Is the Economy Improving?

Have you seen the job numbers from last month?  They give the appearance that the economy is finally climbing out of the doldrums.  According to the Bureau of Labor Statistics the United States economy added 200,000 jobs in December and the unemployment rate dropped to 8.5%.  This has many people excited, especially those who are looking to parlay this news into some early momentum for President Obama’s reelection bid.  On the surface, it appears to the casual observer that this administration’s policies are finally resulting in economic growth.  Slow economic growth, but expansion nonetheless.  Some might argue that these numbers are not entirely accurate and don't tell the entire story.  They do not take into account the significant amount of people that are underemployed or have all together given up on finding work.  In spite of these shortcomings, they are still helpful because they do show a trend.

Like many things in life, trends can lend a view into the future, and this is true when analyzing economic data.  Nobody is able to predict exactly what the economy will be like in the future.  Anyone that tells you differently is lying or some kind of wizard.  In order to frame my argument properly, it is important to disclose that I am not a trained economist.  Like so many other Americans I am horrified about the national debt, Federal Reserve, and our government's unawareness of the national security issues our country's financial problems could deliver.

Over the past few years, Congress and the Federal Reserve have pumped a historic amount of money into our faltering global economy.  In fact, in an earlier post on this blog, we pointed out that during the first ever audit of the Federal Reserve, it was determined that the Fed loaned out of 16 Trillion dollars to foreign and domestic banks between 2007 and 2010.  This is more than the national debt!  Despite this massive influx of liquidity into the banking industry, the “official” national unemployment rate has stagnated north of 8%.

The above chart shows the more than tripling of the monetary base between 2008 - Present.

All this newly created money eventually will make it's way into the market place.  In the past, legislation,  regulations, and manipulated interest rates have assisted with pushing newly created dollars into desirable areas such as housing and the stock market.  This malinvestment of capital resulted in huge bubbles in real estate and internet start-ups.  The resulting long depression that followed these crashes was prolonged by government policies which hindered the liquidation of bad debt.  In essence, this is the business cycle.  Centrally planned growth, followed by a crash, that is extended by bad policy.  Based on positive trends in the economy, we could be entering the early phases of a new bubble.We aren't seeing dramatic signs of impending bubbles yet, but the economic outlook is improving.  Just this week McDonald's announced a record annual turnover for 2011.  McDonald's has performed well throughout the recession, but the latest numbers are turning heads.  There's even good economic news coming out of debt ridden California.  Unemployment in the golden state has reached it's lowest level in 3 years.  As unemployment numbers drop around the country and more people return to work which sector of the economy will attract dollars?  For obvious reasons, many people would love to see the value return to their house or 401K.  Unfortunately, you cannot pick and choose where inflation will rear its head.  There is a very good chance that we could see massive inflation in the commodity and energy markets in the coming months.  If you think the housing crash was painful, you ain't seen nothing yet.Receive access to ALL of our EXCLUSIVE bonus audio content – including “Conspiracy Corner”, “Degenerate Gamblers” and the “League of Liberty Podcast” by joining the Lions of Liberty Pride and supporting us on Patreon!