An Improving Economy? by Bill Roberts

An Improving Economy? by Bill Roberts The Baby Boomer Retirement

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On a regular basis the government releases numbers that would

suggest that things are getting better.
The unemployment rate keeps going down, or so they say, while the

number of people who actually have jobs is less every month. That is

known as the Labor Participation Rate. It's  a much better number to

gauge how things are going instead of the Unemployment Rate (which

they have re-defined to the point of uselessness).
And they say the economy is growing, albeit slowly. What does that

mean?
They lie to us about the Inflation Rate, but by every SANE definition

(increased money supply, purchasing power of the dollar) inflation is at

least 5% per year. Maybe more.
So, if the economy is growing 2% per year (in dollar terms) and inflation

is 5% per year (in dollar terms), isn't the economyy actually contracting

in absolute terms?
The other measure that they are NOT shouting about is the aggregate

household income, or in other words, the total of what we make.Every

year for past several years aggregate family income has been going

down.
How can this be? They say the economy is improving. They say just

look at the stock market.

The Stock Market

OK. Let's look at the stock market. Every year every major Central Bank

( The US Federal Reserve, The European Central Bank, The Bank of

Japan, and even the Chinese) has been practicing what they call

Quantitative Easing (QE for short).This simply means that they are

printing more money.
That money has no where to go. You can't invest it in Plant and

Equipment and expect to make a return on investment (ROI). You can't

invest it in creased inventories, because you might not be able to sell

all that stuff.
You can't invest it in Bonds either, because bonds pay almost zero

interest now, and if the interest rate does go up, the value of the bonds

will go down. A double whammy.
You can't even put it in the Bank and expect a 100% return of your

deposited money bbecause the interest they pay is less than the

inflation rate PLUS they want to charge you for keeping your money.
Another double whammy.
And the Banks don't want it anyway because as their deposits go up,

the Fed increases their reserve requirements (the amount of money

they to keep on deposit with the Fed for the deposits they have in their

bank) so they can't lend it out at a profit, anyway.
So what do you do with all this EXTRA money they printed?
The simple solution is to put it in the equity markets (stocks) and

hope for a continuation of Quantitative Easing.
So the Powers-That-Be say "Look at the stock market. It keeps going

UP. "

Things must be OK

Oh Yeah? OK for whom?
My generation can't retire. Most of us don't have two million dollars

invested in something to generate an amount of money each month

sufficient to live on.
We can't retire and we can't get a job either. Seemingly, the only

solution is to be in business for ourselves. But can we?
It takes more money than most people have in order to open a

business and fund it until it reaches the break-even point. Most small

businesses fail. They fail for a variety of reasons, but insufficient

capital is one of the primary causes of failure.

A Long Story

How did we get here? That is a long story. About 100 years long. One

hundred years with the wrong kind of government.
In 1913 (One hundred and two years ago) we passed two GAME

CHANGING acts. The Federal Reserve Act and the Federal Income Tax.
When they were "arguing" imposing income taxes, some wanted to

limit it to 10%. They knocked that argument down by saying that if the

people thought that they were going to be taxed at 10% we would never

have gone for it. So it was passed without a limit.
God, I wish they could ONLY get 10% now.

Solutions?

The economy can't improve. We have Too Much Government and Too

Expensive Government.
Businesses could grow in an environment of less regulation, lower

costs of labor, and lower taxes. When do you think that will happen?
These people that have invested 100 years to get us where we are

today have NO INTEREST in turning the clock back. They have won.
Get used to it.
Just so you don't think that I am a pessimist, I AM NOT. There are

solutions (on an individual basis) but they come from thinking outside

the box.
If you would like to know some of my solutions, and what they can do

for you, give me a call.