Article Analysis: Let'S Get Fictional (Economics)

Article Analysis: Let's Get Fictional

The performance of the U.S. economy in the mid to late 1990s "grew at above-average rates driven by technological change and innovation." (Puplava, 2005) Today our economic strength is measured by our Gross Domestic Product (GDP) growth. Real GDP is "the market value of final goods and services produced in an economy, stated in the prices of a given year." (Colendar, 2004). Today, as in the 1990's the U.S. has reached a record low unemployment rate, which "is the percentage of people in the economy who are willing and able to work but who are not working." (Colendar, 2004). Included in this conundrum we see steady declines in the U.S. inflation rate. Inflation "accelerates when an economy is operating above potential, one way of estimating potential output is to estimate the rate of unemployment below which inflation has begun to accelerate in the past." (Colendar, 2004).

For many economists, optimism in the economy's strong performance was, and is today, tempered with a quizzical somewhat dismayed reservation. Jim Puplava is among the many such economist with reservations. In 2005, Puplava wrote an daily editorial piece for a online publication, Financial Sense Online, dtd March 7, 2005. Appropriately titled Let's Get Fictional begins by quoting Buddha, showing his readers where he is going, leaving no questions as to his purpose for writing.

"Delusions, errors and lies are like huge, gaudy vessels, the rafters of which are rotten and worm-eaten, and those who embark in them are fated to be shipwrecked." -Buddha

Delusions, is the "gross and false overestimation of personal worth, importance, powerfulness, or attractiveness." (Encarta World English Dictionary (North America, 2006)

Recent data and history on his side Puplava has accurately, systematically deflate the inaccurate perception the media considers news worthy, and the various "government statisticians and corporate accountants are hard fast at work creating fictional miracles." (Puplava, 2005).

Puplava instantly ties the two economic eras together,

"Like the 1990s boom, today's boom is being fueled by massive amounts of money and credit. Debt levels in the

U.S. have expanded to record levels at both the consumer

and corporate level. However, unlike the 1990s, government

debt is also accelerating. The savings rate keeps falling

and debt service payments are at levels that normally

forewarn of an impending crisis. The economy is growing

at above-average rates with consumption making up a larger

portion of the economy. The American consumer continues to

astound the experts with their ability to consume, but that consumption is being supported by larger debt extractions from

this era's new bubble in real estate." (Puplava, 2005).

There are several economic indicators used to measure our economy, Puplava writes, "It is the purpose of this WrapUp to examine these miracles and to expose their fallacies." (Puplava, 2005). I will cover one of his myths as it is something of a personal nature that continues to confound human logic. First I wonder just how high can corporate earnings ascend? Reports of Exxon setting record breaking profits in the billions seem to become common place. However the price of gas has remained steady here in Texas, roughly $2.29-$2.79 a gallon. It is a fact that humans often repeat the mistakes of their past. Today corporate scandal is staying true to the end. I am one who learns from his past, In the saga of corporate misgovernance Puplava points says it best, "Unfortunately the world hasn't changed much since the scandals of the late 1990s. The scandals at WorldCom, Enron, Global Crossing, and Adelphia Communications are all behind us." (Puplava, 2005).

In 2001 I was hired by Frontier communications, soon to be Global Crossing, Ltd. It is no surprise when I say I know first hand the harsh reality of corporate scandal, and stellar

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