Dr. Robert Genetski is one of the nation's leading economists and financial advisors. He has spent more than 35 years promoting the use of classical economic and investment principles for sound financial decisions. With this web site you can use Dr. Genetski's economic and investment insights to help with your own financial decisions. You may contact Dr. G at rgenetski@classicalprinciples.com This site last updated on January 28, 2010: Subscribers receive all economic and financial reports as soon as they are produced. Selected reports are published on this website and available to non-subscribers.
Genetski Receives Top Speaker Award in Economics/Finance
Dr. Robert Genetski of Saugatuck, Michigan was named one of the top five speakers in economics/finance according to Speakers Platform. The distinction is the highest honor that the speaking agency awards to speakers. "It's a great honor to receive such an award," said Dr. Genetski., "I'm grateful to those who provided positive feedback. Looking ahead, the challenge will be to meet the higher expectations that go with such recognition." There were around 10-15 final nominees in each category, narrowed down from an initial list of from 50 to 300 candidates in each category. The final award is for the top 5 speakers in each category. Recognition of excellence in speaking is based on: expertise, professionalism, innovation within the topic area, client testimonials & references, presentation skills, original contribution to the field and public votes received at the Speaking.com Web site.Dr. G's Dec. 29th report on Long-term Economic Prospects
Happy New Year! Here is my annual long-term report on the economy and financial markets. As you can imagine, the policy shift away from classical principles will create problems. The challenge we face is to prepare for those problems and to recognize the impact they will have on our investments. There are a few bright spots. Among these are the likelihood that the year ahead will be another good one for stock prices and real growth. An effective investment strategy is to recognize when it's appropriate to hold certain assets and when we should avoid them. My objective, both with this report and with my regular weekly and monthly updates, will be to help you make better decisions not just to survive, but to profit from the volatile markets that lie ahead. As in past reports, this one contains quite a bit of background and historical perspective, which are important for a better understanding of my shorter pieces throughout the year. Read the entire reportEconomics of the Health Care Debate
The debate over health care represents a defining moment for our country. Congress can pass laws with the noblest of intentions. What it cannot do is repeal the laws of economics. It is the laws of economics, not those passed by Congress that will dictate the consequences of the proposed changes. click here. Many well-intentioned people believe that the proposed legislation will improve people's lives by providing better health care to more people. Not only won't this happen, the proposed changes will have the opposite effect. They will raise the cost and limit both the availability and quality of health care. In short, the proposed changes will make people worse off. Two columnists that have done an excellent job of capturing the essence of the economic issues involved in the current debate are Ann Coulter and John Stossel. Their columns are worth reading, particularly by those who might not be fully aware of how the economics surrounding this issue will play out. For Ann's column click here. For John's column click here.Dr. G answers questions on the economy and finances
This video is from an extensive interview with Dr. Genetski that was conducted this past August for Clark Consulting Click to access the interviewBank 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 reportDid Big Government Save the Economy from Depression or Create the Financial Crisis?
Before relinquishing our liberty to a growing and powerful bureaucracy it's crucial to answer a key question--did government save us from a Depression, or did it cause the financial crisis? Read the entire report
Excerpts from Dr. G's August 4th monthly report to clients
Since the Federal Reserve began operating in 1914, recessions and recoveries have almost always been associated with its policy moves. The three worse economic downturns since the establishment of the Fed occurred in 1929-33, 1937-38 and 2007-09. Prior to all three of these major recessions, the Federal Reserve made policy decisions that reduced bank reserves. In doing so, it produced a highly restrictive monetary policy.
In spite of the damaging impact of increases in government spending, a Fed policy that increases bank reserves can boost spending. Such a policy produced rapid increases in spending along with an economic recovery from 1933-37. In the current cycle, the Fed began to increase bank reserves last September. The potentially expansive effect of this move was temporarily delayed when banks kept excess reserves at the Fed instead of using them for loans or investments. Beginning in February, bank reserves increased even after allowing for the excess reserves that banks held at the Fed. Over the past five months, this increase in liquidity has contained the steep decline in business activity. Given the typical 6-9 month lead time, the Fed's policy should boost spending and initiate a cyclical recovery beginning this summer. Recent data suggest that the timing of such an upturn in spending is on schedule. Read the entire reportDr. G explains the myth of fiscal stimulus
The historical evidence regarding increases in government spending is as clear as it could possibly be. It damages the economy. Read The Myth of Fiscal Stimulus.
Dr. 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's Comments on President Obama's Inaugural Address
There are two parts of President Obama's inaugural address that provide a guide to how he's likely to deal with the current financial crisis. The first deals with his view of what caused the crisis. "Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age." In other words, greedy and irresponsible people caused the crisis. This suggests that when the economy performs well, as it did for most of the past quarter century, it's because people were not greedy and irresponsible. This, of course, is nonsense. Certain people have always had an inclination to be greedy and irresponsible. They always will. This is a character trait that is as old as man himself. To claim that an ingrained character trait explains the current crisis is to misdiagnose the problem. The second relevant part of the speech deals with the President's implied solution. "Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control -- and that a nation cannot prosper long when it favors only the prosperous." Here the President pays homage to the greatness of the free market to generate wealth and expand freedom. However, he can't even finish the sentence without noting that the market system can create chaos without the watchful eye of government (who else?). He ends the sentence by suggesting that the market only favors the wealthy. Hence, in the relatively brief economic sections of his inaugural address, the President blames the current crisis on greed, irresponsibility and free markets. His implied solutions are to regulate the market and redistribute income. None of this is new. President Obama said the same things while campaigning. However, when the President of the United States makes these statements they take on new meaning -- a meaning that bodes ill for both investors and the economy.Excepts from Dr. G's Year-End Report to Clients
The world economy is in the midst of the worst financial crisis since the 1930s. Understanding how the crisis came about and how it will end involves a clear understanding of some fundamental economic concepts. Such concepts are not widely understood. If they were, the current crisis would not have occurred. Most observers recognize the proximate cause of the financial crisis. A speculative boom in housing activity produced far more homes than people wanted. The excess supply of homes led to a collapse in housing prices. The collapse in housing prices produced large losses for those who either directly or indirectly financed the housing boom. What is not well understood is how government policies spread problems from the housing market to the rest of the economy. Central banks throughout the world and most notably the Federal Reserve played a key role in the economic collapse. Their mistakes are reminiscent of policy mistakes made during the Great Depression of the 1930s. Read the entire report Long-term Economic ProspectsObamanomics & Socialism
Sarah Palin has accused Barack Obama of being a socialist. Senator Obama has denied it. Read Dr. G's report on who is correct Obamanomics & Socialism
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 following is an excerpt from one of Dr. G's recent speeches:
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