Mises Institute Conference: Economics for High School Students

Tom Woods on "Applying Economics to American History"




Robert Murphy on "The Core of What Economics Teaches"




Doug French on "Money, Banking and the Current Mess"




Floy Lilley on "The Economics of Recycling"




Jeffrey Tucker on "Technology and Social Change"

Cartoon: After Thanksgiving

Federal Tax Dollars

source

Cost of Home Ownership

source

Cartoon: Thanksgiving, Bailouts, and Rescues

Cartoon: Thanks China

The National Debt

Source

Cartoon: Building Morale

3rd Quarter GDP: 2.8%

Economic growth was weaker in the third quarter than originally reported, according to government data released Tuesday.

The gross domestic product, the broadest measure of the nation's economic activity, rose at an annual rate of 2.8% in the three months ending in September, according to the Commerce Department's first revision of the reading. The initial reading of the report a month ago came in with a 3.5% growth rate.

The decline in the growth rate was expected, in large part because of a recent report showing a growing gap between the nation's imports and exports. Importing goods from other countries is a drag on domestic U.S. growth.

read the CNN article

EOCT Practice Questions

Here are 153 practice questions for the EOCT.

http://www.quia.com/quiz/678432.html

Cartoon: Our New Economic Model

Cartoon: Cash for Flunkers

Budget Deficit and Financial Crisis

The president says he understands the urgency of our fiscal crisis, but his policies are the equivalent of steering the economy toward an iceberg.

President Barack Obama took office promising to lead from the center and solve big problems. He has exerted enormous political energy attempting to reform the nation's health-care system. But the biggest economic problem facing the nation is not health care. It's the deficit. Recently, the White House signaled that it will get serious about reducing the deficit next year—after it locks into place massive new health-care entitlements. This is a recipe for disaster, as it will create a new appetite for increased spending and yet another powerful interest group to oppose deficit-reduction measures.

Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion—the highest since World War II—as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.

Going forward, there is no relief in sight, as spending far outpaces revenues and the federal budget is projected to be in enormous deficit every year. Our national debt is projected to stand at $17.1 trillion 10 years from now, or over $50,000 per American. By 2019, according to the Congressional Budget Office's (CBO) analysis of the president's budget, the budget deficit will still be roughly $1 trillion, even though the economic situation will have improved and revenues will be above historical norms.

The planned deficits will have destructive consequences for both fairness and economic growth. They will force upon our children and grandchildren the bill for our overconsumption. Federal deficits will crowd out domestic investment in physical capital, human capital, and technologies that increase potential GDP and the standard of living. Financing deficits could crowd out exports and harm our international competitiveness, as we can already see happening with the large borrowing we are doing from competitors like China...

In short, any combination of what is moving through Congress is economically dangerous and invites the rapid acceleration of a debt crisis. It is a dramatic statement to financial markets that the federal government does not understand that it must get its fiscal house in order.

What to do? The best option would be for the president to halt Congress's rush to fiscal suicide, and refocus on slowing the dangerous growth in Social Security, Medicare and Medicaid. He should call on Congress to pass a comprehensive reform of our income and payroll tax systems that would generate revenue sufficient to fund its spending desires in a pro-growth and fair fashion.

Reducing entitlement spending and closing tax loopholes to create a fairer tax system with more balanced revenues is politically difficult and requires sacrifice. But we will avert a potentially devastating credit crisis, increase national savings, drive productivity and wage growth, and enhance our international competitiveness.

read the WSJ essay

Sheldon Richman on Health Care Reform

If the politicians who are bent on redesigning the medical and medical-insurance industries really wanted only to curb rising prices and help the uninsured get coverage, they would have zeroed in on the previous government interventions that created those problems. Instead, they are pushing grand schemes to turn our medical decision-making over to bureaucrats. That indicates that the so-called reform campaign is about power.

Medical care is too expensive. Prices for services rise faster than other prices, and there’s reason to believe much of the money is wasted. Expensive medical care equates to expensive insurance, which prices some people out of the market.

This has been called a failure of the free market, but that can’t be: There is no free market. I defy the advocates of government control to name one aspect of medicine or insurance that government doesn’t dominate...

Yes, we suffer from monopoly and high prices. Government is the reason.

source

Peter Schiff on Insurance and Health Care Reform

Great commentary.

The Geography of a Recession

Click here

Cartoon: Counterfeiting

Unemployment by Recession

source

Cartoon: Economic Recovery on Wall Street V Unemployment

TARP and the Budget Deficit

The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program -- the amount it expects to lose -- to as little as $200 billion from $341 billion estimated in August...

The White House is in the early stages of considering what bigger moves it might make for next year's budget. The Office of Management and Budget has asked all cabinet agencies, except defense and veterans affairs, to prepare two budget proposals for fiscal 2011, which begins Oct 1, 2010. One would freeze spending at current levels. The other would cut spending by 5%.

read the WSJ article

October 2009 Budget Deficit: $176 Billion

October was another costly month for Uncle Sam. The Treasury Department reported on Thursday that federal coffers racked up a worse-than-expected deficit of $176.4 billion for the month.

It was the 13th straight month of a reported monthly deficit. Treasury said it was the largest October deficit on record.

October is the first month of the government's fiscal year, and at this reading, the Treasury is estimating that the annual deficit will hit $1.5 trillion. That would top the $1.42 trillion registered for 2009, which was the highest annual deficit since 1945.

Interest paid on the debt in October was $22.8 billion - or 7% of federal outlays for the month.

source

Cartoon: Lemonade Stand

National Debt Hits $12 Trillion

The Outstanding Public Debt as of 12 Nov 2009 at 12:10:48 PM GMT is



The estimated population of the United States is 307,272,889so each citizen's share of this debt is $39,053.29.

The National Debt has continued to increase an average of$3.86 billion per day since September 28, 2007!

source

Cartoon: Mixed Economic Data

Cartoon: Too Big To Fail

Unemployment 10.2%

source

Cash for Clunkers

source

Cartoon: Heart Attack

Unemployment: 10.2%

Unintended Consequences: Obamacare

Fewer insured, higher costs might be the result.

Obamacare could have the unintended consequence of raising health insurance premiums and causing a decline in the number of people with insurance.

Here's why: A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual's health condition.

This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums. (Separate accident policies might develop to deal with the risk of high-cost care after accidents when there is insufficient time to buy insurance.)

The higher premium level would cause others who are currently insured to drop coverage, pushing premiums even higher. The result would be a spiral of rising premiums and shrinking numbers of insured.

In an attempt to prevent this, the draft legislation provides penalties for individuals who choose not to buy insurance and for employers that do not offer health insurance. But the levels of these fines are generally too low to cause a rational individual to insure.

read the article

Unemployment by Job Loss

source

Bill Bonner on the "New Economy"

First, we got word that the crisis was officially over. GDP grew last quarter. Thanks to all the Cash for Clunkers, Cash for Bankers, Cash for Houses, Cash for Trash, and cash for every other blessed thing under heaven, the number crunchers were able to report positive economic growth for the third quarter.

Let’s not get too excited. Stocks bounce. Bonds bounce. An economy bounces. Even dead economists bounce. And if we’re following the Japanese experience, with a long, slow on-again/off-again period of depression, we can expect some quarters of growth, followed by quarters of non-growth. It’s going to be a painful adjustment to the ‘new normal,’ whatever that is...

Unemployment is headed up. The U6 figure – a more accurate picture of how many people are out of work – is up to 17%. There are 1.5 million homeless children in the US now, including 300,000 in the state of California alone. One out of 10 Americans will not bite the hand of government – for it is the hand that gives him his food stamps.

Foreign direct investment has dropped 30%. International trade is down 10%.

Do you call this a recovery? We don’t.

As David Rosenberg puts it, the man on the street is perhaps “less enthused by the fact that a lower rate of inventory de-stocking is arithmetically underpinning GDP growth at this time.”
In other words, it’s ‘growth’ that only an economist could love…and then, only an economist who was an idiot.

source

Peter Schiff on the Jobless Recovery

Today's release of the October jobs report showed the loss of another 190,000 jobs had pushed the official unemployment rate to 10.2%, only the second time since the Great Depression that unemployment was quoted in double digits (factoring in workers who had given up job hunting altogether or have settled for part-time work would push that rate to 17.5%). That didn't stop Wall Street pundits from trying to fashion a silk purse of this sow's ear. The 'green shoots' crowd focused on the slowing pace of job losses, the nascent economic 'recovery' (even if it is jobless), and the projected improvement in 2010. No mention was even made of the quality of what few jobs were being created...

By spending trillions of dollars of borrowed money, President Obama hopes to engineer a recovery and create jobs. However, he has only succeeded in digging America into an even deeper hole than the one he inherited from his predecessor. He believes that if we can simply push up spending to levels seen during the “good times,” then those favorable economic conditions will return. The reality, of course, was that those good years came with a heavy price-tag that we have barely begun to pay...

During the boom, we spent money we did not have to buy things we did not produce and could not afford. As a result, we are now deeply in debt and must sharply reduce our spending to replenish our savings. By focusing solely on consumer spending, the Administration is neglecting the capital investments necessary to improve our infrastructure and productive capacity.

To generate legitimate economic growth and meaningful jobs, we must reverse the trends that brought us down. Consumers may have led us into this recession, but they can't lead us out. The road to recovery is a one-way street, and it's paved with savings, capital investment, and production. It's not an easy road, but we must follow it to ensure our future prosperity.

As a first step, our politicians must stop pushing us backward. Rather than imposing more market-distorting regulations, we should repeal those most responsible for inefficient resource allocation. Rather than creating new moral hazards, we should withdraw guarantees for large financial institutions and irresponsible consumers. Rather than continuing the Greenspan policy of keeping interest rates too low, we should let them rise. Rather than trying to prop up asset prices, we should let them fall to market levels. Rather than increasing the burden of bureaucracy on the economy, we should look for ways to lighten the load. Rather than encouraging people to borrow and spend, we should reward those who save and produce.

source

October Unemployment 10.2%

source

Unemployment 10.2%

source

Fed Rate Cutting Cycles

source

The Fed's decision came just one week after the government reported that the economy grew in the third quarter, the first gain after a severe decline over the previous four quarters.

While it was widely assumed that the central bank would leave its federal funds rate in a range of 0% to 0.25%, economists and investors were eager to see how the Fed described the economy in its statement.

The Fed repeated language from earlier statements that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period."

The federal funds rate is a benchmark used to set the rates paid on a wide range of business and consumer loans, such as home equity lines and credit cards. It has been near zero since December 2008.

source

Cartoon: Mattress Tag

Cartoon: Recession

Cartoon: Pizza

Paul's Audit the Fed Bill Gutted

Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

source

A False Recovery

I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?

What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.

Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.

read the entire essay

Employment Job Losses by Recessions

source

Cartoon: Economic Recovery?