and cashless societies, maybe, but that's a different kettle of fish!

I can assure you that you've been bamboozled by a smart kid with good Google skills and too much time on his hands.

He came here under false pretenses to take the p*ss out of the people on this site.

LOL? :rolleyes:

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I think you've been reading the writings of a different poster.

Sceppy is more than capable of defending his views, but I can't recall him saying that currency debasement or HPI were good and normal. Discussing NIRP and cashless societies, maybe, but that's a different kettle of fish!

Can't edit my previous post but to be more specific: wasn't the latest negative interest rates?

He's been doing this under one guise or another from the start.

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Can't edit my previous post but to be more specific: wasn't the latest negative interest rates?

He's been doing this under one guise or another from the start.

Aye, that's NIRP. It's not printing money or cheer leading HPI though.

BTW, the idea behind NIRP (on savings) is something I agree with - we have too many people hoarding savings, without a risk of loss. As credit is the other side of the debt coin, without those savings being spent, the debts can't be retired. I may not agree with Sceppy's preferred implementation, but I agree with the reasoning.

EDIT: sp

Edited by Traktion

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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