I believe this is off to some degree.  It is important to extend the malinvestment to malproduction and malconsumption, which is a bubble economy.  As of now, you have an economy built on consumer debt, which has it caused to be restructured long. To throw stimulus at it, the end result is unsustainable economic growth.

Schiff is doing a partisan spin, that someone would end up believing somehow if there was no government, then things would be awesome.   Being hired at sub-minimum wage, isn't going to get someone a higher paying job.  I know, for example, one person who hit the wall working as a stock clerk salary wise, because that is what is budgeted for his position.  Corporate wouldn't allow him to get paid more.  

Job creation ONLY happens if a business believes it will have increased business and ONLY if there is no other way to address the need for new business.  What is going on is there is a lack of confidence that business is going to grow, and business is looking for any possible way to meet new business coming in, without hiring.  The trend has been for years now to get "lean and mean" and get rid of workers whenever you can, so you keep costs down, and increase productivity.  You also also having trends like Blockbusters going out of business and replace with Red Box type vending machines, and Netflix.

Also, he is the story on Schiff's fined for hiring wrong, in regards to it being the government doing it (a private regulatory organization fined him, FINRA):

http://mediamatters.org/research/201109210002

Fined in 2010 for what happened in 2008.

http://www.finra.org/AboutFINRA/

http://en.wikipedia.org/wiki/Financial_Industry_Regulatory_Authority

This is a watchdog, funded by the industry itself, to police itself.  And Schiff is upset at them:

http://www.nypost.com/p/news/business/watchdog_bites_t7JaIebHyj2BtXs4Kpj33I

If you watch both parts of the video series (its about 20+ minutes), Peter does get into mal-consumption and mal-production. I've been a big fan of him since his 1hr synopsis on why the housing market collapsed.

Peter isn't perfect, by far, but I do think he contributes a lot of sound arguments to the equasion. In his later arguments at the hearing, he talks a lot about how capital markets are very weak because interest rates are low, which ensures that there is far more desire to borrow cheap money than there is to lend it, which hurts businesses from taking out loans to create growth where possible. I agree our economy is built on consumer debt, but why have we had access to such cheap and readily available credit? Is it just the lenders fault? Just the government? Just the borrower? Or maybe it is an unholy alliance between all three contributing to the demise - of which, government must take the first step in pulling out of controlling the economy so much, forcing businesses and borrowers into more sane planning.

As for the Netflix-Redbox-Blockbuster analogy: Such changes in market dynamics have gone on for ages. Yes, part of it revolves around less workers, therefore more profit. But lets consider the other aspects, too: The reason Netflix/Redbox do so well is that they provide an arguably superior product (movies delivered to your door, TV or rent-at-any-store) for less investment. Blockbuster is dying because they were charging $3/day for the latest movies while Redbox was charging $1. What that means to the consumer is that they can allocate their capital to other purchases which will fund jobs in other markets. That is why increased productivity is a net benefit: costs to purchase an item go down, and the consumer can spend elsewhere, creating new demand.

I woud argue that a complex tax code is inherently open to abuse and sets up for what you'd call mal-consuption and mal-production.

For example the German tax code leading to the movies of Uwe Bole because tax law benefits those who lose money.

Or the sales of companys that have aquired losses to get a tax benefit, rather then if there was no tax benefit, those who had high amounts of shares would be much more in a hurry to push things along.

Just as a side note ...

As I mentioned earlier, since 1980 100% of net job creation can be attributed to businesses that are less than 5 years old. If you dig further into these numbers, the vast majority of these jobs are created by entrepreneurial start-ups that demonstrate explosive growth. With how risky they are they can't raise money from a bank, with how small they're they have difficulty raising money through an IPO, and they are not well connected or politically important so they can't raise money from the government; and (therefore) they require venture capitalists to survive/thrive.

Being that large corporations tend to grow through M&A and not organic growth and therefore don't create jobs, the questions people should be asking themselves is "how do we create an environment where the next twitter/facebook/youtube/netflix will be created?" and not "how do we save bank of America/GM/Blockbuster?"

2) Last I checked 105,000$ was still quite off the one million mark targeted right now...

3) Not every investment creates jobs. The number one investment favored by rich people is hedge funds and those do a lot of things that have nothing to do with jobs creation ( betting against Greece defaulting, against oil futures, the mortgage market collapsing or shorting stocks...). As of 1 year ago there was 1.3 trillion $ under management by hedge funds and that number keep raising...

I can agree with that and guess what, very few of those business were started by millionaires, they were however as you demonstrate it, funded by venture capitalists...

The thing about these entrepreneurial start-ups is they are crap shoots, and no one can predict which can make it.  It is a case of a lot of little dice being rolled over and over and some rise to the top.  Because they go all over the place, they find opportunities and are nimble enough to capitalize on them.  In short, it is drunkard's walks that exposes natural market needs.  This fits into the spontaneous order camp, typically of what the likes of Hayek and other speak of, that this method is best to find what is optimal, as opposed to central planning at top.

One can ask, as you did, how does one find these next start ups?  I would say that several things would help:

* Stable set of rules, where individuals going in can have a set of confidence that their plans can get executed.

* Reducing the downside of failing, so that individuals can pick up and start again.  If the end result of failing is you end up homeless and face the chances of dying if a major medical crisis happens, and you can't cover it, or other things like death in a high crime area, or inability to eat properly, or homeless, then people are less likely to take chances.  There is a presumption that entrepreneurs value freedom over security.  However, if you do have a family and others depending on you, to not place a steady income first, can get in the way.  Also, you have corporate environments which will shut down individuals who want to start new projects by requiring their approval, and then claiming 100% ownership to anything the person comes up with.  Then, throw in a place where the corporation also downsizes at a drop of a hat, and individuals would be less likely to pursue a flicker of being entrepreneurial.

* Increasing the chances of success, by providing the right access to expertise and support so someone can carry out what they are good at and navigate the rest.  Part of this is a positive culture that also supports entrepreneurship.  

* Access to needed resources to carry out a properly created business plan.  Being cut off from funding can get in the way of this happening.  Also, if there is a lack of supply chains to get someone what they need, then that won't happen.  For example, no way does someone launch a fusion reactor energy supply system, because the technology doesn't exist.

* Eliminating monopolistic government regulations meant to prop up established businesses, rather than encourage new people from entering into the marketplace and competing.  Regulations can be barriers to entry.  Of course, society passes some of these barriers to keep out individuals from doing things that would be harmful to people, like having health inspectors to shut down businesses that make people sick.  But large corporations, and other powerful can get regulations passed meant primarily to shut out competition.

Entrepreneurs will be entrepreneurs.  Once you get bitten by the bug, you end up still hovering around it.  There is a question whether or not the conditions of society will end up with individuals who have such drive getting killed off in the end or not.  

And looking at the bolded part.  IF you have a situation where consumers were overextended with debt, and they then acquire more money for lower costs, then you won't create new demand.  The end result, when the bills come do, and people fear for their lives that they could be out of work, you have what is going on now.  What is going on now is that growth is very weak, and will remain such.  It is likely this lower levels of demand will be sustained.  It gets down to a lower level, and savings increase.  The problem is then, there is a lack of demand to create new opportunities.  And if banks decide to restock and not lend, you don't even get new ventures launched at all, so consumers can't even see what else they would demand.  There ends up also being a level of despecialization happening, which also impacts things.  The American consumer, for example, decides to simplify and and get less things.  Things unwind.  And in all this, while this is going on, no one is sure what the heck the future holds, which causes even more contraction.

In this, thrift will go up, and you end up having a reshifting of values in society.   I would say that it would be worth studying the values of people who lived through the Great Depression ended up living and what they thought, because that is what one would expect to see out of Americans, and the rest of the world going this place forward.  Seeing people out of work for years, and knowing them, and knowing they are capable, does make one feel they need to stop spending in foolish ways, and figuring out how to pinch pennies.  Pinching pennies now is a trend seen in advertising today.

I agree. That is why its generally a good idea to save money, be thrifty, then spend money wisely. Although you have lower demand, the reality is that the jobs that are created are generally high-value jobs. In our consumerist society, jobs are generally plentiful for lower skilled labor: retail, fast-food, and the like.

My grandma and grandpa lived through the Great Depression, and since I've got older, I've talked to her extensively about it. It really impacted their values and how they managed their money - use it up, wear it out, make do, or do without. They turned off lights every time they left a room, only purchased new clothes when they absolutely needed them, and bought cars only when the last one died. Their family was one-income, and despite that (he worked as a general laborer at a power plant for ~30 years), they retired with approximately $1 million USD in assets.

Thinking about that and the massive growth of wealth and the middle class after WW2 and the depression, it makes a lot of sense. People came out of the Depression with the idea that they must conserve, so they did. When they conserved, they kept their assets, had little use of credit, and therefore kept their monies. Since that generation has passed away, values shifted to rampant consumerism, and now compound interest is wrecking peoples' lives, because they are transfering their wealth to those that loaned them the money. We've seen this through the savings rate plummeting since the 1970's, and eventually collapsed at the same time the housing bubble burst.

I'd imagine that going back to such a society would be difficult, but is needed. My opinion is that (as an American) that other Western societies are far more responsible with their credit, which ensures that the lower and middle class aren't transfering their wealth to the upper class. I know in my own life, I've focused on having as little debt as possible, and its made me pretty wealthy pretty quickly.

How many venture capitalists aren't millionaires?