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The Golden Fleece

| October 25, 2013 | Categories: Economy | Comments Off on The Golden Fleece

With all the sovereign debt crises currently rocking the global economy, including the impending default of the U.S. Government, a small but vocal minority has been gaining traction advocating the abolishment of the Federal Reserve and a return to the gold standard. This is perhaps understandable given the great uncertainty in the Dollar and the American economy, but nonsensical nonetheless.

The most important thing to know about value of gold in the monetary policy debate is that it is a rock that is found buried in the ground. Its value is determined by the dynamics of supply and demand just like any other commodity. As such, it is no more or less vulnerable to speculative asset bubbles or price manipulation in financial markets. Continue reading →

Don’t let unemployment keep you down

| October 17, 2011 | Categories: Employment | Comments Off on Don’t let unemployment keep you down

Let’s face it. Unemployment is a bummer. I’m not even talking about financial hardship. The psychological and social burden of unemployment weighs just as much as the economic. Millions of Americans know this after sending out hundreds of résumés and applications and finding virtually nothing available that suits their skills and experience.

As a recent college graduate in the job market, I’m quickly becoming acquainted with the feeling. It’s hard to resist the urge to telekinetically strangle the talking heads in the news media railing on the lazy unemployed trying to steal the hard-earned wealth of decent hard working Americans. The truth is that unemployment can be hard, dreary, tedious, and oftentimes seemingly futile work. Unfortunately, telekinesis remains far beyond my skill set. Continue reading →

Congress and the Deficit Deal: The Buck Stops Somewhere Else

| August 8, 2011 | Categories: Economy | Comments Off on Congress and the Deficit Deal: The Buck Stops Somewhere Else

“You can’t always get what you want,” says Mick Jagger, “but if you try sometime, you might find, you get what you need.” Congress got neither with the deficit reduction plan passed last Monday. Instead, it got what it deserved on Friday as Standard and Poor’s dropped the United States sovereign debt to AA+ from AAA. Global markets responded quickly, with the Dow Jones Industrial average shedding approximately 7%, Tokyo losing 5.5% (4% on Friday alone), and London down almost 11%. This is hardly good news. However, several prominent market analysts are saying the credit rating cut isn’t necessarily bad news, either. Continue reading →

Structural Unemployment – Part Deux

| July 12, 2011 | Categories: Economy, Financial News | Comments Off on Structural Unemployment – Part Deux

I painted a fairly bleak picture of structural unemployment in my previous post. First, let me reiterate economists do not agree on any quantitative measure of structural unemployment in the economy, nor do they agree that it is a pressing issue moving forward. Paul Krugman has argued that structural unemployment is a non issue under present circumstances, while Narayana Kocherlakota of the Minneapolis Fed is worried that structural unemployment is ultimately eroding the Federal Reserve’s capability to fight high unemployment through conventional monetary policy tools. I’ll let the experts continue haggling over the precise extent of the problem. If President Kocherlakota is correct, however, policy makers need to ask some serious questions about the efficacy of monetary policy moving forward. Continue reading →

Are you cyclically or structurally unemployed?

| July 7, 2011 | Categories: Economy, Financial News | Comments Off on Are you cyclically or structurally unemployed?

The phrase “jobless recovery” is one we have become all too accustomed to hearing in the financial news.  Economists assure us economic growth is underway, but most Americans take little comfort in knowing that the recession officially ended in June 2009.  At that time, the official unemployment rate was 9.5%.  Fast forward 24 months to the present, and the most recent figures from the Bureau of Labor Statistics place the official rate at 9.1%.  Over the past 2 years, GDP has grown at an approximate average annual rate of 2.4%, while unemployment has only fallen by a net 0.4% over the same period.  The failure of the recovering economy to create new jobs has led many economists to speculate that the labor market is suffering from something much more severe than simple lack of demand for workers. Continue reading →

The CFPB – Consumer Watchdog or Paper Tiger?

| July 6, 2011 | Categories: Consumer Protection | Comments Off on The CFPB – Consumer Watchdog or Paper Tiger?

The Consumer Financial Protection Bureau (CFPB) is scheduled to begin operations on July 21, but it remains unclear who will head the new agency and what regulatory power it will have. The Bureau was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to educate and protect consumers from predatory lending practices. However, it has been mired in controversy since its inception by opponents of financial reform and financial sector lobbying groups. Continue reading →