Now You Can Be an Economist and Forecast the Unemployment Rate

Now you can pretend to be Ben Bernanke . . . check out this cool interactive app which lets you choose the parameters of the economy and then it plots the future unemployment rate.

What I really like about this app is that you can clearly see how changes in the labor pool affect the unemployment rate. The fact is that the unemployment rate has only been falling because more people have been dropping out of the labor pool.  Actual job growth has been minimal.

Hat tip to Mish (see this link for more information on the state of unemployment in America)

Wyoming Prepares for the End

Pacific Mushroom
Creative Commons License photo credit: Steve Snodgrass

With federal and state debt loads exploding, Wyoming is preparing for the worst:

State representatives on Friday advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States.

House Bill 85 passed on first reading by a voice vote. It would create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.

I’m all for preparedness, but even this statement has me puzzled:

The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed. And House members approved an amendment Friday by state Rep. Kermit Brown, R-Laramie, to have the task force also examine conditions under which Wyoming would need to implement its own military draft, raise a standing army, and acquire strike aircraft and an aircraft carrier. [emphasis added]

An aircraft carrier? Really. They do realize their state is landlocked . . .

“The Penny Plan” to Eliminate the Federal Deficit

four cents
Creative Commons License photo credit: Robert Couse-Baker

We all know that Uncle Sam’s trillion plus dollar budget deficits are unsustainable. Debt is now larger than Gross Domestic Product and we are well on our way to Greece-level debt (and that excludes our “off the book debt,” see sidebar for our true debt levels . . . around $77 trillion). Adding insult to injury, the states are running huge debts of their own.

At some point, Uncle Sam is going to have to sober up and face reality. The reality is that the budget deficit needs to eliminated and budget surpluses must become the norm (American households need to listen up as well).  One solution that I recently came across was “The Penny Plan.” They describe the plan as thus:

The One Cent Solution is beautifully simple: If the government cuts one cent out of every dollar of its total spending (excluding interest payments) each year for six years, and then caps overall federal spending at 18 percent of national income from then on, we can:

  • Reduce federal spending by $7.5 trillion over 10 years.
  • Balance the budget by 2019.

Moreover, instead of using inflated budget “baselines” to claim nonexistent spending “cuts” a common practice in Washington, the One Cent Solution calls for real cuts.  Under the One Cent plan, the sum of all discretionary and entitlement spending will have to go down from one year to the next, by one percent or more.

Another cool feature of the Penny Plan is that it comes with anther great Remy video shown below.

But alas, I fear even this attempt may be too little too late. Even with a balanced budget by 2019, we will still add trillions of dollars to the national debt. Thanks to President Obama’s policies, the national economy will still be struggling to recover over the next few years. This is a recipe for an explosion in our debt-to-GDP ratio. Check out this history of recent debt ceiling increases to see how unsustainable our path already has become.

And if it all becomes too depressing, turn to Remy again for some more amusement with “Raise the Debt Ceiling.”