Well, I’m glad they ended it, but, the delusional world these people live in only seems to underscore the need to entirely revamp the way we go about our national banking.
The Federal Reserve’s policy-setting body announced Wednesday it will phase out its long-running bond-buying program this month, as expected. The central bank also said it will continue to try to stimulate the economy by keeping interest rates low for a “considerable time” as it credits its historic intervention with substantially improving the labor market. ….
…. In concluding QE, the committee noted “substantial improvement in the outlook for the labor market since the inception of its currency asset purchase program” and “continues to see sufficient underlying strength in the broader economy.”
Three rounds of bond purchases approved in the wake of the 2008 financial crisis — the last initiated in September 2012 — helped expand the Fed’s balance sheet to historic highs of more than $4.4 trillion.
Earlier this year, it began tapering the monthly purchases as the unemployment rate declined and inflation remained tame. With this latest two-day policy meeting, the FOMC said it will conclude purchases of longer-term Treasury and mortgage-backed securities in October with a final round of $15 billion.
Despite the volatility and global growth worries, the committee reinforced its expected timeline of increasing interest rates in the middle of next year. Since the FOMC’s September meeting, the Bureau of Labor Statistics reported that the economy created 248,000 jobs last month and that unemployment registered less than 6% for the first time since July 2008.
On the economy, the committee assessed, as it did following its last meeting, that “economic activity is expanding at a moderate pace.” It also said that “a range of labor market indicators suggests that underutilized of labor resources is gradually diminishing.”….
Despite lower energy prices, the Fed statement also said “inflation running persistently below 2% has diminished somewhat since early this year.”
The Fed would like to see inflation climb higher toward its 2% target rate, preferably pushed higher by rising wages. That hasn’t happened so far. …..
In recent months, any dissent has usually been provided by inflation hawks such as Dallas Fed President Richard Fisher or Philadelphia Fed President Charles Plosser, both of whom believe the Fed’s long-running stimulus programs will eventually lead to runaway inflation and/or dangerous asset bubbles.
Yellen, a dove who leads the Fed’s dove majority, has said the Fed won’t raise interest rates until the Fed meets its dual mandate of full employment and price stability. The Fed has defined that dual mandate as an unemployment range of 5.2%-5.6% and an inflation range of 1.7% and 2%.
In short, the Fed’s October statement sounded a whole lot like the September statement. Policy makers once again stated emphatically that future policy shifts – ie., a rate hike – will depend on the progress of economic data. If the data is good, rates will move higher accordingly. If the data falls off again, the Fed will readjust accordingly.
Wow, there’s so much stupidity in all of this, one hardly knows where to begin!!!!
First, let’s look at our “labor resources gradually diminishing”. According to the BLS we had 62.2% of our employable population employed in 2008. It stands at 59%, and has for the last 4 months. Perhaps even more importantly, in 2008 we had 66% of the population engaged in the labor force (people looking for jobs, recently unemployed and still looking for jobs, along with the people who actually had jobs). Today it stands at 62.7% and continues to drop. Here’s what’s been going on since Sept 2013 ….
Again, it is 3.3% less than it was in 2008 and hasn’t done anything but steadily decrease. But, somehow, the Fed believes our “labor resources [are] gradually diminishing”????? WTF? What world are they living in?
Yes, we have a 5.9% unemployment rate, today, just 0.1% above what it was in 2008. But, if our participation rate had remained the same as it was in 2008, we’d have 8.2 million more unemployed people today. As it is, there’s no room for them to even participate, so they don’t get counted as unemployed but participating. But, the fact of the matter is, in 2008 we had 79.5 million people “not in the labor force”, but, today, we have nearly 92.6 million people not in the labor force.
But, this brings us to the laughable notion of full employment being able to be defined as “5.6%”. In 2008 people were screaming about the unemployment rate of 5.8%, and that was when we had a 66% participation rate. Full employment means that everyone has a job who wants a job. It’s facile, sophist, and idiocy to suggest full employment today could be achieved with a 5.6% unemployment rate. Even in a decent economy 5.6% unemployment is no where near “full employment”. But, that’s the whole notion behind “full employment” —- that we have a healthy economy. In a healthy economy, 5.6% unemployment would be tolerable, but, not great for job seekers.
Now, this is simple stuff. Any person with an operating synapse can understand our current 5.9% unemployment rate is nowhere near full employment. And, the Feds have to know this because of the aforementioned lack of wage increases. At full employment, wages grow and significantly so, which as a by-product, causes inflation. We can determine if it is healthy or not by seeing if the wages are increasing beyond the inflation rate or not. If they don’t, we know it sucks, if it does, we know this is healthy.
Also mentioned what “lower energy prices” ……. that’s more bull$hit! Yes, recently gasoline and oil prices have decreased. But, those are only parts of the total which make up our “energy prices”. Anyone notice a decrease in your electricity rates? No? How about the rates from your natural gas company? No? Weird!!! For the people heating with propane, please let us know how cheap your propane is come January. But even with our gasoline prices, they’re trying to convince the people that $3/gallon is cheap!
But, consider all of this. The Feds know our wages haven’t increased. But, they’re still working towards a 2% inflation rate. They’re trying to define “full employment” as about 5.4% unemployment, when in reality 5% unemployment in a stable economy is essentially stagnation. It wouldn’t really suck too bad, but, it wouldn’t be great, either.
I’m glad they’re removing a manipulating force which skews the metrics, but, they’re doing it for all the wrong reasons. Worse, they have to know all of this. Essentially what these people are telling the American citizens is that they are not working for you, they’re working against you. The wish for they’re aiming for 12.5 million chronically unemployed Americans — given today’s current population, they want wages so depressed they won’t keep up with inflation, and the sheeple believing the exorbitant energy prices are cheap.
A special thanks to Fox news for helping propagate this propaganda.