What Recovery?

If we add 200,000 jobs a month, will recovery take 7 years or 12 years? ... On Friday, we got the December jobs number: +200,000. That's good, but not good enough. I posted a graph from the Hamilton Project showing that, at that rate, the labor market wouldn't recover till 2024. But perhaps that's too pessimistic. The Economic Policy Institute took a look at the same numbers and concluded that a growth rate of 200,000 jobs per month would lead to a full recovery in seven years or so. That's nothing to celebrate, but it's better than the Hamilton Project's estimate of 12 years. It's also a bit odd: Isn't this a simple matter of taking job losses and dividing by monthly job gains? Well, no. The date of our eventual recovery depends on some crucial unknowables about the future of the American labor force. – WonkBlog Washington Post

Dominant Social Theme: This was a bad recession but it'll be all right soon.

Free-Market Analysis: We have learned that the US recession is over and that the only reason Europe is in trouble is because Southern European countries like Greece won't rein in their spendthrift ways. But as an alternative news site, we have never subscribed to the idea that what has occurred in the early 2000s is a merely a normal business cycle event.

In fact, we are on record numerous times as explaining that what has occurred in the 2000s is the END of the dollar-reserve economic system. If the cycle itself is left to run its course, gold looks (possibly) to finish above US$3,000 or US$4,000 (maybe US$5,000) and Western-style paper-money economies cannot stand that sort of strain, in our view.

Something will have to happen. This is why the analysis of dominant social themes of the power elite, which we regularly offer, is a useful tool in understanding the Way the World Works. The elites use fear-based promotions to guide the world toward global governance. US$5000 an ounce gold is likely intolerable to them.

It blows up almost every really important meme they've spent a century promoting. It blows up the central banking meme that the good, gray men in expensive suits can gently adjust and guide a paper money supply. US$5,000 gold will indicate that they cannot and that people have no faith in central banking or central bankers.

It blows up the idea that US dollars are a repository of value. If and when gold rises to a value equivalent to US$5,000, the US dollar will be seen truly as a kind of paper tiger, folding notes that are increasingly devoid of value. Why, in fact, would people want to hold notes that have been so thoroughly reduced? A high gold price will destroy whatever dollar-reserve (petro-dollar) credibility remains.

Finally, US$5,000 gold is a stunning repudiation to Western governance generally. The capstone of the modern money politics is the fiat dollar. For it to be devalued so radically will call into question the fundamentals of the system – not just the economic system but the larger configuration of the modern regulatory state.

Within this context, articles about jobs and economic recovery (like the one published in the Post, excerpted above) seem to us to miss the point. This is NOT a normal recession within a stock bull-market context but a vicious countercyclical bull market in precious metals that likely has three or four years to run.

The only way to stop the cycle from its completion is to confiscate gold or silver or do something else of a radical nature to ensure that gold (and silver) doesn't complete its run. This is not a new idea. From our point of view, World War II was at least partially caused by the inability of the power elite to damp the worldwide depression.

Notice that after World War II, the paraphernalia of world government was put into place – the UN, the World Bank, the IMF and then later NATO, Interpol and now the International Criminal Court. The implementation of all these massive facilities indicates that much more was taking place after Word War II than just a reset of what had gone before.

In fact, an entirely new economy was in the process of being developed. That's because the Depression had basically wiped out the old one. And we would argue that's what is happening today. The old dollar-reserve system is basically dead.

We estimated years ago that the financial crisis would cost the powers-that-be some US$100 trillion to fight. Such numbers sound impossible, illusory. But add up all the money poured into the system by different central banks around the world and we have a gut-feeling it already amounts to around US$50 trillion, maybe more. Heck, the Fed loaned some US$15 trillion IN ONE WEEKEND, from what we can tell.

These numbers, as we have long pointed out, have themselves killed the modern central banking system because they have been reported throughout the Internet. Not everybody is aware of them but millions of people are. Some of these millions, perhaps tens of millions, have lost their jobs and houses, and in some cases, their families.

It has occurred to these people that the system is neither rational nor beneficent. The idea that Ben Bernanke can loan trillions to colleagues while the average person is sinking into bankruptcy is not merely a casual observation of modern society. It is a rage-inducing phenomenon.

This is what will sink the system. This is the reason we've proclaimed it dead. It's the reason, as well, that the central banking system is set up with such mind-numbing bureaucracy and its every nuance is clothed in language that makes the eyes glaze over.

The idea is to hide the reality of what's going on in a blizzard of big words and statistics. Terms like "quantitative easing" come from nowhere into the modern lexicon. But in the past, such phraseology would find its home in a New York Times article. Today, these terms are all over the Internet.

It is the Internet and what we call the Internet Reformation that is fracturing the modern central banking economy. For the first time since the invention of global central banking about a hundred years ago, a free, untrammeled press has been able to comment on this "invention."

In fact, anyone who looks at the situation with a clear vision can see instantly that price-fixing the value and amount of money in an economy is BOUND to be distortive. Once one realizes the contradiction at the heart of central banking, the rest of the system begins to be comprehensible.

There IS no justification for it. It doesn't work and merely ruins the economics over time of those who engage in it. Worse, those intergenerational power elite families that have created the system and control it KNOW that it ruins economies. The POINT of central banking is ruination.

It cannot be otherwise. Those who control the printing of trillions can raise economies up until they crash. Then, by printing yet more money, they can buy up ruined businesses for a pittance. Eventually, the entire economy (not just the banking sector) belongs to them.

But national greed and rapine is not enough. The Anglosphere elites seek to impose this system worldwide. The New World Order, they call it. They will not be satisfied, apparently, until they control the world's money. This is not merely a hypothesis, either. Evidently and obviously, central banking has its own logic; the system is prone to collapse and needs to get constantly bigger in order to survive.

The system is also unstable within the larger business cycles it generates. This is because the imbalances created by fiat money build up until the system can no longer support itself. By this time, most of the major corporations are basically bankrupt. Absent the current system, nobody would lend to them because it is impossible to tell whether they are viable. Think GM.

For this reason, the powers-that-be must use extra-curricular methodologies to retain the system. War is perhaps the best (if not the only) method of maintenance. It is war that allows the elites to create the necessary social discipline that gives bought-and-paid-for legislatures the justification to insist on the militarization of society.

It is only through this militarization – by turning a collapsing economy into a command-and-control one – that the current power elites can continue to maintain their hegemonic grasp. Within the context of war, critics can be jailed, young men can be pulled off the street and made to work within a military context for a pittance and the larger corporate structure, with all its inefficiency and bloat, can be continually propped up for the "good of the nation."

This is likely what's happening now. The ridiculous – obscene – system, in which a handful control the world's wealth, is going to be sustained by mad, regional war, probably in the Middle East. The foundation has been laid by the phony war on terror and now economic totalitarianism is going to be sustained by a larger military conflagration, perhaps one that will begin with Iran.

It will be cast as a war between civilizations (between Islam and the West) but it will be no such thing. It will be far grubbier than that. It will simply be another desperate effort to maintain a failing monetary system within the context of saddling domestic populations with the authoritarianism of currencies they would otherwise reject.

Ironically, books may be written about the "struggle for freedom" that an upcoming war will entail. But those in the West who fight this war will be contributing to their own further enslavement. They will be dragooned into an epic struggle that probably end with some kind of world currency that will make their already miserable lives worse not better. Monopoly-issued fiat money is a curse.

We have gone to this length to set up a frame of reference for this Washington Post article. Treating the current leg of the business cycle as business-as-usual strikes us tendentious. The reality is that the system is collapsing and trying to figure out when the recession or when "business will get back to normal" strikes us as a questionable and even unnecessary exercise. Here's some more from the article:

Here's the issue: Before the recession, the economy needed to produce 120,000 jobs a month just to keep up with new entrants into the labor market. Lately, that number has been closer to 90,000. Part of this is that immigration has fallen and many immigrants are leaving. Part of it is that some workers are leaving the labor force — either they can't find a job and have given up, or they have decided to stay home with the kids or focus on other pursuits rather than take the sort of jobs they can get right now.

The question is whether the growth of the labor force bounces back or holds steady. And it turns out, this question matters a lot ... This is a case where a longer recovery could mean a better recovery. If we continue growing at 90,000 jobs a month, it likely means that many of the long-term unemployed never made it back into the labor force, and that the economy is producing less than it otherwise could.

It means, in other words, that the recovery is proving unable to reverse some of the deepest wounds inflicted by the recession. If we get catch-up growth in the labor market, that may push back the return of full employment, and it may even temporarily increase the unemployment rate, but it will mean we're seeing a fuller recovery.

This is surely a neatly reasoned argument but we would argue it is being applied to the wrong economy. The system is so sick it has needed trillions in interest-free loans and giveaways simply to survive. Nor has the system purged itself.

Most of the "jobs" that the Washington Post speaks of are actually employment measures that prop up the current dysfunctional economy. Union employment, public school teaching, legal positions, even medical berths all contribute to continuing the system as it is. And the current system is failing.

It is certainly a weird situation. The very jobs that people are so keen on realizing contribute in many cases to the demise of the culture in which they live and try to survive. This is because the power-elite has had the time and money to create an economy that supports the destruction purveyed by central banks.

One can continually try to calculate when and how Western countries emerge from the current travails. One can make statistical arguments for or against fuller employment. One can treat the current situation – as does the Washington Post – as one in which business-as-usual shall re-emerge sooner or later.

But for all the reasons listed in this article, we think this is the wrong approach to analyzing what is taking place. The current economic climate is an entirely artificial one. It is propped up by men desperate to hold onto what they have got – and who have proven in the past they will do anything - anything! – to retain the Money Power they believe is their birthright.

Conclusion: To talk about whether the American economy is capable of producing a given number of jobs within this context is in our view to have the wrong discussion at the wrong time. A bigger game is afoot. And that's the one we ought to be paying attention to.