As I wrote in Thursday’s “Oh, the Propaganda,” years of post-NFP raids have conditioned market participants – and sadly, PM holders – to believe this largely meaningless, heavily rigged report is vitally important to the long-term gold and silver outlook. It is decidedly not – as demonstrated by the fact PM prices have cumulatively been unchanged on this year’s 12 NFP days; but more importantly, “good” or “bad,” the pace of global money printing has continued to accelerated – and will continue to do so, until all fiat currencies are destroyed. Case in point; in the wake of a second straight “better than expected” NFP report Friday morning, both Precious Metals traded higher. And remember, ceteris parabus, both metals trade well below their marginal costs of production; i.e., levels that typically provide significant fundamental support. In other words, investors have been afforded the opportunity to own history’s only proven inflation hedge at bargain basement prices, amidst the most intense period of fiat currency creation in global history.
As for the report itself, it of course contained the usual paradoxes, conundrums, and ominous signals. Yet again, we’re told low-paying retail was the largest growth sector; amidst what objectively is the worst holiday shopping season since the 2009 post-crisis low. Recent headlines trumpet comatose consumer confidence and spending; not to mention, deep discounting and weak same-store sales. Yet, we’re told, the retail sector is dramatically ramping up employment. Sound fishy?
I sense a significant amount of such “growth” is holiday-related temp help; as the BLS now considers temporary and part-time jobs equal to full-time jobs in NFP reporting. Moreover, labor participation barely ticked up from last month’s 35-year low; and somehow, the BLS calculated a 0.3% drop in the “unemployment rate” – from 7.3% to 7.0% – from a paltry 203,000 job increase and rising labor force denominator. As noted in Wednesday’s “More BLS lies, coming right up,” the government can literally peg NFP data wherever it wants, at any time – and does.
On that note, does anyone – aside from me – find it strange how only the U.S. is reporting a material jobs “recovery?” I mean, Labor Participation is plunging 35-year lows, average wages are declining, real wages peaked in the 1970s; and not only is holiday spending at multi-year lows, but the third quarter was one of the worst earnings periods – relative to expectations – ever. Thus, data manipulation notwithstanding, how can the U.S. government even pretend its jobs outlook is improving, when virtually every economy on the planet is decidedly weakening?
Europe just reported 0.1% GDP growth for the third quarter, Japan reported 0.5%, and the UK, an “amazing” 0.8%; whilst Brazil’s GDP was negative, and China’s notoriously unreliable data wobbles between slight growth and outright contraction. In Japan’s case, such “growth” has been accomplished purely via inflation, while wages for the average person have fallen for 17 straight months. In the UK, perhaps the world’s highest average cost of living is only worsening, with a record low savings rate caused by “the 99%” cashing out assets to pay for basic life necessities. In Brazil, food riots held the national stage this Fall, amidst a plunge in the real currency; while in Europe, most of the continent remains mired at post-2008 economic lows – including PIIGS like Greece and Spain, and supposed “first world” economies Italy and France.
In America, we are experiencing chronically weak retail sales, capital spending, consumer confidence, and durable goods orders; a rapidly rolling over housing sector (amidst surging interest rates); and record low Labor Participation. Not to mention, recent, nation-paralyzing crises like the “fiscal cliff,” government shutdown, and debt ceiling (of which, the latter two are set to repeat next month); scandals like the NSA and IRS; the Obamacare rollout; threats of war with Iran to Syria, and ongoing financial criminality (check out this clip, if you want to be awed). Irrespective, we’re told the U.S. labor picture is rapidly improving, and GDP growing at the comical rate of 3.6%.
More specifically, I want to focus on the aforementioned low-wage jobs constituting the “New Employment Paradigm” America’s economy is morphing into. For some time, I have noted the widening income gap between “the 1%” and the rest; and frankly, corporations themselves and their employees – as this month, the gap between corporate profits and employee wages hit an all-time high. The principal causes of these ominous trends are 1) most “stimulus” is channeled to the financial sector, and 2) an inexorable productivity trend is causing companies to shed non-essential workers in record numbers. Catastrophic legislation like Obamacare is only exacerbating this trend; and as more high-paying manufacturing jobs move overseas, employee bargaining leverage will continue to decline.
Thus, we have a “recovery” by name only; as the true “underemployment rate” sits closer to the 25% level witnessed during the great depression than the 7% reported by the BLS; as symbolized by the fact that simultaneous with Friday’s NFP “beat,” personal spending fell to a nearly four-year low, while the savings rate actually declined! Of course, such data shouldn’t surprise anyone with their pulse on reality, given how the nation’s largest employer – Walmart – experienced nationwide wage protests on Black Friday weekend; while this week, fast food workers in 130 cities struck as well – in what is being deemed the “strike against poverty wages.”
Retail and fast food have been the “fastest growing” employment sectors this year; yet their average worker earns less than $9/hour, working part-time shifts of just 24 hours per week. This is why half of all such workers are receiving supplemental government assistance, and why “the 99%” are not only suffering, but growing in number. Worse yet, as noted in this article, Applebee’s is experimenting with ‘computerized waitressing’ in 100 cities; which, when it ultimately spreads to other low to middle-end restaurant chains, could result in the loss of hundreds of thousands of jobs. As you can imagine, such a trend will only increase demand for entitlement programs like Food Stamps; printed out of thin air, of course. But by then, you can bet the BLS will come up with a new “adjustment” to avoid calling the loss of such jobs “layoffs.”
Thus, when viewing jobs data – and any government-generated economic reports, for that matter; keep in mind that not only are the “headline numbers” subject to massaging at the least, and fraud at the worst, but the underlying internals typically tell a far less sanguine story. So for those thinking “the economy” is ready to stand on its own two feet – i.e., without unending, expanding Fed support – you are likely to be heavily disappointed.
Sadly, America is plagued not only with the necessity of expanding its fiat Ponzi scheme ad infinitum, but demographic and secular corporate trends that will require more stimulus, not less – which ironically, will only worsen the situation by generating increased inflation. Moreover, if Fed-induced record low interest rates are not maintained – can you say, QE5? – The entire debt-swamped nation, from the Federal government down to millions of struggling households, will immediately be “financially nuked.”
Thus, I ask you, where do you think your hard earned savings should be parked; in dying fiat dollars, or eternally enduring physical gold and silver; particularly at prices below their latters’ cost of production?