Financial News Falsehoods
Unemployment was reported as 9.5% today. The number is actually 16.5%. I'm using the broadest measure of unemployment - U6
U1: Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work.
U3: Official unemployment rate per ILO definition.
U4: U3 + "discouraged workers", or those who have stopped looking
for work because current economic conditions make them believe that no
work is available for them.
U5: U4 + other "marginally attached workers", or those who "would
like" and are able to work, but have not looked for work recently.
U6: U5 + Part time workers who want to work full time, but can not due to economic reasons.
====================================================================================
CNBC stock pickers are saying we will continue to have deflation because of high unemployment. They ignore 3 issues:
- Commodity prices will rise as countries with the largest populations (China, India, Indonesia) will strive to consume at levels Americans have in the past
- Inflation is an increase in the money supply, and the FED has increased M1 by 16% since 2008
- There is no causation between high unemployment and deflation, look at Zimbabwe - 80% unemployment and 10,000% inflation!
