This site last updated on May 13, 2016. Subscribers receive all of Dr. G's weekly economic and financial reports as soon as they are produced. Selected reports and portions of those reports are published on this website and available to non-subscribers. You may contact him by clicking this link:

Pickup in Retail Sales Points to Rebound    Today’s report on April's retail sales is encouraging. It shows sales are up at a 7% annual rate from the first quarter and 3% from a year ago. With real incomes growing, it was only a matter of time before sales also improved. Those who fail to understand the Fed's monetary policy tend to be concerned the Fed may raise interest rates. They should not be worried. Prior to the Fed's experiment with quantitative easing, an increase in interest rates could signal monetary restraint. This is no longer the case. Given recent monetary developments, an increase in interest rates is no longer a sign of a more restrictive policy. Hence, any improvement in sales and growth should be positive for both the economy and stock prices.

Excepts from Genetski's monthly report to clients on March 9th

In last month’s report, I noted how tentative signs of an upward move in gold, oil and other commodity prices could signal the beginning of a rebound in both stock prices. The recovery has continued this past month, suggesting an end to the collapse of commodity prices.

A rebound in commodity prices is important for several reasons. First, much of the cyclical erosion in profits is due to the abrupt decline in commodity prices. Second, a recovery in commodity prices suggests the global economy is no longer weakening.

Third, if the collapse in commodity prices has held down increases in current dollar spending, an increase in commodity prices should lift the pace of spending. When spending increases at a faster rate, it’s easier for companies to increase earnings.

While these signs remain tentative, they appear to be gathering momentum. So long as the momentum continues, it raises the odds of a near-term recovery in stock prices.

Dr. G's latest book translated into Chinese    Bad news out of China has led to a rough beginning for stock prices in the new year. As Chinese leaders seek solutions, they might want to look at Classical Economic Principles, which has just been translated into Chinese. If China were to adopt classical economic principles it would greatly improve their economy as well as global growth.

Yellen's Indefensible Defense of the Fed's Policies    Genetski explains why the Fed Chair Janet Yellen's defense of Fed policy is indefensible

Europe’s Problems Go Deeper than Greece   European leaders seem to believe the main problem with their area’s anemic growth is a lack of money. While monetary issues are part of Europe’s ongoing turmoil, the real problem is a fixation with the ghost of Keynes.

In the Keynesian world, monetary policy is all about manipulating interest rates to alter people’s psychology and expectations. Rather than focus on their primary role of providing liquidity, central banks focus on influencing expectations about policies by setting alternative interest rate targets.

Policies promoting private wealth creation are seldom on top of the Keynesian agenda. Europe attempts to stimulate the economy tend to focus on borrowing funds to finance government infrastructure projects. In Keynes quixotic world, borrowing half a trillion euros leads to a multiple expansion of spending decisions which kick starts the economy.

Unfortunately for Europe, the Keynesian world is not the real world. In the real world, the funds governments borrow are funds that would have been available to support the private production of goods and services. The loss of these funds to private businesses creates a multiple contraction of private spending which offsets the increase in government spending. The net effect of this massive borrowing saps the economy’s strength since government tends to spend money less productively than private businesses.

So long as Europeans operate within their Keynesian world, they will continue to experience slow growth, poor economic performance and ongoing financial crises.

Trump's Tax Plan    The Republican Presidential hopeful's tax plan is not only good economics, it's brilliant politics: Give up the votes of hedge fund millionaires in exchange for the votes of all other taxpayers.

The following analysis includes Dr. G's reconstruction of National Income Accounts to highlight the contribution of the private sector   A Classical Reconstruction of National Income Accounts

Central Bank Alchmists?   Recent economic news highlighted the ECB plan to purchase a total of 60 billion euros worth of securities each month for at least a year. Europe’s central bankers are well aware how US economic performance has improved. They believe the improvement is related to the Fed’s massive purchases of securities.

The ECB leaders are also aware the Fed made $116 billion in interest payments on its portfolio of securities and reported a profit last year of $99 billion. Buying securities is very profitable. The profit is turned over to the Treasury, reducing the federal budget deficit by $99 billion.

Have the central banks’ alchemists discovered Rumpelstiltskin’s secret? If so, economics is doomed. With alchemy, there is no scarcity. Unfortunately, drawing back the curtain makes it apparent Rumpelstiltskin’s secret is safe.

Central banks have not discovered the alchemists’ secret. A central bank’s purchases of securities do not create wealth. The purchases are not backed by the production of any goods or services. However, these purchases can facilitate the creation of wealth if there is a shortage of money, or if regulatory moves have limited the use of the available money supply.

Regulations have been a problem limiting the use of money both in the US and Europe. Once these regulations ease, the inflationary impact of these central bank purchases of securities will become progressively more apparent.

US Monetary Policy   A key factor in understanding the Fed's monetary policy since 2009 involves the behavior of excess bank reserves. One of our very knowledgeable clients had some questions regarding excess reserves and their impact on bank deposits and loans. Since monetary issues are complicated and can be confusing Dr. G's give and take to his questions might benefit others.   See Genetski's Q&A regarding Excess Reserves

Dr. Ben Carson tops another poll as Best Candidate to beat Hilary   See Genetski's article on Dr. Carson's Economic Views

Dr. G explains why Dodd-Frank reforms can cost $200 billion a year   published in Investors' Business Daily

The Legacy Project asked me to answer questions to help guide young people in their lives   Here are my answers

Dr. G explains what's so bad about a minimum wage   Dr. G's Analysis

Monetary Policy & the Financial Crisis   With the aid of recently released transcripts of Fed meetings, Genetski's analysis provides insightful details into the role monetary policy played in the worst financial collapse since the Depression Dr. G's Analysis

Genetski Again Honored As Top Speaker   Speakers Platform announced Robert Genetski has been voted one of the top 5 speakers in the fields of Economics/Finance for the fifth consecutive year.  Speakers Platform

“It's a great honor,” said Genetski.  “It raises the expectation of audiences, which is good.  It means I have to work that much harder to meet 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 Web site.

Over 12,000 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.

Why "best practices" for healthcare won't work  An ex-medical doctor offers his view on what's wrong with the healthcare law. See article

Cyprus Update March 25th:  The Cyprus solution is the first positive move to come out of the Eurozone since its formation. When banks become insolvent, equity holders, then bondholders and then depositors should be at risk for the losses. This is the way markets are designed to work. See the additional comments See also initial March 19 comments

The Impact of Freedom-to-Work Laws on Michigan's Economy   On January 28, Dr. G presented his views on Freedom-to-Work to the Economic Club of Grand Rapids. Here is the PowerPoint from the presentation.

Transcript of Dr. G's speech on Poverty, Prosperity and Economic Freedom at Trinity Christian College:  Read the transcript

Bob Genetski Is My Favorite Economist   No, this isn’t coming from either President Obama or Krugman (although he is mentioned in the article). It was written by Christopher Channer, who distributed it to his investment clients. I’m posting it here because even my Mom hasn’t said things this nice about me. Bob Genetski is my favorite economist

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

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

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 report The Fed also has an excellent explanation of how the change in excess reserves can impact bank loans and deposits. Here is that article

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 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

Classical Principles Book Front Cover

Blog the Book

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