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Friday, September 18, 2015

Stinkin' Thinkin' Leads to Stinkin' Policy

I didn't see this in Janet Yellen's notes from yesterday; maybe I wasn't paying close enough attention to the sources I looked at, but Fox Business News reporter Melissa Francis this morning pointed out what I missed.  It's about the 2:45 marker in this video from today, but Yellen essentially said her "accommodative" monetary policy put people back to work and reduced income inequality.  To quote exactly, in context and all, from the Yelleninator:
“The main thing that an accommodative monetary policy does is put people back to work. Since income inequality is surely exacerbated by having a high unemployment and a weak job market, that has the most profound negative effects on the most vulnerable individual. To me, putting people back to work and seeing a strengthening of the labor market that has a disproportionately favorable effect on vulnerable portions of our population, that’s not something that increases income inequality.”
I will note in passing that in the dark ages, when I was growing up, "accommodative" was a term we used for young women of relaxed moral virtue.   We'd say, "boy howdy, Maria sure is accommodative for $5!".  Or "if you can spare a couple of bucks, Carlotta can be very accommodative".  

Getting back to the point, everything Yellen is saying is factually wrong.  They haven't put people back to work.  We have the lowest labor force participation rate since March of 1978 under President Peanut Farmer, and John Williams at Shadowstats says that if unemployment were recorded like it was in Carter's days, it would be stated closer to 23% than the reported 5.1%. 

Her income inequality statement is also wrong.  Census Bureau data shows that the median income for "all households" in the US is just $53,657 - the last time it was this low was  before 1995 according ton this chart on Business Insider.  She's not just wrong, she's completely wrong.  She's 180 degrees out of right.  On a compass, if  right was North, she'd be pointing South!  She hasn't helped reduce income inequality, the Fed's ZIRP is the biggest wealth transfer in history; in this case from savers and small businesses to the giant banks. 

None of what I'm pointing out is simply my opinion.  They're both widely reported numbers: from the US Census Bureau for the income data and from the Federal Reserve of St. Louis for the labor participation rate. 
I'm left with wondering what's up with Janet?  Is she an Obamanoid political hack?  Is she not capable of seeing the world outside, so blinded by her econometric models she can't see straight?  Is she just an addled, borderline incompetent, professorial type?   Not that these are mutually exclusive.  She could be all of these. 


5 comments:

  1. There is another explanation. I originally thought that the senior levels of government were filled with incompetence. However, I have now come to the conclusion that no one can be that wrong, that often. What I think is that this is deliberate.

    Glass-Steagle allowed banks to securitize trillions in bad bank loans and pass the risk off to institutional investors, making hundreds of trilions of dollars in profits. The institutional investors were mostly the pension funds of government employees, along with private sector 401(k) plans. To distract everyone from the real cause, the TEA party blamed government employee pensions for the mess we found ourselves in.

    Then when the system collapsed, they were declared too big to fail and given trillions in taxpayer bailout money. The corporate executives at the companies who were bailed out received large bonuses that year, if you will remember.

    The government began injecting large amounts of cash into the economy, and propping up the stock market. Several trillion dollars in stocks were purchased, pushing up the value of the market. That bubble has since burst, but the money has already been transferred.

    The banks began to foreclose on homes, and since many of them had no proof that they were actually owed any money, they and their lawyers began to produce fake and forged loan documents. The banks caught a lot of flack for that, so then the people to blame were homeowners. The banks began to say "If those deadbeats had just paid their loans like they promised, we wouldn't have to lie." The courts agreed, and began giving people's houses to the banks, despite what the laws on the books said.

    Then ZIRP came along, and the wealth was being stolen from savers and small businesses.

    The next step is to blame those very savers and small businesses.

    It is too systematic to be blundering.

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  2. It is probably also worth noting that, while Yellen is the current perpetrator, her predecessors were equally foul. Corruption is not merely a Democrat thing. Rove Republicans are fully adept at it as well.

    Reagan's biggest mistake was accepting Shrub I as his vice, and then backing him for President in 1988. Shrub I was the same sewage at the end of Reagan's term that he had been while campaigning for the nomination in 1980.

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  3. I certainly can't fault Divemedic's analysis. And it has been going on for quite a while. I think all Fed Heads are political critters, as you say, Mark. Greenspan was so detestable, he prompted the invention of new vocabularies. It has been awful since Nixon got us off the gold standard and the role of the Fed increased in size and scope.

    Maybe it can be argued that Nixon's hand was forced and he took what he thought was the least awful choice at the time, but it might well have been another one of those situations of taking the band-aid off fast vs slow. Suffer now or kick the can down the road. Ever seen a politician accept "suffer now"?

    Fed Heads are really working for the Ruling Class, as opposed to a particular party, but the ruling class isn't so much partisan as it is self-perpetuating.

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  4. Now the Fed is tasked with "fixing" income inequality?

    Don

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  5. "The banks began to foreclose on homes, and since many of them had no proof that they were actually owed any money, they and their lawyers began to produce fake and forged loan documents."

    Not true. A legal failure to be sure but those banks and investors did indeed own those mortgages. The group to be angry with are the lawyers and a few homeowners who profited at the banks/publics expense. The problem is that bundling loans to be sold as investments was legal and proper BUT many states had old and out-dated laws regarding the title to real property. This failure of the law to catch up with technology was the problem not the banks and investors.

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