You are browsing the archive for 2013 August 18.

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Plunging Stock Prices Reveal Shaky Recovery

August 18, 2013 in Economics

By Joseph Salerno

On Thursday, stocks suffered their largest tumble since June due in large part to a so-called “spike” in the yield on 10-year government bonds, which rose by a measly 11 basis points, from 2.712% to 2.82%. This is further evidence of the very shallow and extremely shaky foundations of the current economic recovery, as anemic as it is, which is based on the Fed once again artificially pumping up household net worth in financial assets and housing prices by relentlessly beating down the interest rate below its natural rate. But the Fed is playing a game that it can never win. Once confidence vanishes that the Fed is able to maintain its inflationary QE and zero interest-rate policies, the jig will be up and equity and real estate markets will come tumbling down pulling the still shaky financial system with it.

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Source: MISES INSTITUTE

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What Is Money?: The Congressional Lecture Series

August 18, 2013 in Economics

By Joseph Salerno

You can now enjoy a three-part lecture series on the basic principles of money from an Austrian perspective. The series was sponsored by Congressman Ron Paul and presented exclusively to Congressional staffers. The lecturers were myself, Constitutional lawyer Edmund Vieira, and investor, author, and financial commentator Peter Schiff.

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Source: MISES INSTITUTE

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To Get People to Work, Tighten Welfare Standards

August 18, 2013 in Economics

By Michael D. Tanner

Michael D. Tanner

Contrary to stereotypes, there is no evidence that people on welfare are lazy. Indeed, surveys of welfare recipients consistently show their desire for a job.

However, there is also evidence that many are reluctant to accept available employment opportunities. In fact, despite the work requirements included in the 1996 welfare reform, only 10 percent of adult welfare recipients in New Jersey are working in unsubsidized jobs, while roughly 32 percent are involved in the broader definition of work participation, which includes activities like job search and training.

Perhaps that is because, while poor people are not lazy, they are not stupid either. If you pay people more not to work than they can earn by working, many will choose not to work. And, New Jersey pays people on welfare a great deal not to work.

Congress and state legislatures should consider strengthening work requirements in welfare programs, removing exemptions and narrowing the definition of work.”

A new study released by the Cato Institute looks at the state-by-state value of welfare. Nationwide, our study found that the value of benefits for a typical recipient family ranged from a high of $49,175 in Hawaii to a low of $16,984 in Mississippi.

In New Jersey, a mother with two children participating in seven major welfare programs (Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, housing assistance, utility assistance and free commodities) could receive a package of benefits worth $38,728 a year, the fifth highest in the nation. Only Hawaii, Massachusetts, Connecticut and the District of Columbia provided more generous benefits.

It’s important to remember that welfare benefits are not taxed, while wages are. In fact, in some ways, the highest marginal tax rates anywhere are not for millionaires, but for someone leaving welfare and taking a job.

Don’t forget that there are additional costs associated with going to work, such as child care, transportation and clothing. Not to mention that even if the final income level remains unchanged, an individual moving from welfare to work will perceive some form of loss: a reduction in leisure as opposed to work. By not working, welfare recipients are simply responding rationally to the incentive systems our public policy makers have established for them.

Of course, not every welfare recipient meets the study’s profile, and many who do don’t receive all the benefits listed. (Only about 23 percent of New Jersey TANF recipients also receive public …read more

Source: OP-EDS