This site last updated on May 18, 2012. Subscribers receive all of Dr. G's economic and financial reports as soon as they are produced. Selected reports are published on this website and available to non-subscribers. You may contact him by clicking this link:
Dr. G's latest stock market update to clients: Stock prices fell again this past week with most of the key indexes falling 3˝%-4˝%. The S&P 500 is down roughly 7˝% from its peak on April 2nd. Since April 13th, when I recommended moving from a fully-invested to a neutral stock position, the S&P 500 is down 5˝%. Since May 10th, when I recommended moving to a fully defensive position, the S&P 500 is down just over 4%. See the entire report
Scheduled Tax Hikes Mean 9% Decline in Workers' Take-Home Pay Massive tax hikes due on January 1 will produce a sharp drop in spending power for taxpayers. The increases have important implications for both the economy and financial markets. See the entire report
Exorcise the Keynesian Demons A full 66 years after his death (April 20, 1946), the spirit of John Maynard Keynes still possesses the minds of many of the world’s economists and national policymakers. Keynes economic icon demon instills an irrational fear—that cutting government spending will undermine economic activity, while history rationally demonstrates the opposite. Continue reading
European "Stability" Funds Promote Instability Europe is back in the news with signs pointing to Spain as the next country involved in the ongoing debt debacle. Europe’s policymakers continue to try to overcome fundamentally destructive policies with financial gimmicks.
The creation of so-called “rescue” or “stability” funds is designed to provide a means to purchase government debt and avoid a financial crisis. Such funds actually create problems rather than solve them. There is a limited supply of credit available for public and private borrowers. Shifting credit to so-called “stability” funds leaves less credit available to productive, private businesses. Europe’s economies will continue to struggle as “stability” funds further destabilize credit markets and undermine economic growth.Ryan versus Obama Budgets Both the President and House Republicans have presented budget plans that have important implications for the economy and financial markets. Here is Dr. G's analysis of each of these plans and how they are likely to impact the economy and financial markets. Budget Analysis
Federal Spending Doesn't Stimulate Growth, It Usually Depresses Growth After carefully examining the impact of federal spending from 1901 to 2011, Dr. G explains how and why it tends to depress economic activity and increase unemployment. See the complete report
Genetski Honored As Top Speaker Speakers Platform announced Dr. Robert Genetski has been voted one of the top 5 speakers in the fields of Economics/Finance for 2012. This is the third consecutive year Genetski has received the honor.
“I’m proud to receive such recognition,” said Genetski. “It raises expectations, which is good. It means I have to work harder to meet those higher expectations.” Each year, Speakers Platform recognizes five speakers with fifteen popular topic areas. Recognition of excellence in speaking is based on expertise, professionalism, client testimonials & references, presentation skills, original contribution to the field and public votes received at the Speaking.com Web site. Over 13,000 votes were cast from business leaders, educators, association members and others from around the world. Many voters effused about how much the nominees improved their personal and professional lives; a living testament to the positive impact and important work of all the candidates.
Dr. G Tells CEOs to Look for a Stronger Economy in 2012 January 15, 2012: Genetski spoke to 60 CEOs in Sarasota and 150 in Tampa telling them to expect continued gains in the year ahead. He surveyed the CEOs and found almost all reported business had improved over the past year. Only one CEO in the Tampa area indicated business was down over the past year.
Most CEOs in Tampa (fewer in Sarasota) reported significant increases in health insurance costs. Several CEOs said they expected recently passed healthcare legislation would force them either to fire a number of workers or close their businesses entirely.Dr. G tells clients ghost of Keynes prevents solution to Europe's debt problems See Dr. G's comments
How Keynesian Economic Theory Contributed to the Financial Crisis Dr. G's detailed analysis of how Keynesian economic theory contributed to the financial crisis is particularly relevant at this time. This flawed theory continues to be the basis for policy decisions, such as the President's proposed “Infrastructure Bank.” Read how following Keynes can wreak havoc on the economy
Japan's Third Opening Great tragedies can make for great opportunities. Dr. G's Nikkei column
Can a Blind Pilot Land Safely? Today's Wall Street Journal (May 23) describes a speech given by economist Robert Mundell. Mundell is one of the world's leading economists and is concerned that the end of QE2 will lead to a recession. Dr. G commnets on Mundell's views. Click to read
Health Care Suffers from Governmentitis Our health care system is broken. Prices are exorbitant. Doctors often avoid prescribing the treatment or medicine they believe is appropriate. Instead, they often defer to the one recommended or preferred by Medicare. Prescription drugs are either ridiculously cheap or horrendously expensive. Health insurance is costly and indecipherable.
The main problem with our health care system is that it has a bad case of governmentitis.... Click to read the entire article
Bank Reserves and Their Implications for Monetary Policy
A recent study by the Fed's staff regarding the behavior of excess reserves helps to explain some of the unprecedented changes that have occurred over the past year. The study clears up some of the unknowns regarding the Fed's policy and has important implications for tracking monetary policy. The Fed staff report is on target in identifying a key source of the buildup in excess reserves.
The bottom line is that I am more convinced than ever of the need to subtract excess reserves from total reserves in gauging monetary stimulus. What they have failed to address is the issue of why the Fed would allow "net reserves" to decline during a period of financial stress. Until they address this issue I have to assume those at the Fed know not what they do. Read the entire reportDr. G's critiques Krugman
Paul Krugman argues that we need a large fiscal stimulus package. Dr. G shows that these arguments are not supported by either sound economic theory or by the evidence. If fact, fiscal stimulus in the form of government spending makes the economy worse not better. Read Krugman's statements and Genetski's response.
Dr. G Provides a Classical Perspective to the Immigration Debate
In terms of the immigration issue, economics and moral principles lead to the same conclusion. The best way for the US to help our neighbors to the south is to minimize restrictions on workers coming into the US. A free market for workers provides the quickest means of helping both those in Mexico who need work and those in the US who need workers. As in all other areas where free markets operate, the end result of a free labor market would be higher living standards on both sides of the border. In the case of immigration policy, as in so many other areas, doing the right thing also provides the greatest benefits. Read the entire article. Immigration: Economic & Moral Issues
Dr. G Discusses The New World Order
In 1980, the three most powerful countries in the world were the United States, Japan and Germany. Today there is a new world order. Based on purchasing power parity estimates, the three most powerful economies are now the US, China and India. Read the entire article. A New World Order: US, China, India are 1-2-3
The Moral Case for Privatizing Social Security
The moral case for privatizing Social Security is compelling. Privatization provides the means to end poverty among the working poor. It ends poverty, not by a gift or by taking something from others, but by simply allowing people to keep what they have earned. Overtime, the buildup of assets leads to an appreciation that even the most menial job provides value and dignity to those doing the work. Once it becomes apparent that the much-maligned hamburger flipper can accumulate great wealth, both the flipper and those who disparage such work will have a greater appreciation for its value.
To view the report go to The Moral Case for Privatizing Social Security
Dr. G's Cost-Benefit Analysis of Social Security reform indicates that establishing private accounts are so powerfull that it isn't necessary to cut benefits
To view the report go to Social Security Reform: A Cost-Benefit Analysis
To view the worksheets underlying the analysis go to Social Security worksheets
