03/12/14 – Alan Butler – The Scott Horton Show

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All right, you guys.
Welcome back to the show.
I'm Scott Horton.
This is my show, The Scott Horton Show, here on the Liberty Express.
And I'm joined on the phone by the boss of the Liberty Express, Alan Butler from Butler on Business, and the man that makes the whole thing go.
Welcome to the show.
Alan, how are you doing?
I'm all right, Scott.
How are you doing?
I'm doing real good.
Appreciate you joining us today.
I'm always glad to be home with my buddy.
All right.
Well, good times.
Now, here's one of the cool things about Alan.
There's lots of cool things about Alan.
But one of the cool things about Alan is he knows this guy who used to work at, I believe it's the Federal Reserves at the Treasury.
I know people that worked at both.
But I think what we're getting ready to discuss is the jobs report.
Right, yeah.
You had one of these guys who was the guy who wrote these horrible, bogus statistics.
But then he taught you how to decode them, right?
Who's that?
Well, the fellow's name is Keith Hall, Scott.
And he ran the Bureau of Labor Statistics for five years.
They're appointed to five-year terms.
They're designed to straddle administrations, so three years under Bush 43, two years under the Obaminator.
And now, it's funny because, you know, for somebody like me, I don't really have any money.
So I don't pay too much attention to all the investment stuff and whatever.
But, you know, watch the financial channels that much or that kind of thing.
But I do, from time to time, I pick up on the fact that they're always coming up with new formulas to define their statistics.
And it's always in a way, and obviously so, unabashedly so, in a way to disguise the pain of regular people.
So when it comes to the inflation rate, they say, oh, well, if you had to switch from, you know, sliced roast beef to bologna, then that doesn't, because the price of roast beef went up so high, then that doesn't mean that there's been any inflation there because you still have bologna to eat.
So we can count that, you know, you might have counted a point up, but we get to count that point back off again as long as you have bologna.
And I know that they do the same thing with all of the rates.
And yet what's funny to me, I swear I'm going somewhere with this.
What's funny to me is this, the way I look at it, we're already living in the future here in 2014.
So they must have redefined the unemployment rate so many times now, structural this and whatever kind of jargon that, where it doesn't even mean a thing compared to the real reality of who's actually needing work and who's able to get it.
Am I right about that?
Yes, but you know, I want to, first of all, defend the career people that work for the Bureau of Labor Statistics.
They do a good job compiling the data, but it is our Congress that dictates how the data are presented.
So you can, if somebody is interested in looking through the tables that are generated each month by the Bureau of Labor Statistics, you can capture the smoke that's perpetrated by the media and the politicians and figure out exactly what happened in any particular month.
All right, but now wait, let me ask you this.
Are you swimming right now?
No, I'm not.
Okay, because you sound like you're in the deep end of a pool.
Well, we have to thank, what is it, Tim Cook now with Apple.
I'm on my iPhone 5.
All right, well, you sound better now, so please go ahead.
Okay, well, let's talk about that headline number everybody hears at the beginning of each, on the first Friday of every month.
That number gets presented by the media and the politicians as being the number of jobs that were added every month.
But in reality, that number, that headline number, actually reflects the difference between what happened and what they thought was going to happen.
It's not the number of jobs that have been added or lost in a particular month.
It's basically the variance.
And I'll give you an example.
If you recall, January, they said we added, I think it was about 133,000 jobs in January.
For Scott, we lost over 2,800,000 jobs in January, about 113,000.
Is it really as simple as that, the way they lie?
They just neglect to mention how many were lost, and they only just talk the gross incoming, and that's it.
They just never tell you the net job numbers?
Well, it's the reporters that don't tell you.
The data is, are clearly in the report.
I mean, if you want to sit there and look at the report, you can see what actually took place.
Now, I will tell you, there's months though, like February, where what gets reported, in the case of February, we were told that it was 175,000 jobs added.
But in February, we actually added 750,000 jobs.
But the 175,000 was that many more than the 500 and roughly 1,000 they thought we were going to add.
But I can tell you for the year, we're still down, I think it's 2,082,000 jobs for the two months ended February 28th.
We were behind the rate of job creation, if you can call a negative number a creation of a job, we're down about 14% on the year.
Now, the real problem that I saw in the February report is that the 750,000 jobs we added in the month of February, 300,000, or 40% were private sector jobs, meaning 60% were public government jobs.
So now let's take a look at the 300,000 private sector jobs we added in February.
Everybody got all excited.
They thought that was a big number, good number, 175,000.
The real number was 300, but it wasn't a good number because that represented a 46% decline in private sector hiring February 2014 versus February 2013.
And if you look at the private sector hiring year to date, we're down substantially, 13.5% year to date, two months ended February 28th.
If you look at the last three months, we lost a quarter of a million jobs roughly in December.
We lost 2,800,000 in January, and then we added 750,000 back in February.
So Scott, we're still down over 2,100,000 jobs, since December 1st.
And I think any way you slice it, that is not a good number.
Now, the other thing too is the media represents a figure called the U3, and they act like that is the unemployment rate.
And for the month of February, they're telling us that we have a 6.7% quote, unquote, unemployment rate, but that 6.7% really represents only the short-term unemployment.
Now, to be counted in that number, you have to meet three conditions.
First of all, you have to have a job to begin with.
Then you have to lose the job, and you have to lose it within the last 26 weeks.
And then you have to go out on a job interview in the last four weeks.
So if you're a kid graduating from college, if you don't have a job yet, you're not counted in that 6.7% number.
If you lost your job 27 weeks ago, you're not counted in that 6.7% number.
If you haven't been out on a job interview in the last four weeks, you're not counted there either.
And let me ask you this.
What's the excuse for that?
Because I've always heard that, and I know it's been like that for a long time.
If you go so long without being able to get a job, they stop counting you.
But it seems to me the only answer to why is because they don't like the number looking too high because that makes them look bad.
And they're the politicians, and so they're the ones in charge of what number's being reported.
But among economists, even Democrat economists or whoever, do they have a justification?
What is the devil's advocate position for stopping counting people who could be working except for that they can't find any work, even if that means they gave up and quit trying?
Wouldn't you assume that that's a rational decision that they made to give up because there ain't a damn job to go get?
Well, in some cases it's worse than that.
In this country, most of the job searching now is done on the internet, and that doesn't count as looking for a job.
Now in Europe, it does.
So you could even still be looking for a job, and they don't even count that.
Well, it's okay.
So what's the devil's advocate position for that?
What's their excuse for that, Alan?
Doc, in the case of the U3, it's really not designed to tell us the total number of unemployed people it's designed to tell us people that represent that group that I just mentioned.
But let me give you an example of why the U3, the media and the politicians are being fixated on that U3 number, that 6.7%.
Do you remember the 99 weeks people with people getting unemployment benefits for 99 weeks?
You realize that they continue to collect 73 weeks worth of unemployment checks longer than they were being counted as unemployed?
In other words, they got unemployment checks.
Right.
If we quit counting them in the U3, in 26 weeks, the unemployment checks are 73 weeks thereafter.
Right.
Yeah, it's almost like they assume, well, you know, if you're out of work that long, then you must lay down and starve to death, and we don't have to worry about you anymore after that.
Well, and then another reason why that U3 is not the number to be looking at is the average person in this country who is unemployed has been unemployed for a little over 37 weeks, which means the average unemployed person isn't even in that 6.7% number.
The number that the career people look at is what we call the employment ratio.
It's the percentage of the population that is currently working, and that number is steady at 58.8%.
Now, when the recession got underway, it was 63%.
When this recession supposedly ended, it was in the upper 59th percentile.
Right.
So here we are, we have a situation where, and again, that's across the entire population.
So we have 315 million people in this country times 5%, you're looking at close to 15 million fewer people working today than when the recession supposedly got underway.
Right.
And by the way, in the Bush years, that was a jobless recovery itself.
That might have been real good times if you were an investor in Countrywide for a little while or something like that.
But there are a lot of regular people who are still hurting and wondering what recovery, even in the height of that bubble.
And now we're living after the collapse of the bubble.
Of course, they say we're in a jobless recovery right now.
They say we're in a bubble right now.
If this is the good times before the next crash, then I don't know what the hell is going to happen, but it sounds like it's probably going to hurt pretty bad when we get to the bottom.
Well, if you stop and think, if it was a jobless recovery, we'll talk about this on the other side of the break.
Yeah, we're stuck.
All right, there's the bumper music.
It's Alan Butler.
He's the host of Butler on Business here on the Liberty Express, and we'll be back on the other side of this here thing.
Hey, Al Scott here.
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All right, you guys.
Welcome back to the show.
I'm Scott Horton.
This is my show, The Scott Horton Show.scotthorton.org is where I keep all my stuff.
Interview archives and such like.
Okay, I'm talking with Alan Butler, host of Butler on Business, and we're talking about the real unemployment rate.
The real comparison of the numbers of those with jobs to those who could be working.
In fact, do we ever get right to that?
Does anybody ever work out exactly that ratio?
You said they, you know, you don't want to look at the one that the media people always cite.
You want to look at the, what was it?
It went from 63 to 58, the number of people who are employed.
You know how that compares to how many people are able and willing to work if they had a chance?
The 58-8 is called the employment ratio.
That number looks at the total population of the United States.
And the reason they, the career people look at that, 58.8% of the people in this country currently are working, which means 41.2% of the people are not.
The 41.2% of the population that doesn't work depends on the 58.8% of the people who do.
If you want to look at future economic activity, what powers the economy, who's generating the revenue, it's the 58.8.
Well, not even all of them because a lot of them are government employees and they're just tax parasites too.
And also all the people that work for all the firms that suck off the taxpayer, like the bankers and the military industrial complex and the, and hell, the food companies that service the government and all those kinds of people who really only exist on, you know, political dollars, not market ones.
Well, and that's why the February results where 60% of the jobs that were added were government jobs, 40% were private sector.
And that was a plunge of 46% compared to a year earlier.
So, you know, they're not really- Is there ever a number where they say out of the entire population, the American people, here are the number of able-bodied people who would be working if they could?
Because I know they exclude everybody out as many ways as they can, it seems like.
Prior, from the inception of the Department of Labor, back in the late 1800s, the original definition of being unemployed was not working, but would work if work were available.
And you would agree with that is a good definition, right?
Yeah, absolutely.
That's my question.
What's that total number compared to, you say it's, you know, the number of people working out of the entire population is about 63% at the height of a bush bubble, for example, and it's about 58% now.
Well, what's the total number if we had real full employment in terms of everybody who's really looking for work?
You mean, if we go back to the- How many do we have unemployed right now?
Using the classical definition, original definition, not working, but would work if work were available, right at 24%.
Roughly one in four people are out of a job right now who would work if they could find a job.
Right.
So that means we're not counting your grandma, we're not talking about your little cousin, and we're not talking about quadriplegics, and we're not talking about people who are legitimately, structurally unemployed.
We are talking about people who would be working, except that the Democrats and Republicans are at war against this economy, apparently.
Yeah, and that number would be 24%.
Now, interestingly, they changed the definition from the one you and I both agree is the one that sounds reasonable, not working, but would work if work were available, to this current definition during the FDR years and the Great Recession.
And in that case, they did change it to define away a bunch of unemployed people to make the numbers look better.
During the Clinton years, we have a statistic, we have a U3, which I told you was 26 weeks.
The U6 goes out to 365 days.
Well, during the Clinton years, they redefined the discouraged workers out of the U6, and so Clinton, with a stroke of a pen, defined away 5 million unemployed people.
So there are times when the politicians are who make these decisions, their career people calculate, you know, they compile the data, they do a good job of compiling the data.
But, you know, when they're told by the Congress, you will report this data this way, they salute and present the data the way they're told to present it.
But you can look through the tables to find the real data.
You mentioned the inflation rate.
You know, right now, we're in a period where we're being told by the media, by the central bankers, and by the politicians that we have one and a half percent inflation.
Right.
Yeah, that was going to be my next question.
Well, here's an interesting thing.
If you look at the last five years, where we've supposedly had one and a half percent inflation, in aggregate, we've had about nine percent, accumulatively, over these last five years.
But if you look at the index that they use for tallying food stamp benefits on a pro-recipient basis during this period, where in aggregate, we've had nine percent inflation, the core things that you and I have to buy to live on have gone up 35 percent.
And that's actually a more representative inflation rate.
That's slightly under seven percent over the five-year period.
So there are ways to get to the real numbers, even looking at the government reports.
And in this case, the food stamp inflation index is a great place to see what's really going on with the inflation rate.
Yeah, that makes a lot of sense.
Well, hey, anybody who has to eat food or drive their truck to the grocery store to get food knows that the value of the dollar has been declining lately.
I mean, it's absolutely ridiculous.
And I don't know what the numbers are, but I know they're lying when they tell me the number is one point something, anything.
And I know that everybody knows better than that, because you don't have to be an economist or political at all to know that you're telling me it costs how much for this package of bread or meat or eggs or milk or whatever staple you name, wheat product or whatever it is.
Are you kidding me?
Yeah, I went and got this small couple of bags worth of stuff cost three hundred dollars.
What?
You know, everybody's living that way right now.
And even on TV, they admit it and they'll admit that, well, cheese is kind of a mystery because officially the numbers are still only one point something I heard.
You know, that's the way they report it.
Now, we're not sure what's causing you so much pain, but our government assures us that you must be imagining it.
Except there is a way to get to the data.
And if you look at how they're adjusting the food stamps.
While they're telling us one and a half percent, they're bumping up food stamp benefits by seven percent because they recognize that's what food costs are doing.
Right.
But, you know, I will say again on the inflation numbers, it's also the Bureau of Labor Statistics.
They go out and price check 80,000 goods every month.
And you cannot argue with their data.
The problem is when they generate these indices and the politicians tell the career people, you will report this number this way.
They report it that way.
But you can get to the data by looking at what they compile.
Well, and isn't it a big deal that you would have that much inflation in a time where there's, you know, during the Bush years, there were such bad.
I mean, they write trillions of dollars worth of bad bets and bad investments still had to be liquidated and deflated out of the economy.
That many different people who were involved in taking out loans on a regular basis as part of the operations of their business went bankrupt, quit doing so that, you know, multiplication factor, the fractional reserve ratio, you know, kind of petered out and to a great degree to a worldwide degree, right?
I've seen the pictures of the sea of ghost shipping ships off the coast of Singapore, you know, like hundreds of massive container ships that are just sitting there with nothing to do.
Massive global deflation because of the height of the bubble had to had to be popped.
And yet still you're telling me it's more like 7% inflation a year, price inflation a year just because of the amount of new money that they've created.
Even with all that deflationary pressure, the amount of money that they've created in order to try to fill up those holes from all those bad bets and at least make the bank's hole at the rest of our expense that they've been able to still inflate that much.
And that's before the banks have loaned out all the money that the Fed gave them and that they're keeping on balance at the Federal Reserve now.
We're already at 7% price inflation on the shelves is what you're telling me.
Yes, and that is a government number.
Now, it's not a well-publicized government number, but it is in those reports that are generated every month.
It's just that our media and our politicians used to ignore those points.
And it goes back to the conversation you and Charles and I had about Victoria Nuland yesterday.
The state is in their hands when they tell us that we have 6% unemployment and the numbers are, you know, five, six times that.
But it's likewise with the inflation report.
I mean, nothing to 7%.
I mean, you can buy that one, can't you?
You would agree that the way they're tallying up for people buying food that we've had 7% inflation?
It sure seems like it in a lot of ways anyway.
Well, and you know, in the Bush years, there were some prices that stayed pretty flat.
Fuel and food and housing had bubbles in them and had a lot of upward pressure in them.
But there were other prices that didn't really go up.
It doesn't seem to me like it's real.
I mean, gas has been three, three and a half, almost four bucks kind of varying in there for years and years now.
It doesn't seem like there's been that much upward pressure in fuel prices lately, at least here in Texas.
But I don't know how that is, you know, everywhere else.
But then again, it doesn't have to be outright.
The inflation is the creation of the new bank credit and the new currency by the state.
The effect in certain sectors or all of them is dependent on a lot of other factors other than just the creation of new money, right?
All kinds of different government policies and wishes of the marketplace and all of that take, you know, have effect too.
So, you know, we certainly have huge price inflation in housing there for a while ending in 08.
And I guess, you know, it looks like we kind of have that again now, right?
A new housing bubble?
Yeah, they're calling this one the echo bubble.
But before we leave, the one thing I like to do is track that 1964 quarter.
In 1964 and earlier, we had 90% silver coin.
Right.
You could buy a gallon of gasoline in 1964 for a quarter.
You'd still buy a gallon of gasoline today with a 1964 quarter.
God, it's been a pleasure, but I got to send a show from Austin to Chicago.
So I'll let you go.
Thanks, Alan.
Appreciate it.
Bye.
All right, everybody.
That's Alan Butler.
Butler on business here on Liberty Express tomorrow morning.
And I forgot what time.
Anyway, see y'all tomorrow.
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