The September jobs report is out and it looks like somebody’s cooking the books. The numbers just do not make sense.
Ron Paul: Hello everybody and thank you for tuning in to the Liberty Report. With me today is Daniel McAdams. Daniel good to see you.
Ron Paul: Happy Friday Dr. Paul.
Ron Paul: Friday, that’s good. I have a special report we got today from our illustrious government, from the Department of Labor, all these statistics on unemployment and they give us the jobs report for September and as usual there’s always the projections. The projections are important, because if they are above the projections or below the projections, the instantaneous traders have a lot of adjusting to do.
Today the numbers came out worse than the projections over many more people losing their jobs and getting their jobs and this hit hard on the markets today. The stock market had been up a little bit and went down rapidly, gold was up over 20 dollars and they are trying to sort all this out.
There’s something pretty interesting about how these statistics are reported, because it seems like the government, I know you won’t believe this, but they tend to fudge the figures a little bit and they tend to be optimistic and they tend to manage the markets by just their propaganda.
It turns out that the unemployment rate is great, 5.1%, we shouldn’t complain about it, but there were 579,000 people who left the job force, so that seems rather strange. Are you shocked that the government would not be straight with us on statistics; I mean should we trust our government for what they tell us?
Daniel McAdams: What’s funny is I was looking at Twitter this morning and the White House put out a tweet that looked so impressive. It showed how unemployment rate has just since Obama came to office, has just gone downward and downward and downward, but they skipped that other part that you mentioned.
Ron Paul: The labor participation rate, we have a chart on that, we’ve shown in before, but it does tell us a whole lot. The participation rate is going down all the time and they keep saying it’s the lowest it’s been since 1977, but if you sort out the women in the workforce, it’s actually the worst it’s ever been for men and why the women factor is important. As you know, in the 70s a lot of women weren’t in the workforce for economic benefits, because they didn’t need to be. Then they were forced into it and now they are coming out. That distorts things, I think you can see on the curve going down sharply, it’s very, very important, it’s down under 62% now, around 62% and that is very significant.
It’s actually worse than that if you just look at adult males; the rates are that much worse. Over half a million left the workforce, but the actually employed was only less than 236,000, it was down that way. It is miraculous.
I guess the only thing I can suggest because we don’t trust there figures, but there’s others who don’t either, I think some of the traders don’t trust them either, but what they do is they listen to the noise and they might agree with us on that. They are smart enough to say I know how the markets are going to react. If you really wanted I think looking at John Williams, free market stats, shadow stats, he gives the information. As a matter of fact, if you look carefully at the Fed, the Fed even has a number that puts unemployment rates over 10%. John Williams says it could be over 20%. That sound like a depression and people keep saying the economy is doing well, but why are people so pessimistic? I don’t think there’s any complicated reason to figure out why they are depressed, because what’s happening to wages.
Daniel McAdams: Yes, wages are flat, 0.0. It’s almost like propaganda, because the government keeps telling us the unemployment is way down, way down, the individual who finds himself out of a job may even be less likely to, he feels bad about feeling bad about it, because everyone else seems to be doing so well.
Ron Paul: Another number came out today that won’t add to any optimism and that’s the U.S. factory orders and they’ve been down every month to some degree for 10 months, they were down more sharply today than expected and some blame our exports have gone down.
They say the dollar is too strong, so there’s always that dollar is too strong or too weak and affects it. Of course they never talk about a stable dollar, maybe they can trade better internationally if they had stable money and the currencies were related with a stable base such as gold. They wouldn’t have all this to do. The dollar is up and this would affect it, but once again they have to contend with this.
To think that we are not in a recession I think is really bizarre. You talk about the real wages down, they haven’t gone up, I think they are down, because the real wages if they factor in unemployment, people in fixed incomes or people who move back with their parents and all this, standard of living is going down. This explains, as far as I’m concerned, why people are so disgusted that they even look and say maybe we need a socialist as a President, maybe we need the iron fisted one person who will direct this economy and run things, so there’s a lot of frustration out there.
At the same time, you and I, even though we’ve tried to get people to wake up and say maybe we could help ourselves back here at home if we didn’t waste so much money and effort overseas, but it seems like we haven’t yet achieved that.
Daniel McAdams: When something like this happens the media of course turns to what they consider are the free marketers, which are the supply siders. We were talking about before the show that several of them have come up and said you’ve got a great idea, a great program to create a million jobs instantly. First of all, forget about the Fed, ignore the debt, let’s lower the corporate tax rate, let’s get rid of the EPA, let’s deal with malinvestment that way and these sorts of things. They really are missing the main point, aren’t they?
Ron Paul: They would also go along with opening up sales overseas of oil, which always is rather bizarre. Why do we have to relegalize freedom that has been denied to us for so long, of course we should, but why was it ever abolished? Why did we ever say you can’t sell your oil overseas? It’s just mischief in management. Their suggestions corporate 20% great, sell oil overseas, fine. That’s going to help, less regulations.
I don’t think people want to talk a whole lot about how much harm Sarbanes-Oxley and Dodd-Frank has done and then because that regulates markets and nobody knows exactly what’s going on. The big regulator, of course is the Fed. The answer to all this is to get rid of the Fed, but that’s not going to happen overnight. Is there anything that we can do on the short run that may get us back to a market?
The most important thing we can do to deal with this, go along with the mischief or the elimination or lower taxes and that all, but it doesn’t deal with the Fed, it doesn’t deal with fixing the interest rates, it doesn’t deal with the liquidation of debt, it doesn’t do with the liquidation of malinvestment. These are all things that are a consequence of price fixing, fixing the cost of money. Then, there this overriding issue of moral hazard. Why do people do things in a certain way? Because they might think they are safe to do it, in other words why do banks loan out some money, why was such a huge amount of debt that we got into trouble in ’07 and ’08 and the housing bubble and all this. There’s a Fed out there and they have endless credit and everybody knows and even those who are very sympathetic to our views about reining in the fittest. We still have to have a lender of last resort, because banks can get into trouble, so therefore we have to always have that, but with the lender of last resort it always means they are going to make mistakes.
I think what we have is the lender of first resort. The Fed’s doing all the lending because we don’t save money and we don’t have a market rate of interest, so that really doesn’t solve the problem, if we don’t look at the Federal Reserve. We have to liquidate debt and that is contrary to everything that’s going on including many conservatives, are the conservatives are going to cut back on the military budget and are they really going to have an answer? I don’t think that’s going to happen soon.
Daniel McAdams: That’s what I was going to say earlier that there’s a huge diversion out there for all these bad numbers, which is we got to get more involved in Syria now that the Russians are there, we’ve got to get more involved in Iraq, we got to do more overseas. With a weak economy what you want to do is go spend billions of dollars more in these no-win wars.
Ron Pau: Another one is it is all China’s fault.
Daniel McAdams: Yeah.
Ron Paul: That’s a popular thing to do, just bash China. Of course they act in their own self-interest, but they are not in such a bad shape some people think, because they are a creditor nation, we are the ones that owe all the money, so we will be under the gun. But, China is related, because they were sucked into this system too, because we ran up out debts, we could issue the currency, we bought overseas, we have all this wild debt overseas and foreigners have been foolish enough just to take our paper money and then actually loan it back to us and feed into the system to the point where they are locked in too. They don’t want to see the collapse of our system and right now our economy is holding up somewhat better than what’s happening in the rest of the world.
That will change because exactly who’s going to be worst I think is going to be irrelevant. I think we are all going to end up suffering and that notion is still around and you’ve heard it and we’ve dealt with it and that is that war is good for the economy. We’ve heard that said with the 30s, Roosevelt got us out of the depression with a war.
Daniel McAdams: Get rid of a lot of people from the workforce that way permanently.
Ron Paul: That’s right. The unemployment rate goes way down and that was really the time when the women were put in the work force and that one chart we had up there a minute ago, people look at that chart, what you see is there was an improvement after the 70s it went up, but the improvement came when we went off the gold standard, which meant that the standard of living was going down, people had a lot of inflation back in the 70s and 80s and we pushed a lot of people into the workforce, that’s probably when the women went into the workforce to make up and keep up with their standard of living. Of course that looked good, but probably it wasn’t as good as it appears on the chart. Right now, the chart doesn’t look good to anybody and I think it’s the adaptation to bad economic policy, I think it’s the adaptation of many conservatives, not all, but most liberals about debt. Debt is not a big problem and I think you’ve heard of a guy by the name of Paul Krugman.
Daniel McAdams: Yeah. He loves you; he can’t stop talking about you.
Ron Paul: He says debt is ok and we need more. He sort of badgers me because I won’t ever admit that gold and sound money doesn’t work. I wonder when he’s going to admit that his Federal Reserve and spending all these things that we’ve been doing, but I know his answer would be and has been and that is that we just haven’t done enough. We don’t have enough spending to urge things along.
I think it is a contest of ideas and we are seeing the consequence of an economy run by Keynesian economics and paper money and interventionism, a foreign policy that drains our wealth and that changing the tax code and things may be very beneficial and changing the regulation, it may be good and we should be for it. It will not solve the problem if you don’t deal with the Federal Reserve. We have to get to the point of not allowing the Fed to fix interest rates. They cannot manage economy; they cannot be a central economic planner, that has to be rejected. We have to reject the notion that debt is good, because that makes a country and individuals totally dependent and we have a whole culture of dependency, the wealthy and the poor are dependent and those in the middle class still willing to work, they are struggling and they are hurting and they are losing their jobs.
If anybody really cares about making a fairer society and a better distribution of wealth, they have to look to the free market, because it is the free market that has been able to create the largest middle class in the history of the world and it was in this country and the highest standard of living and it’s disappearing. It’s crucial on what we decide now. If we decide more on more government and more interference and more paper money and more debt, this is going to be much, much worse. We have to accept the fact that a lot of mistakes were made and that we have to allow the market to give us some indication on how to eliminate the debt and get rid of the malinvestment.
That is the solution. We need some liberty, we need some freedom, we need to deal with property rights and we need a lot less government believe me, that won’t give us a million jobs in one month, but on a year from now you would see a thriving economy and much happier people and actually we would have a new generation that would be more hopeful about having jobs. Until we change the philosophy of what the role of government ought to be and what the economic policies ought to be, we are not going to get to the bottom of this.
I do want to thank everybody for tuning in to the Liberty Report today and please come back soon.