Inside Out

The week began with more pessimistic news concerning America’s labor participation rate.  Don’t get caught in believing the economy is improving because it’s not.  Just 62.4 percent of civilian Americans 16 and older were working or looking for work.  This has caused the jobless rate to drop to 5.1 percent.

But, who would not count 94 million Americans who should work, but don’t?  That is how it’s done at the Labor Department.  Goldman Sachs economist predicts the jobless rate will reach 4.5 percent.  What a great Obama economy for our middle class.

Now my advice for you.  Don’t believe for a minute that interest rates will be raised soon.  Those printing money may need it, but the economy is just too weak.  Why is that?  There is no inflation, slow consumer spending and no jobs – which all makes an improving economy only an illusion.

Since interest rates are at all-time lows, what should one do? Refinance your mortgage is always a good bet, and pay down credit card debt.  Those card interest rates are the highest – higher than student debt.

Here is an example of how idiotic the government is.  Start a 529 plan for a student beneficiary. Good idea.  If the student has Fedloan debt, can you use the 529 to pay off the loan?  After all, it’s a student expense.

The answer is no.

So whatever the balances are across the country, no 529 money can be used to reduce the $1.1 trillion student loan debt.  It makes no sense, but that is how politicians who have no student debt try to help the middle class.

My column has long seen deflation as the consequence of an anti-business president and a currency printing happy Federal Reserve.  Both ideas do not stimulate growth.

Greg Ip, writing his column for the Wall Street Journal, quotes Rudi Dornbusch, an renowned economist, “No postwar recovery has died in bed of old age – the Federal Reserve has murdered all of them.”

You cannot have a recovery with out-of-control federal spending and a Federal Reserve as the only buyer of that debt.   With low-interest rates, the economy should be roaring (had it not been for all the new regulations and trade agreements that cripple our business and middle class).

Why would any person take any chance when Obama is in the White House?  Remember: the 2008 recession was brought about by careless government policies dealing with real estate.

Government policy forced lenders – many of which were not regulated – to make individual home mortgages to those who could never pay them back without help from inflation.  Wall Street took those bad loans, securitized them in bundles and sold them to investors as AA-rated debt.

With no inflation, there was no ability to flip the home property. It was repossessed and foreclosed and sold for a loss.  What this brought was more regulation for those banks, which never caused the problems.

Whatever you can’t today get from your bank is not their fault.  It’s the fault of the administration and congress.  The administration did too much and the congress did too little.