Hysterical unemployment propaganda figures are going to bite the Fed in the a$$.

The Fed has been tying stimulus activity to employment numbers for a long time.  They will stop the stimulus, they say, when employment numbers as measured by them, reach certain goals.  Back in 2012, that number was 6.5%.  Of course, in order to avoid being seen for the useless fools they are, they had to game the employment numbers lest the real number of perhaps 9-12% or more be known.  The gaming of the numbers takes place in many forms, but the most ridiculous one is that people who have become disillusioned about the employment situation and who have thus stopped looking for work are no longer counted as unemployed.  They simply choose not to work.  And why should they work when disability and welfare and never-ending unemployment checks keep rolling in?  The liberal system not only allows but encourages many people to choose not to work.

In any case, the recent unemployment numbers came out and if you just read the headline (which is what the con men count on), it looks like the nation is just working like crazy since unemployment is down to a very nice 6.3%!  Again, that is 6.3% by the Fed's on metrics, corrupt though they may be.  And how, pray tell, did this wonderful number come about??  Simply because the labor force was reduced by over 800,000 people!  From that link, Mish lists the cause of this reduction as:

 

 I believe that he missed one very important reason: people retire or give up simply because they cannot find a new job that pays like the old one did.  When the credit was flowing, people got overpaid. Now when people leave a position, the trend is to try to fill it with a junior person.  Of course, "junior employee" is a euphemism for "cheaper headcount overhead".  You really have to be endowed with specialty skills, technical skills, etc. in order to make the same money that you did before if you are coming from laid off status into the workforce again.  The HR and accounting departments are really turning the screws on hiring managers due to slow sales.

In any case, because of these supposedly good unemployment reports, the Fed is going to be under increased pressure to pull back the stimulus and begin to enforce banking rules again.  That is not going to end well.  It will immediately cause a raft of layoffs as we enter a greater depression.  The dirty secret of a "consumption based economy" is that it is a fake economy.  People consume on credit that they have no ability or intention of ever paying off.  I don't mean that they are deadbeats.  Consider this: when I watch house hunters on TV once in awhile, the budgets are often 500-900k.  

Those are ridiculously high numbers for the average 2 earner family.  Is everyone stinky rich except me??  I think not.  I am easily in the top 10% and perhaps even touching into the top 5% of earners in this country.  No way would I spend 300k on a house!  But these people do because they have no intention of paying it off.  They treat a house payment as a rent payment.  They didn't care what they paid as long as the bank would loan it to them.  They only cared about the monthly payment.  They were under the impression that at some point they could pass the house on to a greater fool at the same or more money than they paid.  No way can they ever pay those ridiculous mortgages off.  Bottom line: they won't because they can't and when interest rates rise causing the price of houses to plummet, these people will tear up and walk away.  Perhaps they don't know it yet but the math is obvious.

If we think the debt to GDP ratio is high right now, wait until the credit collapses which in turn will collapse conspicuous American consumption which in turn will collapse the fake GDP leaving only the debt standing.  That's how the debt Ponzi ends up, with a skyrocketing debt to GDP which in turn pushes people away from loaning the government money money (treasury sales become more difficult) which means that government has to raise interest rates in order to entice buyers of its worthless debt.  Then the big inflation kicks in as Government, who cannot raise taxes in a depression, begins to print ever more money from thin air in order to service the ever expanding service of the debt due to rising interest rates.  At some point we either just default or hyperinflate.  In the mean time, the Federal Reserve liars will continue to tell us how well they are managing the economy (as if central economic management EVER worked in the history of man...).

1. oking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job
5. Disability and disability fraud

Read more at http://globaleconomicanalysis.blogspot.com/2014/05/nonfarm-payrolls-288000-unemployment.html#RzR8e72MaKMg1oUF.99

Labor Force Factors

1. Discouraged workers stop looking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job
5. Disability and disability fraud

Read more at http://globaleconomicanalysis.blogspot.com/2014/05/nonfarm-payrolls-288000-unemployment.html#RzR8e72MaKMg1oUF.99

Labor Force Factors

1. Discouraged workers stop looking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job
5. Disability and disability fraud

Read more at http://globaleconomicanalysis.blogspot.com/2014/05/nonfarm-payrolls-288000-unemployment.html#RzR8e72MaKMg1oUF.99