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Tuesday, May 7, 2013

The Village of Potemkin

Thus, the use of fiat money is more justifiable in financing a depression than in financing a war.

Potemkin Village is not a plot of the next M. Night Shyamalan film or a new video game by Nintendo where you try and catch cute characters to battle each other. 

It isn't even a remote village somewhere that Rick Steve's can get you to in Eastern Europe. 

Potemkin Village doesn't exist.

It actually is the best analogy for our economy I have seen yet!

Confused? Let me explain...

Have you ever seen the old Spaghetti Westerns?  Did you ever notice that most of the buildings look the same from movie to movie? Well, that is because most of the time when a movie producer would want to build a set and didn't have it in the budget for a whole new set design they would order up a "Potemkin Village" from the local prop house.

The term "Potemkin Village" is named after Prince Grigory Aleksandrovich Potemkin-Tavricheski who was the lover of Catherine II during the 1700's.  Aleksandrovich was known to create fake villages along the path of Catherine as she passed from one side of Russia to the other to impress her during her tour of the country in 1787.  This impressed Catherine very much and kept him in her good graces as well as her bed.

How would he feel now if he knew his namesake would best describe lies? defines a "Potemkin Village" as; "a pretentiously showy or imposing facade intended to mask or divert attention from an embarrassing or shabby fact or condition."

Guess what?

We as the American People are falling victim to these "Potemkin Villages" each and every day.  Just take the most recent jobs report for example; What we see according to the Government is that 165,000.00 jobs were added in March of this year. 

Here are the "highpoints" of the press release;

unemployment rate since January. The number of unemployed persons, at 11.7 million, was also little changed over themonth; however, unemployment has decreased by 673,000 since January. (See table A-1.)


non-farm payroll employment increased by 165,000.  Professional and business services
added 73,000 jobs in April and has added 587,000 jobs over the past year. In April, employment rose in temporary help services (+31,000), professional and technicalservices (+23,000), and management of companies (+7,000).

Within leisure and hospitality, employment in
food services and drinking places rose by 38,000 over the month. Job growth in the food services industry averaged 25,000 per month over the prior 12 months.

Retail trade
employment increased by 29,000 in April. The industry added an average of 21,000 jobs per month over the prior 12 months. In April, job growth occurred in general merchandise stores (+15,000) and in health and personal care stores (+5,000).

Health care added 19,000 jobs in April. Within the industry, employment rose in ambulatory health care services (+14,000). Over the prior 12 months, job growth in health care averaged 24,000 per month.

In April, employment also continued its upward trend in social assistance (+7,000).

Employment changed little over the month in construction, with small offsetting movements in the
residential and nonresidential components. Construction gained an average of 27,000 jobs per month over the prior 6 months. Manufacturing employment was unchanged in April.

See that last part, "Manufacturing employment was unchanged in April". 

That's bad.

That's bad because we aren't increasing what we are making. We aren't adding any more value to our country.  Our GDP to debt ratio is 105% and growing rapidly.  We are not adding any assets to our balance sheet!

Sure, professional jobs went up, so more admins and computer guys got jobs.  Maybe a few more managers got hired, but for the most part, the solid middle class production job was not created.

When you have a country that is filled with very high end jobs and extremely low paying jobs like service jobs, you will never have a middle class that will grow and create a tax base you can earn from.  People who work in manufacturing have disposable income!

They have money to be spent on TVs, Cars, and other larger ticket items that we can make domestically, but the jobs that create those things are not being created at all!

Wait staff and line cooks at restaurants do not have disposable income. 

Walmart Greeters do not have disposable income. 

Office Admins do not have disposable income.

Bar Tenders do not have disposable income.

Without disposable income... money does not flow through an economy.

So... A question for you, with all that data you just read, did you spot the "Potemkin Village" in the jobs report?

It was the unemployment rate! 

You see, the unemployment rate is one of the biggest lies in America.  It isn't 7.5 percent, or 8.5% or even 10% .  The "Potemkin rate" of 7.5% is just laughable. 

I will prove it to you;

According to Bureau of Labor and Statistics, 9.5 million people have left workforce under the Obama administration. The link I provided gives you access to the BLS records and you can customize the reporting as you like... I used the option of "out of workforce" and the Obama administration time frame to generate my results.

Now... it is a matter of simple math; Divide 9.5 Million by the population of the United States and you get 28.2 percent.

Yes... 28.2% of working age adults are out of the work force. Now you can't look at that number and tell me that we are in a recovery.  More people are out of work now than ever before! This is just one of the Governments "Potemkin Villages" they are using to tell us that "all is well... don't worry, trust us, you'll be OK!"

It is a mathematical certainty that we are loosing close to 600,000.00 per month that are hidden from view. 

The average workweek for all employees on private nonfarm payrolls decreased by 0.2 hour in April to 34.4 hours. Within manufacturing, the workweek decreased by 0.1 hour to 40.7 hours, and overtime declined by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.7 hours. (See tables B-2 and B-7.)
This is a problem.  If we look at the "employed" figure of 143,724,000 people a drop of 0.2 hours is a full-time-equivalent decrease of 1/2%.  Applied to the employed population this amounts to an imputed economic decrease of 718,620 jobs!

People, you need to wake up! 

It isn't getting better out there! 

Sure there may still be some pockets of the country that are doing "ok"... but when you look at numbers like this; it doesn't bode well for us.  We know that the "QE" process is just getting worse and money is being printed at a rate of 85 billion dollars a month, and frankly it won't work in the long run. 

Inflation will come, the economic system is setup to fail, and we are watching it slowing starting to unravel like a poorly made scarf.   Ben Bernake doesn't know the stitches to fix it.  He just keeps adding to the bottom as the top unravels. He has proven himself to be incompetent time and time again with what he says.  He doesn't get it.  He doesn't have to.  They want the economy imploded.  They want people to crawl on their knees and beg the Government to bail them and their children out just as they bailed out the "to big to fail" banks in 2009.


If I were you, I would watch the video that I have embedded here.  It's good and its three very smart men telling you that the laws of economics have been ignored!

If you haven't chosen to truly open your eyes about the danger that our monetary system is into ... now is the time... do your research and then get your family ready!

You need to continue to prepare yourself accordingly... "The Event" is coming at us faster than we know.

Until next time...


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