This is a particularly tough episode because it’s about economics, the economy. I’ve been asked over and over again to do this. What’s hard about it is it’s very difficult to really show how you can benefit, which is a little strange compared to the rest of the episodes. Maybe you can benefit by being better informed and protecting yourself from some of the things that you hear out there.

The economy is often looked approached without understanding causality. Microeconomics shows what affects and is effected.

One of the key things I want to stress and make important here is that the economy is completely different than it has been in the past. Most of everything that you’re hearing today is not very good. I don’t mean not very good about the economy; it’s not well-founded. There are a lot of people who are saying things about the economy and about how things are going that seem to indicate that it’s either good, or improving, or something else. I not only want to show you that it is wrong, but also why it’s wrong, and how you can see underneath it a little bit.

First of all, how do these people get these ideas that I’m considering or saying to you are wrong? One is that, over time, macroeconomics, what it does is it looks at trends, it looks at how the interest rate has occurred in different times through history, and how the economy was when the interest rate was down or up. It shows unemployment, and employment, and labor participation, and growth, all based on historical trends. The problem is that if the underlying assumptions change, then their results and their analysis are a fallacy.

A little bit into the numbers. Take a look at it. The assumption is that all the trends analysis and things haven’t changed that affect the relationship between those trends, but we know they have. How do we know that? Take a look around, what’s going on. Take a look at how the interest rate is right now. The idea was, historically, as the interest rate goes down, home sales will go up, and people will purchase more cars, the economy will boost. It’s not happening. The interest rate is just about zero.

I had an economics professor many, many years ago that used to say: “The lowering of the interest rate was kind of like pushing on a string.” If the demand is there for somebody to do something, they’re more likely to take that action because it saves them money because the interest rate is lower. But to stimulate by lowing the interest rate, when the underlying desire and demand is not there, then there’s no reason to invest, no matter how supposedly free it seems to be.

What about unemployment rates? They’re saying the unemployment rate is down to 5.3/5.4, etc. last month or this month, but at the same time, what is that really going? What is unemployment? It used to have a different definition. Yes, they’ve changed the definition. They  changed the definition about 15-20 years ago, but it doesn’t matter when they did it. The idea was that they no longer call for long-term unemployment as part of the unemployment rate. If you’re out for a long time, over a year, it doesn’t count. As you’ve probably seen, a lot of people have been unemployed for a long period of time. On top of that, the number of people that are out of the workforce. What that means is they’re no longer trying to find a job. If they’re no longer trying to find a job, they’re not counted; they’re not considered part of the labor force.

On top of all of these, you have part-time workers. What happens with part-time workers? It turns out that the way they count it (part-time statistics are really bad) is by total hours. You’ve heard me say it over and over again, life unsettled, people who are older, etc. are being laid off or replaced by younger workers, people’s hours are being cut back, etc. In this case, people are having to get jobs that may be part-time jobs. They may have to get two part-time jobs,