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RUSH: Neil in Charlotte, North Carolina. I\u2019m glad you waited. Great to have you on the program. Hi.<\/p>\n
CALLER: Hey, Rush. You pointed out earlier that the Bureau of Labor Statistics jobs numbers and unemployment rates are derived from surveys. Well, by nature, those numbers must have a margin of error, and that\u2019s the dirty little secret. You can find the margin of errors at BLS.[gov] under the “technical footnotes” for the reports. If you scroll down, it says “reliability of estimates,” and you\u2019ll see that the nonfarm payroll numbers margin of error — hold onto your seat — is plus or minus 100,000. The footnotes say that because it could be a negative number, they cannot for certain guarantee that there is any increase unless the number is above a hundred thousand. So we got 115,000. It couldn\u2019t be 215,000 it could be 15,000. And the same goes for the unemployment number.<\/p>\n
CALLER: The margin of error for the unemployment number — here we go — could be plus-or-minus 300,000.<\/p>\n
RUSH: That\u2019s true. This is true, but it\u2019s true for every report, and it\u2019s not just for this one. It\u2019s for every report since we\u2019ve been alive. So it\u2019s part of the factor. It\u2019s an interesting thing to know, don\u2019t misunderstand. But I think with this bunch, if they\u2019re reporting 115,000, it\u2019s not that high.<\/p>\n
CALLER: Right.<\/p>\n
RUSH: They\u2019re doing whatever they have to do to move that number down — the unemployment rate down — from 8.2% to 8.1%. It\u2019s just a poll! It\u2019s like I said, they call people. They just ask, “Have you looked for work in the last four weeks?” and whatever people tell \u2019em is what they record. That\u2019s why that margin of error is so high. This is not even a rigged Drive-By poll. It\u2019s worse than that. The Bureau of Labor Statistics, he\u2019s right. The Bureau of Labor Statistics unemployment stuff is just a poll. <\/p>\n
But it\u2019s a poll that everybody has accepted by virtue of the fact that we talk about it every month as though the number is real, and then we parse it from there. Which we\u2019ve done for years. But after that, Neil, don\u2019t forget, then they “seasonally adjust.” And then they weekly revise. They tell us about the seasonal adjustments at the end of the season, but they don\u2019t tell us about the weekly revisions. Well, they do tell us about the weekly revisions. They just don\u2019t get reported. But he\u2019s right, nevertheless. <\/p>\n
The margin of error is plus-or-minus a hundred thousand. So it\u2019s possible there were only 15,000 jobs created. It\u2019s possible there were no jobs created, too. The margin of error is a hundred thousand, but who says it\u2019s a hundred thousand? They do. The margin of error could be a hundred million. Well, it\u2019s probably not that bad, but it cannot be a precise science. It just can\u2019t be. So it is there to create an impression and a mood. Neil, thanks for the call.<\/p>\n
Pete in New Orleans. Great to have you on the EIB Network. Hello.<\/p>\n
CALLER: Thank you for taking my call, Rush.<\/p>\n
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CALLER: I know you\u2019re a great, great economist and what have you. I mean, you have pretty much your pulse on a lot of what\u2019s going on in the world. But my question is this: With such a huge deficit that the United States is operating in year after year, isn\u2019t this fact draining the world of the funds that would otherwise go to, say, underdeveloped countries? By the fact that the American government is sapping all this money from these international funds…? I don\u2019t hear any mention of “struggling economies” in the world having to pay, say, high interest rates because the American government is tapping all these funds and using most of this money for its own use. <\/p>\n
RUSH: Well, now, wait, wait, wait. I\u2019m losing you here because, as I\u2019m understanding your question, let\u2019s make up a country: San Cordoba. What right does San Cordoba have to our money? What does it matter whether we\u2019re running a deficit in San Cordoba unless they\u2019re using US dollars in, and they\u2019re not. They\u2019re using Cuban pesos, which are worthless.<\/p>\n
CALLER: No, no. What I\u2019m saying is, we\u2019re going to China to borrow funds from China, and we\u2019re the biggest borrower of Chinese money. Now, if we weren\u2019t in the market borrowing this money from China, China would have to go to, say, Bangladesh or the Congo or Sudan. It could lend their money and these countries could borrow at a much lower rate.<\/p>\n
RUSH: Well, wait a second. Wait a second. We are borrowing money from the ChiComs. They\u2019re not getting money from us except interest payments as long as we make them. But we are depending on the ChiComs, and it\u2019s not… I can see where you think it would be the other way around because we end up owing them big time and if they call the loan all hell could break loose.<\/p>\n
CALLER: Right.<\/p>\n
RUSH: You\u2019re saying if we were solvent and we didn\u2019t need any money from the ChiComs, you\u2019re asking who would they then lend it to?<\/p>\n
CALLER: Well, they would probably lend to some of these underdeveloped countries who are struggling to run their governments<\/p>\n
RUSH: No.<\/p>\n
CALLER: You see what I\u2019m saying?<\/p>\n
RUSH: No.<\/p>\n
CALLER: They would let you borrow at a much cheaper rate than they\u2019re able to borrow now since the ChiComs would have this huge market in the United States to lend money to.<\/p>\n
RUSH: I don\u2019t know… Even with the circumstances that you\u2019ve said, I don\u2019t know what you\u2019re asking me.<\/p>\n
CALLER: Well, my —<\/p>\n
RUSH: Or what problem you think exists because of our debt as it relates to the ChiComs and the Third World. I guess it\u2019s the Third World I\u2019m having trouble understanding.<\/p>\n
CALLER: That\u2019s right, the Third World. Yes. What I\u2019m saying is the Third World, the world economies, are struggling right now to borrow for their own needs. Like Greece and Italy and Spain and all are probably having to pay high interest rates to the Chinese government to borrow. Because China could say, “Well, if you don\u2019t borrow, I have a huge market in the United States that is willing to borrow from me at such a rate. If you want me to lend to you, you\u2019re gonna have to beat the United States rate of interest.” And these countries are probably having trouble financing their own debts because, like I say, of all this money that the United States is using up in the world.<\/p>\n
RUSH: Well, see the problem is if we had a global currency where everybody was using the same currency and we were spending it all and borrowing from everybody else and thereby preventing everybody else from borrowing money, I could understand that. But Greece and Spain use the Euro, and they\u2019re primarily going to Germany for their financing.<\/p>\n
CALLER: They\u2019re going to China, too. I\u2019ve read where the Chinese government was looking to finance some of these deficit spenders in Europe.<\/p>\n
RUSH: Ok, so —<\/p>\n
CALLER: And my thinking is that if they do finance these debts, they gonna probably finance \u2019em at the higher rate of interest because the United States is such a big user of Chinese funds.<\/p>\n
RUSH: I\u2019m sorry. I\u2019m not able to get my arms around this. I\u2019m not sure… Why don\u2019t we try this: Why don\u2019t you tell me what you think the problem is that the United States is in? Is that what you\u2019re…?<\/p>\n
CALLER: Well —<\/p>\n
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<\/a>RUSH: Are you trying to tell me that we\u2019re in trouble for some reason?<\/p>\n