Obama Economy Worse Than 1970s Written on May 28, 2011 by Floyd Brown
The worst economic conditions in recent memory were during the Jimmy Carter era of stagflation. Stagflation was a term coined in the 1970s to describe high unemployment with high inflation. Stagflation is back. Translation: Americas middle class is getting poorer; a record number of middle class workers are out of work. If you are lucky enough to have a job, your wages arent going up, but you are facing higher prices for everything.
Recent data suggests that the current economic recovery is both sluggish and slowing with unemployment stubbornly high, this from a page one story in Investors Business Daily.
The Obama/ Bernanke partnership has been a bust.
The Fed is winding down Ben Bernankes experiment in money printing called QE2. He trumpets his success saying that QE2 has pointed the U.S. economy in the right direction. But did it really? It turns out that QE2 has created maybe 700,000 full-time jobs, but at a cost of about $850,000 for each job.
All QE2 did was create a boom in the stock market. Wall Street bankers reaped millions while the average investors barely madeback some small amount of the money that they lost during the 2008 crash.
We believe this boom is an easy money mirage, as MarketWatch.com reports, But even the stock market boom hasnt been what it appears. An analysis shows that most of the rise in the Standard & Poors 500 Index under QE2 has simply been a result of the decline in the dollar in which shares are measured.Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars its even less. Measured in gold, the S&P 500 is up just 4.5%.
QE2 has had little visible effect on the real economy. Over the same period, the number of part-time workers has gone down by 600,000. In other words, weve basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs.
Marketwatch.com continues: The percentage of the population in work is actually lower today 58.4%, compared to 58.5% last August. The percentage of the work force in actual work, the so-called participation rate, has fallen by half a percentage point.
Housing is no better because of QE2, April housing starts fell 11%. Marketwatch.com says, Housing is double-dipping. According to the National Association of Realtors, the average price of an existing home was $177,300 in August, just before QE2. Now its $163,700 or 8% less.Economic growth has slowed. It was 2.6% last summer. Its a miserable 1.8% now.Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.
We all wish for better news, but Obamas policies are pointing us in the wrong direction. Regulation of business is growing. One CEO of a mining firm we talked with said he is looking for new projects abroad. I have been fighting for nearly a decade to open a new mine in Montana, and at every turn the government places roadblocks in my way. How am I to create any jobs?
If Obamas tax policies are enacted then we could see marginal income tax rates of 60% in some states. Obama clings to socialism and his new programs in healthcare and welfare. They all retard growth. Unemployment taxes are at record highs in most states and this further depresses hiring.
The Fed has invested nearly $2 trillion in Treasury debt since 2008. The investment hasnt paid off, but when the relentless buying of US Treasury debt ends, we have no similar experience to guide us. One result could be even further collapse and a full blown depression.