Peter Bromberg's UnBlog

Where are the policies that will actually help Americans at the bottom regain the dignity of real, value-creating jobs, Mr. Obama? Again and again, you have offered a higher minimum wage as a solution. Yet as the overwhelming majority of economists have argued for decades, the minimum wage actually harms the poorest workers — those with the weakest grip on their jobs. Same with education: cheaper student loans aren't going to help the bottom quintile. Despite Pell Grants and other aid, only one in three children from the bottom quintile go to college—and just 11% graduate. You could go to bat for real education reforms that drive social and economic mobility, Mr. president. But you haven't. You won two elections with what seemed to be sincere promises to fight for people. That should include fighting for people at the bottom, even if the best policies for doing so contradict your progressive-liberal policy dogma. The American dream, which you so often mention in your speeche...

According to Keynes, the root cause of economic downturns is insufficient aggregate demand. During  World War II and it's immediate aftermath, Keynes was immensely influential. By the 1970's when the great inflation was unfolding,even Keynes' chief critics such as Milton Friedman or Robert Mundell still retained many Keynesian assumptions. With the crisis of 2008, Keynesian policies came back with a bang and reoccupied center stage. Following the Crash of 2008, these policies are no longer satisfactory. If the entire global economy is to follow Keynesian medicine, which requires more money printing, spending, borrowing and bailing out - on top of all the money printing, spending and borrowing that preceded the crisis, then we need to look at them with fresh and critical eyes. The place to begin is with what Keynes actually said. First of all, Keynes did not believe that fiscal stimulus alone could ‘kick’ the economy into full employment equilibrium as many of his mode...

The People's Bank of China's surprise announcement Wednesday of a half percentage point cut in banks' required reserve ratio is an admission that the economy is facing stiff headwinds. Consumer price inflation remains relatively high at 5.5%, and the true level of inflation as reflected in the GDP deflator is probably closer to 10% The reason? After the 2008 financial crisis, China embarked on a Keynesian stimulus program that by GDP standards, was three times the size of ours here in the US. The country is drowning in unproductive investments financed with credit. The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S. Now comes the hangover. Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up,...

Unemployment Rate vs Total Employment Yes - the unemployment rate fell to 8.6 percent in November, but it also masks a startling shift in the job market. The Labor Department said Friday that employers added 120,000 jobs last month. With that, the unemployment rate dropped to the lowest level in more than two and a half years. But a key reason for the drop was that hundreds of thousands of people who could work had stopped looking for work . The report showed 487,000 people left the labor force in November -- for the Labor Department's purposes, they are not counted as unemployed. What's important is total employment, which has barely budged. This means we're still facing a NET LOSS of over 2 million jobs since president Obama took office in 2009 - an absolutely abysmal performance, considering all the taxpayer money the government has thrown at the problem. Source: Bureau of Labor Statistics The above chart simply takes the total US employment number b...