LS starts with point one which is a common falacy that there are trillions of dollars of uncounted wealth in the form of public company assets not on their balance sheets (because of proprietary rights and created technology) that does not wind up as an asset book entry.
Now that's wrong. Here's why. To some degree, some of this kind of stuff is on balance sheets because the corporate entity that owned some of it was sold to another corporate entity and under purchase money accounting, was required to book the purchase price as "goodwill" to the extent they really paid for something other than hard assets. Most of this has now long since been written off because in fact it does not have value even equal to what was paid for it and analysts don't assign any value to it whether or not it is on the books.
Reason why double entry accounting analysis is so helpful is because we report assets and earning capacity in the form of numbers, reflecting in units of the fiat money system (dollars) what the historical data is--here, what LS is arguing is that numbers that were expensed in earlier periods to create these rights should have been capitalized and that there is a further profit element that will at some point be turned into a bookable return. Problem is that none of these enterprises can get anything for any of this: They can't get it into a retail price (in fact, for the most part, they can't charge a high enough retail price to cover real hard costs that are in fact on their balance sheet and P&L); they can't sell it for anything; no bank will loan against it. Problem LS is that there is no evidence of any nature anyone can see that it exists and since there is lots of evidence it does not exist, I tend to view it as fiction.
The IRS position is a little different. These enterprises hire people like me to tell them what the black and white letters of the law tell them to do about reporting their income and expenses and tax liability; we do that; the IRS then says well we don't like the result because you are not complying with the spirit of this black and white; we say well it is a black and white system, if you don't like it, you have more influence with Congress than we do, you fix it. Most of the time we win this argument. The IRS analysis is directed to a different issue having no relevance here and generally wrong.
The stuff about small business has some merit--but not as an investment proposition. Anyone who can figure out how to get down to the dirt level and create an enterprise that makes a product people want or provides a service they will pay for, ought to do that--mostly, the people who are doing that are not buying new Lexius's and $50000 SUV's (some are); as you suggest, many get paid in cash and don't pay tax; so their costs and returns are different. So maybe the GDP numbers were understated because of these enterprises--but when their customer base runs out of cash and credit to pay them, they too are out of business--and their business is presently shrinking just like everyone elses'--because the economy is in fact in really bad shape.
Understanding the money is an important problem--there is in fact way too much money supply in the system. In our fiat money system, the money is just credits, much created initially as "loans"--debits (or debt) on the books of the lender. The essential problem of the moment is that as Doug Noland is attempting to point out, there is no theory about future economic activity in which enough future money assets are created or realized to pay those debts. We have now reached and passed the point, where existing debts can be serviced out of historically reasonable income levels. That is why the default rates on every kind of debt are up sharply. You are right--there is not enough money supply in the hands of debtors; but that is because they are overobligated with respect to their commitments--the fed could solve that problem by running the printing press and handing debtors cash to pay debts; but when it does that is when it destroys the dollar as a monetary unit--risk of that is why gold is going up.
The airlines are not in the dump because of 9/11; they are in the dump because they don't provide a service that has value in the current market equal to what they charge for it. Their business plan didn't work for a long time before 9/11; does not work now; and isn't going to work in the future either. Fundamentally, takeoff is the most expensive part of any aircraft operations; landing is the second most expensive; moving bags from one airplane to another is almost as expensive as both combined; and the business plan makes you do this twice for every trip which adds value to the customer only once. This system won't work because competative transportaton that costs less is available (cars) and because new competitors (Southwest, Great Plains and others) that only do the work once are coming into the market.
Gold is an artifical market. Probably in a free market setting, the price would be somewhere between $550 and $850. But it is a very narrow thin market. And at some point in the early 1980's, monetary authorities decided to eliminate the monetary role of gold and significant financial power was employed to sell borrowed and paper gold to get rid of all the buyers and force the price down to the $250 range. That has proved an unsustainable level--as George Soros has regularly pointed out, market interventions of this character seldom are effective over the long term. But, gold prices do not provide much evidence of true price levels for that reason.
The rest of this stuff is an ad hominum argument that the problems are overstated. Numbers in fact suggest that the Midwest economy based on the auto industry and its suppliers is doing better than the rest of the country. The North American auto industry in this period will provide doctoral thesis material for generations of economics students. The continuing manufacture of cars by Ford and GM at a loss because the loss is a lower loss than closing the plants is a classic unsustainable economic series--and it affects the entire market--look at the buildup of inventory of lease return cars in the hands of financing institutions and their affiliates at lease return prices that are well in excess of market. What do you think will happen to all of these suppliers when this comes to an end? In your particular case, the end is likely to be worse that the worst case Papulva-Noland sceanero. In my view, the end is likely to be that both Ford and GM (as well as Delco and all these currently continuing suppliers) are no longer in business.
Papulva's language is a little overstated--he views it as justified in an environment where the cliff is just ahead and no one seems to recognize it. Reason the perception understates the future reality is because you are right, we have not yet gone over the cliff--but we are about to.
Second, the criticism of the microbusinesses is that we don't have any evidence that microbusinesses are collapsing; and quite a bit (yes, often anectdotal) that they are not. One of the main strenghts of these businesses is that they resist capture by government statistics . . . deliberately.
Third, there ARE studies out there from the late 1980s to the mid-1990s on corporate valuations. I suggest you check almost any issue of the American Economic Review---hardly a "conspiracy" journal. There are numerous papers supporting the position that American corporations were undervalued, everything from stock valuation studies to asset undervaluation studies. Now, you can claim all these guys are "egghead" economists, and what do they know? But that doesn't change the fact that the studies are out there, and that overwhelmingly they are in the same direction---that U.S. corporate assets are and have been undervalued.
Fourth, the money thing is nearly unprovable. I point to real world price indicators---gold, oil, interest rates---and in almost every case someone can come up with an "artificial market" answer. But if an "artificial market" is applicable to the price of gold, then it is also applicable to the patent/monopoly rent benefits that you dismiss earlier. At any rate, Puplava has his "bubbles" that supposedly show inflation (except we just can't find any, and have no actual price data on such a thing), and I have these "artificially" affected markets. I find it interesting that I am in the position of the traditional goldbugs, who used real goods prices as superior indicators of value than estimated (often government) numbers.
Fifth, I agree to an extent on the weaknesses of the airlines. The interesting thing was that prior to 9/11, Southwest was basically flat. To an extent, though, you are arguing that in the 1920s, farming was going to collapse anyway, and thus the "Dust Bowl" only accelerated it. Maybe, maybe not. My point is that regardless of what originally caused it, the vacation/tourism/airline downturn is a HUGE drain on the economy, and that this is substantially (though again, not entirely) related to security concerns, not market forces per se.
I do take issue with your notion that the propositions "will not stand any kind of factual analysis." Quite the contrary, unlike many posters and Puplava, I constantly review and try to digest the most recent genuine economic studies available from Journal of Money Credit and Banking; American Economic Review; Quarterly Journal of Economics. Since I'm a historian, not an economist, I don't obsess about these or run regressions to check their conclusions. But I CAN detect trends in the scholarship, and it is in favor of the propositions that I have advanced here.
I agree everyone should have access to "responsive views." It is interesting that I am about the only one here to challenge Puplava, and am SAVAGED because I don't toe the "gloomster" line. And usually, I only ask for fairness in reporting: if you are going to headline bad news as bad news, fine, but what I find amazing is how willing some people are to constantly try to "spin" any good news as more bad news.
This is EXACTLY the type of approach that I encountered in debates over Y2K. I may be totally wrong here. I was totally right then.