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Guest Post: Lacy Hunt: "No Increase in Standard of Living Since 1997"
Via Casey Research,
Lacy Hunt: "No Increase in Standard of Living Since 1997"
There's a belief among certain economists – and the wider population – that if the government takes a more active role in the economy, the social outcome can be improved. Dr. Lacy Hunt, executive VP of Hoisington Investment Management Company (HIMCO), says it's a false belief… and he has proof to back it up. An unprecedented buildup of debt, he shows, can only lead to one outcome: a drop in Americans' standard of living.
Many investors are so shell-shocked by the ongoing government meddling, cronyism and financial scandals that they have turned to "investments" with negative real interest rates. You can do much better than that – even in times of crisis. Listen to Lacy Hunt and 27 other renowned experts to find out where the opportunities lie in today's politicized economy. Click for more details.
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I don't know about 1997 but this economy is stuck at 2008 level.
http://www.freefdawatchlist.com/2012/09/stockcharts-idcc-pcln-pphm-dnkn-fasaapl.html
More like 1980.
You mean 1984
http://www.informationweek.com/security/attacks/florida-ag-confirms-pc-s...
Yes, people actually pay for the big brother services under the delusion that the keepers of the keys to the kingdom of PC Security won't play favorites.
This is fairly serious, I can't name a government department in Canada that doesn't have a couple of copies on the EX level equipment in some form or fashion. Same goes double for states-side. The question now is what did they see that they shouldn't have.
That story is seriously sick. What's sicker is the penalty...or rather, lack there of. Those people should be in a cell. This makes us want to tape over our built-in web cams.
Dude's name is Lacy?
I am Chumbawamba.
That's what his mamma calls him.
http://en.wikipedia.org/wiki/Real_wage
in truth the real wages of the u.s. peaked in the early 1970's. gives a whole new interpretation to the liberation of women into the workforce.
"Liberating" women was about lowering wages and destroying the family.
Dudes named like a lady...
this space for rent...
You're obviously informed on this subject, so as one pro to another, I ask: who fucking CARES?
When was the last time *any* individual could expect a reasonable modicum of "privacy" of his daily duties in public?
I have always told every coworker and friend I've ever spoken to on the subject of "cyberspying" that you really should assume that *everything* you've ever done on a network-attached computer has been recorded somewhere. You will most likely never be bothered, but to think for even the briefest second that the information is not captured and banked is a gross error.
On a very distantly-related point: it's a violation of various "laws of war" to use .50 cal rifles on infantry. That's like...I dunno...not "sporting" or something. You can only "justifiably" use a .50 cal on the enemy's EQUIPMENT. OK, so there's the "law." So what does the .50 cal gunner do when a bunch of guys are shooting at him? Is he going to just STAND THERE? Is he going to pull out a sidearm or an M16 or whatever?
No...he's going to shoot at the enemy's "equipment."
Well, as long as "equipment" includes stuff like canteens, web-gear, rifles, helmets, gloves, vests, etc, I think I see a pretty simple solution!
So OF COURSE the users of "DesignerWare" would only ever use the capabilities of that software for "legitimate business purposes." Right? They can have all kinds of LEGITIMATE BUSINESS REASONS to need to know what someone is doing ON THEIR EQUIPMENT.
The case will ultimately achieve nothing. No matter what happens to any single specific developer or employer or software-using entity, the *capability* is so advanced and so prevalent that it is completely INESCAPABLE.
The best way to keep people from finding out you did something is NOT TO DO IT. This has nothing to do with "reasonable expectations of privacy" or people having some kind of "legal right" to spy on you.
It has everything to do with the fact that there's a massive (and I suspect conscious) DENIAL of the reality of today's living environment.
Look forward. Acknowledge what we've built and where we are. The genie doesn't go back in the bottle.
Great comment!
The appropriate solution is to escape the bottle. In this context, this means "get out of dodge", which means "outer space". Yes, that's going to take a lot of work, and therefore might not happen. But there seem to be no other likely choices given the absolute, complete, utter cluelessness of modern humans.
Feels like it. But, realistically it was just diminishing returns. Really did flatline somewhere in the mid-90's for most places. Was entirely noticeable to me. Seems like it wasn't for most other people. They just kept plugging away thinking that somehow "they" weren't doing it right... like the neighbors had the "secret fomula." lol.
why is captian obvious wearing a fake congressional medal of honor?
'You mean 1984'
I'm feeling more like 1776 myself.
It was a good year for lead investors.
I vote for politics circa 101776 BC.
No kings yet (just some alpha-male-bullies), no fictions like "government", "corporation", "organization", "central bank" yet. With the weapons we can buy today, those alpha-male-bullies would be toast in a week without their "government" full of thugs to protect them.
Hopefully the anarchists and libertarians of today would be smart enough to exterminate predators before they formed new fictions and hired new thugs. If not, mankind deserves to spiral down the drain of history and become extinct.
Dunno bout anybody else but I felt richer when I was a bartender in 1976..tips were great and under the table ! Chicks everywhere !
WHAT! there's been an increase in the standard of living???????
If you put lipstick on a pig it's still a pig
'Economic patriotism': Corporatism dressed as populismOINK OINK OINK
Banks: A Bright Spot Amid Earnings GloomiPhone = iHigher
That article is preaching to an OLD choir.
Well there you have it. If we were to give marks to government expenditure on the basis of generating a stream of income or improved productivity, as opposed to no income or negative income, what would be the mark out of ten? My bet is a big fat zero.
Well yes, it does not take a leap of faith to say that all present Debt is Future Taxation (that is delayed). Oh the opputunity costs that this removes from the economy is frightening.
Even at ZIRP levels the principal cost is enormous and should interest rates spike (as in the PIGS) you find yourself in a vice grip that has only two possible soulutions. Reduce services and/or increase taxation. However if you have bleed your host (taxpayer) dry, well trying to get "Blood out of a stone" leaves you only with a Government collapse. (as in the PIGS soon)
Crap ... take me back to the golden days of 1997
Why can't you people simply be satisfied with your fair share of the burden of global citizenship??
Obama, my brotha, is that you?
"If debt does not generate an income stream to repay that debt, it is counterproductive."
A+ to the professor - this is why Keynesianism, as practiced today, fails horribly. Scrape off whatever is engraved above the entrance to the Marriner Eccles building, and put that instead - and send Bernanke off to wherever failed economic professors go to pasture.
But Nobel Prize wining economist Paul Krugman says that overall debt levels don't matter because debt is just money we owe ourselves.
(that was my MillionDollarBonus impression.)
If true then Santelli's idea of a million bucks per person is looking better and better.
Hurry, somebody shoot that bastard dead - he makes way too much sense! JD.
Why 1997?
How about 1970s ... before civil rights, equal opportunity, environmental laws, handicapp access? When CEOs made X50 times average of employees, instead of 300 times as much!
1997 is the peak era of financial deregulation on Wall Street, NAFTA, and China in the WTO. And lower %age of income taxed at lower rates since 1982!
Who benefited from all this? Just coincidences, no doubt.
Yes, it is time for government borrowing and spending to stop. But any policy should be based on real economics, not pure ideology!
Handicap access? Really? Were you bullied by wheelchair Jimmy in school?
No, but he yelled at me when I went to check out that hand throttle, and nearly telliscoped his legs in.
And the dumb fucks Obamabots still blame the entire crisis on Bush... they all forget that all of that big problem was engineered by Clinton and the republicans in 97-98. Not to mention that sack of shit Greenspan.
The Bernank said today, "I don't think we'll enter another recession."
See, it's all fine.
Between the lines:
Cause we are already there!
Between, between the lines:
Cause we never really left the second great depression!
pods
They hate us for our FREEdumb...
In 1980 I started bussing tables at 15. I made $3.35 plus maybe total $6 after tips. That was 6 gallons of gas, at 15. Life was better than good. My business in making a couple products for the painting/staining business along with some contracting is now lucky to pay me about $25-$35 an hour these days, sometimes less. So I am back to making about 6 gallons of gas an hour WHEN there is work. It all depends on yoru situation, by for many in the trades these days, it is a collapse, and looks to be maybe turning down again. I'd give an arm to be 15 years old in the 80's again.
I'm in a trade tied to the real estate and construction industries in an area that has not been hit as hard as most. I'm doing well if I can work 3 days a week these days. That's after brutally dropping my rates to undercut all the other people who got laid off in my industry and are out going solo. There was a brief uptick around July when I managed to work about 12 or 13 days in a row, but since then it's been a slow drift back downhill, with the last month being almost entirely blank.
Simply put, shit is getting real, again. You can't print curb and gutter and building footprints and you can't force houses to turn over.
I am actually leaning towards working on the ski hill this winter. Why not just do the "ski-megedeon" thing, what they hell...
It's true, and they have no one to blame but themselves, and some wireless cell phones, and a crib.
[The Bernank said today, "I don't think we'll enter another recession."]
Thats true, since we never left the recession that began in 2007! Perhaps that the first statement ever that I agree with Bernanke.
Underemploymen t+Unemployment+workforce dropout has only increased since 2007. Eventually the dollar will collapse and the unemployment rate will drop to zero, as either everyone has to find a job to put food on the table, commits suicide, or is killed in riots, sickness, or war. But by then, the standard of living will be closer to the dark ages than of the modern era.
deleted.
Only $395? Not bad, but they could have included some timeshares in the FEMA camps. Alsaka still has some rooms facing the mountains.
What is the real message of his presentation?
Allow me to decode it for you…
Thesis:
Government “intervention” has proven to increase the misery index via an encouragement of indebtedness. The fifties were a glorious time of free markets and little government meddling in the financial industry.
Translation:
Despite the financial industry’s highly successful regulatory capture efforts and the attendant destructive debt explosion, we should continue to deregulate the industry. I made up the stuff about the fifties in an attempt to prove my point… hope that no one notices. I mentioned Eisenhower to get everyone warm and fuzzy about my presentation. In reality, Eisenhower would have slapped me in the face for incorrectly describing his economic policies.
Hope that this helps…
Lacy Hunt (nee Underall)
As debt increasingly intruded itself into public and private finances since the 1970s, we lost the intuitive knowledge that debt pulls forward our standard of living potential, but limits our ultimate potential.
Our standard of living potential is lowered by debt as we allow outsiders to take a cut of our earnings in the form of interest that we would be spending ourselves if we had waited until we could afford to pay cash.
"Live within your means" used to be a warning to avoid debt, but most today hear it as "make sure your monthly payments are manageable."
Credit card acceptance was quite slow in the beginning. Store cards date back to the early 1900s . Bank cards appeared in the mid-1940s, but consumer credit did not become common until the late 1960s. Common revolving credit was still over a decade away at that point.
Lacy Hunt's point to only borrow for things that have a good chance to generate an income stream used to be common sense and common knowledge.
Today, about 30% of new car buyers pay cash. About the same 1/3 ratio is the proportion of people who own their home free and clear. That leaves two thirds of the population who use debt at a significant level. That's a pro-debt voting block that comes in handy these days.
He implies that all we need to do is reduce government spending and the glory days will be back. It's not that simple because the global economy also has a growth problem. I submit that with high energy prices (which are not going to come down), global growth will be constricted from this point forward. And once the debt bubbles explode, then we are left with a mess.
So, any argument that we can generate growth by reducing debt and reducing government spending is a spurious argument that has no substance. However, if those are arguments used in tandem with a completely new economic policy, then I would agree. But does anyone really expect a completely new economic policy? Instead, all we will get is tweaks.
If we did something like this, then we have a chance (but it's not going to happen):
1) Balance the budget next year to save the dollar
2) Enact a constitutional amendment that does the following:
a. Bans unions
b. Requires the pay differential from the top to bottom to be 20 to 1 for companies with more than 100 employees. And all bonuses/stock options to be the same for all employees for companies with more than 100 employees.
c. Requires that 10% of all items sold in the country to made in the USA. Any items currently sold with less than 10% will have 25% tariffs until the 10% level is reached.
d. Companies using foreign workers to do work that applies to the USA, will incur a 10% penalty on income. If this does not reduce foreign workers sufficiently, increase the penalty until it does.
3. Reduce Military spending to a maximum of 10% of the Federal Budget unless a war is declared by Congress.
4. Make all government entitlements means tested (including Social Security, Pensions, and Medicare).
5. Make the corporate tax rate a flat rate of 10%.
6. Make the capital gains tax rate a flat rate of 15%.
7. Ban property taxes. Use state and local sales taxes.
8. Create a national sales tax that makes government spending equate to a maximum of 18% of GDP. I would expect the tax to be around 14% on the Federal level.
Note: Total sales taxes would be around 25%, but there would be no property taxes or income taxes. And sales taxes are primarily voluntary, although they are regressive.
9. Ban college loans (and forgive the debt that exists for all student loans). Instead, offer free college online for those with low incomes.
10. Give new manufactures tax exempt status for their first 5 years.
www.goldsilverdata.com/companies.html (for gold and silver mining stocks)
" 1/3 ratio is the proportion of people who own their home free and clear"
In some area's that's impossible. You lease it from the goverment (property taxes). The property taxes are so high their like a mortgage.
Due to public pensions, salaries and benefits, they keep increasing.
He must be averaging. The bottom 99% has seen a giant drop in living standards, the top 1% has seen the world handed to them on a gold platter.
Ask the new pilots and pharmacist about how their salaries have decreased or going down in many instances.
A flood of pharmacy grads has caused a glut. They overbuilt the schools.
Aawwh why doesn't he quit beating around the bush and just tell it like it is. The banksters, through financial terrorism, are in the process of imploding the economies of the world and then they're going to F'n try to kill us.
What's with these suits. Don't they get it.
This Casey Research stuff is always so simplistic. I realize it's politics and marketing more so than analysis, but even acknowledging that, these guys always just come across as shills.
Winning WWII with the Allies didn't IN ITSELF create an income stream, but that doesn't mean the debt used to do it was "counterproductive."
The vast majority of human experience on this planet cannot be justified through P&L analysis. Coleridge is considered an important poet, and for sure Rime of the Ancient Mariner or Kubla Khan can be appreciated as stunning works of art by BILLIONS of people, but would the actuaries and beancounters of the so-called "libertarian" set have continued financing his drug abuse so he might drink himself into a stupor every night on the off-chance he'd produce a masterpiece?
Could ANY publisher have made his work appealing as a financial investment?
Sure doesn't seem like it.
The key realization is that life on the ant-farm may well be financially justifiable, but that wouldn't make it worth living.
I have no doubt that things have gotten worse - far less secure, deeply in debt, heavy welfare, wars galore... But the standard of living stalled @ 1997 level? [15 years ago]
I'm sure that depends on your circle of relationships, but the piss boy (who doesn't even have to collect piss, nor hold a bucket) has at least 1 cell phone, probably a handgun, access to a 42" flatscreen / cable / internet... Tons of people have money for aluminum / carbon fiber bikes and time to ride them. Even the girls have their own Harleys. Lots of us have as many bathrooms as our parents had bedrooms. How many rust-buckets do we see on the road these days (before cash for clunkers even)? In 97, a lot of people had video libraries. Now, it's all so instantaneously available, who even wants a library?
I can't see how it continues on, productivity has been largely banished. But I have to question the 15 years of flatline living standards claim.
To sum up the posts here from people who are not pushing a point of view but are testifying to their life experience - things are getting worse, fast. This is my own experience too. Let the great minds debate - the trenches are filling up with shit, fast. And if you stick your head up the machine gunners on the other side of the barbed wire will blow it off. This is WWI trench warfare. Waiting for the poison gas.
I would vote for a politician promising 90-100% unemployment!
Let's the machines/robots to do the work for us.
AND GIVE US OUR FLYING CARS ALREADY!
In summary, he makes two points: (1) the misery index has, on average, been higher when the government has increased its activeness; and (2) if you decide to take on debt, unless you want to decrease your standard of living, there must ultimately be at least a net zero or better yet a net positive cash flow generated to offset the negative associated with the debt (i.e., the Austrian notion of the marginal productivity of debt (“MPD”) must be greater than unity – a kind of reverse Keynesian/Krugmanite pay people to fill and un-fill holes in the ground). Nobody should get points these days for being correct for what amounts to poor data and/or poor reasoning, even if they are generally correct.
On the first point he is only partially correct, but would at least appear more correct if he used consistent numbers. To wit, the definition of his “misery index” changes, and thus that misery index graph is silly. For example, both the definition of inflation and unemployment he uses (i.e., the CPI and U-3, respectively) have changed significantly through time (around the early 1980s they began to change greatly). If he corrected them to get a more consistent series his point would be much more obvious (e.g., with current levels being more than twice those he was discussing). In order to compare any series historically you minimally require a consistent series, and he doesn’t have one. Even if he is unwilling to make the adjustments himself he could pay Shadow Stats a few hundred and clean up his numbers. I guess that his firm cannot afford the money to have more accurate numbers.
On the second point concerning the MPD being less than one, he is correct; but incorrect about it being unforeseen at the time. The Austrians and old time economists always thought this was the case; it’s only that after the appearance of cultural Marxist economists (call them “Keynesians”) that politicians seemed to have their justification for promising “free” stuff where we could “grow” our way out and "pay" for it. I guess the day of reckoning has passed, but it would be nice not to keep hearing the “who could have known” nonsense the economics “profession” seems to need to feign to avoid any pitchfork consequences. Would it be too much for even one “professional” economists named Lacy to just flat out say something to the effect: “economics has turned into a quasi-religion that is falsifiable, and we should all admit that our preening and pretending to be a ‘science’ was downright silly.”
Personally I'd say 1996 for my own reasons but hell 1997 is close enough...
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Glass-Steagal was government intervention. Bad government!