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Good news, but—

December 2, 2011

Isn’t it great news that today’s unemployment report showed such a significant drop?

Absolutely it is great news but I have just two concerns. Much of the drop was due to the unemployed giving up on looking for work—so they do not get counted in the government’s official report. My second concern is just how much of our employment comes from what I call artificial stimulus. The mega liquidity effect on our economy, combined with programs like American Recovery and Reinvestment Act is an example of the artificial stimulus that will have to be extracted from our economy at some point in the future. As we pile more and more stimulus on top of one another at the expense of further indebtedness, we have to think about the long term affects at some point. 

While I consider today’s drop in unemployment a positive sign, I consider Black Friday record sales not so positive. The reason for this is because we seem to be very slow learners that there are repercussions from our shop-until-we-drop mentality. The only long term solution is for all entities (corporate, government and private citizens) to learn to live within our means. Likewise, Wednesday’s unprecedented actions by world central banks to increase liquidity and borrowing are a move in the wrong direction because it encourages more of the behavior that got us in this mess in the first place.

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