Yves here. The William Gibson observation, “The future is already here — it’s just not very evenly distributed,” apples to America’s so-called recovery. The Fed has clearly been eager for some time to “normalize,” and has been eagerly seizing on shreds of data that confirm that stories it wants to tell, namely that its policies have been a great success and that it can now start rolling them back.
However, some experts have said that members of the central bank for the most part recognize that its QE and ZIRP experiments haven’t worked out as expected. Banks, who are suffering from a collapse in net income margins, the lifeblood of their profits, have been pressing the Fed to back out of its policy experiments and has been looking for any sign of improvement in the labor markets as an excuse to start raising rates.
Even though some readers may question Thomas Palley’s acceptance of the Fed’s claims about the strength of the economy (for instance, claims about the difficulty of finding skilled workers has to be taken with a fistful of salt, since very narrow hiring specifications are a relatively recent development), he’s correct to point out that way the Fed proposes to go about it is half baked. Using the blunt instrument of a Fed funds rate increase is likely to do more harm than good and ignores better options.
By Thomas Palley, the former Chief Economist with the US & China Economic and Security Review Commission. Prior to joining the Commission he was Director of the Open Society Institute’s Globalization Reform Project, and before that he was Assistant Director of Public Policy at the AFL-CIO. Originally published at his website.
After more than 7 years of economic recovery, the Federal Reserve is positioning itself to tighten monetary policy by raising interest rates. In light of the wobbly reaction in financial markets, an important question that must be asked is whether raising interest rates is the right tool.
It could well be that the world’s leading central bank is going about the process of tightening in the wrong way. Owing to the dollar’s preeminent standing, that could have severe global repercussions.
Just as the Fed has had to rethink how it combats recessions, so too it must rethink how it transitions from an easy monetary policy stance to a tighter stance.
A quick review
In December 2015, the U.S. Federal Reserve increased interest rates for the first time in almost a decade. This move came with the expectation of gradually raising its interest rate to a new normal of 3%. Initially, normalization aimed to lighten pressure on the monetary policy pedal, and only later would it turn to hitting the monetary policy brake.
The normalization process was contingent on the data showing continued improvement, but the U.S. economy slowed in the first half of 2016, putting it on hold. However, since May, the data have again been robust regarding job creation and wage growth. Furthermore, there are signs of asset and house price exuberance in the U.S. economy that can be destabilizing and also inflict large future losses on working families.
These recent developments have prompted the Federal Reserve to consider restarting the process.
Raising Interest Rates is the Wrong Way to Begin Normalization
The problem is not that the Federal Reserve wants to restart the normalization process, but rather that it wants to do so by raising its policy interest rate. That risks spilling the infamous monetary policy “punch bowl”.
Raising interest rates is a dangerous step in today’s integrated global economy. The Fed must calculate especially carefully given that other economies (the UK, Japan, and the European Union) are on the ropes and lowering rates.
Raising U.S. rates in such an environment threatens to cause an inflow of hot money into the United States that will appreciate the dollar’s exchange rate and further fuel US financial markets.
That, in turn, will negatively impact manufacturing via lower exports and increased imports. It will also lower investment spending by injuring manufacturing. And it would further distort financial asset prices, setting them up for a possible disorderly correction.
There is an Alternative Normalization Path
There is an alternative normalization policy path that avoids these problems.
1. The Federal Reserve should shelve plans to raise its policy interest rate. Later, if the normalization process goes well, it can put rate hikes back on the policy table.
2. The Federal Reserve should immediately stop reinvesting the income from its private sector bond holdings and should start running-off those holdings.
Having the private sector repay debt held by the Federal Reserve would drain liquidity from financial markets, thereby tamping down financial speculation and also putting incipient upward pressure on long-term interest rates, which is what policymakers desire.
3. If the Federal Reserve is concerned about house price inflation, it should impose a temporary reserve requirement on new mortgages.
That would make new mortgages more expensive, given that banks would pass on the cost of the reserve requirement to borrowers, thereby cooling house price inflation.
Most importantly, this well-targeted measure would not affect interest rates in the rest of the U.S. economy, thereby avoiding causing hot money inflows and collateral damage on manufacturing and investment.
4. If the Federal Reserve is concerned about a stock market bubble and related impacts on consumption spending, it should raise margin requirements.
Margin borrowing for stock purchases is at near-record levels. Even a symbolic increase would put speculators on notice and discourage borrowing. Such a move would also rehabilitate an important anti-speculation policy tool that has been allowed to fall into disuse.
Rethinking Monetary Policy in Normal Times
Chairwoman Yellen’s recent Jackson Hole conference speech was titled “The Federal Reserve’s Monetary Policy Toolkit: Past, Present, and Future”. She argued that the policy tools developed in the economic crisis to promote recovery need to be retained for possible future deployment. Those tools include interest on excess reserves (IOER), large scale asset purchases, and explicit forward guidance.
Whereas the Federal Reserve has radically rethought how to combat recessions, its policy framework for normal times is less changed and remains focused on interest rates. For instance, both IOER and forward guidance concern interest rate policy.
This lack of change means the Federal Reserve risks spilling the punch bowl. The above alternative program shows how that can be avoided.
Instead of immediately raising interest rates, the Federal Reserve should use the current transition as an opportunity to introduce quantitative policy tools such as margin requirements and adjustable discretionary reserve requirements on problematic asset classes. Doing so can allow it to drain the punch bowl without spilling the punch.
Unfortunately, the Fed is far behind the curve. It has directed all of its efforts to preparing the market for higher interest rates, when it should have first been preparing the market for these type of targeted measures. However, better late than never.
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Under normal circumstances, raising rates would depress the economy, and since the economy isn’t really all that good unless you’re so rich you don’t need to care how the economy is doing, now is not the time to raise rates. Except sooner or later, even if nothing changes, the Fed is going to raise rates. Why? Because it hasn’t in a long time, and any number of its board members “know” that that just can’t be right.
But here’s the thing. Since lowering rates so deeply for such a long time didn’t have the effect they expected, wouldn’t it also be reasonable to expect that raising them also would not have the generally anticipated effect? Could it be that it simply wouldn’t matter a whit if the Fed raised rates (modestly) now?
I was about to make this same comment. Instead I’ll just give a +1 to yours. Raising rates will definitely help those relying on savings for income. Might keep some of the pension funds from getting themselves in trouble chasing returns too.
I was thinking about this some more today and here’s what I came up with. Interest rates have a dual effect. Lowering rates removes interest income from the economy, but (maybe) can spur investment from borrowing. If interest income drops more than borrowing increases you see a net loss in income. I think this is what we have seen over the last several years. Conversely if rates go up but borrowing stays the same, we could see a net positive improvement.
Here is an article that looks at an unintended consequence of the Federal Reserve’s ultra-low interest rate experiment:
http://viableopposition.blogspot.ca/2016/09/unintended-consequences-i-bond-market.html
Everything always reverts to the mean and the reversion to the mean for investors will be extremely painful.
Reverting to the mean for old folks trying to live off modest savings and driven into the stock market by years and years of low interest rate policy will be extremely painful. Some people are going to get screwed coming and going.
I’ve seen this argument before, and it always raises the question for me, “Who is so rich they ‘rely on savings for income’?” I don’t remember a time when “savings,” as I normally think of them, i.e. savings deposit accounts at a bank, paid more than about 3%. So, let’s just estimate, say somebody is trying to live on a median family income, about $50,000 a year. That would mean in the good old days they had about $1.7 million in their passbook accounts. If they just withdrew $50,000 a year that would last 34 years, and with accruing interest a few years longer (the math is more trouble than I’m willing to go to while still in my second cup of coffee). I find it hard to sympathise with people as rich as that, but in addition I find it hard to believe there are very many of them.
Most of the people who are living off their savings are retired people who are living off of a combination of savings and social security payments. They’re not as rich as people who could live off of savings alone.
I missed some of your numbers, but no family of four could save anything on $50,000/yr. going back just 30 years. But say by some miracle 3% was the going rate for thirty years straight my Excel formula states if $10,000 was stashed immediately it would take over $1600/mo. for 360 payments (12 X 30) to save anything close to a $ million. My guess is the family of four would have to have income well over $150,000/yr. ( in constant 2015$) for 30 years to save $1.7 million. Does not make them rich, just better off. But 3% interest rates went down below the horizon about ten years ago. Most people ran to Wall Street type accounts and 401k to build savings-if they could do that.
Yuk
And the Bond market collapses, because Bond prices vary inversely with Interest rates. Corporations and Local Governments who have stuffed their balance sheets full of debt, will have an easy time rolling over the bonds, and have no debt servicing exposure.
Perhaps now the parasitical nature of the FIRE sector will become very apparent.
Yellen over the crowd: One ring to rule them all.
Raising rates during a time without income/wage inflation, no price discovery, and thanks to ZIRP a massive leveraging in all things government, household, and corporate should work out well.
No one wants to be responsible to the next crash.
this is generally a good article and raises valid points but it still misses the elephant in the room. The Fed has NO real control over its official policy rate. There is no Fed Funds rate to target in system with over two trillion in excess reserves and the Fed therefore has no real control over interest rates. Rather they have to fake like they have control by paying interest on excess reserves which is just a gift to the banking system at taxpayer expense. That is NOT a market rate, it’s a fake rate dictated by fiat.
The author is right that the way to start normalizing is to stop re-investing the proceeds of its current holdings and let its balance sheet shrink. That is never going to happen though because the markets would tank.
There is no way out for the Fed. The world is buried under a mountain of debt, much of it which will never be repaid and the only way out is through a system wide reset of the international monetary system. Of course the elites don’t want that because much of the wealth that was created over the last 30 years will be lost when that happens. What people don’t realize is that much of the wealth is illusory and just the mirror image of all the debt that was created.
https://medium.com/@Robert_NYC/monetary-madness-438836c44464#.bn4dagar0
What’s throwing everything off is Red China.
In simple terms, America is no longer the price setter for globally traded commodities.
This reaches extremes in such items as iron, steel, aluminum and copper.
Being a Communist economy — driven by top-down command — and genuine fear — producers are insanely over producing commodities at ruinously low prices — for all concerned.
The Red Chinese economy is a simulacrum of a real economy, as it refuses to accept price signals.
The up shot is that Red China is exporting deflation// crippling price recovery — all across the planet.
No-one in Beijing has the wit to accept higher sales prices and lower production volumes.
The top pols in Beijing are over loaded with engineers. That’s a field that virtually never supplies politicians in the West. Engineers are so comfortable with hard numbers — like tons per year — that it’s messing with their minds.
Being Communists, these fellows are actually emotionally allergic to profits.
Which goes a LONG ways towards explaining why the DIRE profit picture in corporate Red China does not ring alarm bells in Beijing. Whereas, their hair ought to be on fire.
You also have a Balkanized economy in Red China. This or that major producer is typically NOT a national firm at all. Instead, it’s totally concentrated in this or that province. ( Remembering that a province in Red China is often as populous as America, entire. )
So, it’s a bitter pill for Beijing to compel this or that firm to shut down // back off production — when the pain will be so intensely regionalized.
We gag when Cat has to lay off 3,000 workers, nationally. In Red China, they’re facing the dire need to lay off 300,000 workers — in one industry — in one province.
So, you can see how ‘sticky’ the politics gets.
The consequent exported deflation is messing up EVERYONE: Europe, Russia, America, Japan, Korea — even India.
Red China’s insane over production of commodities is the root cause of the global malaise. All other producers in scale can’t make any headway. The obvious exception to this is high tech — an industry that’s actually not hooked to commodities — coming or going.
The end game for Red China must be a world-wide revulsion — a tariff campaign — to stop her from ruining herself — and everyone else.
She’s proving the ultimate folly of Mercantilism run riot.
When we decided that we should be guided by the markets, the first question that popped into the bankers’ minds was “How do we rig the markets?”
Private banks set about rigging every market they could.
The Central Bank’s set about creating a “wealth effect” (rigging the markets).
Central Banks poured money in to inflate markets and out of desperation took to buying stocks themselves to keep stocks up.
Artificially inflating an asset bubble does create a “wealth effect”.
We are all familiar with the “wealth effect” in real estate.
It’s imaginary wealth that evaporates when the bubble pops (Japan 1989, US 2008).
The FED talked about raising rates and the markets took it very badly.
Now they have had to backtrack.
The silly old FED has really painted itself into a corner.
Don’t pop that stock market bubble or there will be hell to pay.
What did you people at the FED learn from the dot.com bust and 2008?
Nothing.
Dean Baker has repeatedly pointed out that if there were really difficulty in finding skilled workers you would expect to see increasing wages offered in those sectors of the economy, which we have not. If the definition of skilled is being revised to mean someone who already knows the details of the job, why does anyone take the complaint seriously? At a minimum, in any office, you have to learn the local culture and practices, and it used to be taken for granted that there would be a little more to most people’s training on the job.
Palley is interesting from the outset simply by pointing out alternatives to playing with interest rates. The MSM seem to talk of nothing else in connection with the Fed, as if its sole function were the performance of secret rites too arcane for the laity to understand. I am in no position to judge his proposals, but why are they not more widely discussed?
The next free-fall in stocks is Oct. The next free-fall in yields and free-fall in oil/commodities is @ Nov. month-end (the kind of outlier which prompted the Treasury’s joint staff study of the Treasury market in Oct 2014 – which I warned them about).
But warning people about what will happen, like that the bond bubble bursts in 2017 (& it will), doesn’t cause panic. And the fact that c. 1973, I’ve never missed an economic swing doesn’t make any difference either (I’m the greatest market timer in history).
The FED is doing almost everything, exactly BACKWARDS (we will experience another economic depression if the FED doesn’t reverse course). The problem is that the FED is impounding savings in the commercial banks. That destroys money velocity. That decelerates AD. That is the direct cause of secular: stag(F)lation.
You see, the 300 Ph.Ds. on the Fed’s research staff don’t know the difference between money and liquid assets. They universally believe that the DFIs loan out savings (existing deposits). The fact is that the DFIs, money creating depository institutions, from a system’s perspective, always create new money and credit whenever they lend/invest. So bank-held savings are lost to both investment and consumption — until their owners invest them directly or indirectly.
This was predicted as a consequence of deregulating interest rates for the CBs exclusively (the NBs were already deregulated up until 1966). And when financial innovation became saturated in 1981 (widespread introduction of ATS and NOW accounts), the rate-of-change in Vt peaked. Thus, in contradistinction to Professor Lester Chandler’s original hypothesis, DD Vt no longer offset the dampening impact of idle funds.
I.e., Congress turned 38,000 non-bank conduits into 38,000 CBs (the CUs, MSBs, and S&Ls) via the DIDMCA. This caused the S&L credit crisis. Then it removed the legal tie between deposits and reserves in the early 1990’s, completed by c. 1995. So, the stage for the GR was already set in stone (as the NB’s IBDD pass thru accounts weren’t restrictive).
But economists managed to further blunder. BuB introduced the payment of interest on IBDDs, interbank demand deposits held at one of the 12 District Reserve Banks, owned by one of the 5,210 member banks (notice that the Fed erroneously omits the CUs, MSBs, and S&Ls from this count & it also overstates M1 & understates IBDDs, as deposit classifications’ definitions never changed).
Remunerating excess reserve balances caused non-bank disintermediation (an outflow of funds or negative cash flow). The 1966 S&L credit crunch is the economic paradigm. But the GR’s credit crunch didn’t just halt NB lending/investing (83% of the lending market pre-GR), it imploded it (dropped by c. 3.6 trillion dollars, see: Zoltan Posar).
It is axiomatic, unless savings are expeditiously activated, and otherwise put back to work, there is a deceleration in economic activity, a deceleration in income, employment, and job creation. And in the longer term, the drop in AD, where N-gDp is a proxy, diminishes the demand for capital goods, capex, and thus we get a decline in productivity and the standard of living of the vast majority of Americans.
Not only did I predict the Jan bottom in Brent crude, but last summer I said the murder rate would rise in 2016. The murder rate will rise further next year. This is a socio-economic problem of immense proportions.
-Michel de Nostredame,
You offer a fascinating read – if I could read it. Excessive use of acronyms makes this hard to read (what is IBDD, DIDMA, etc.?). As a cautionary note – never believe yourself to be uniquely prescient. Others likely see much of what you see, will react to that vision, and change the outcome you expect.
Thank you for the barb at all the acronyms! I thought they were the curse of Department of Defense documents until I saw a few American Telephone and Telegraph (ATT) documents — I caught myself there on the acronyms. Now they show up in all sorts of scientific papers and even comments at Naked Capitalism.
Maybe the accelerating growth in acronym usage is related to the accelerating growth in the number of bad organization names, names for treaties and clumsy naming constructs in general.
II didn’t tell anyone for 37 years. Not one of the 300 Ph.Ds. on the Fed’s technical staff knew (and still don’t).
See: Dr. Richard Anderson, former V.P., and senior economist, FRB-STL:
From: Richard.G.Anderson@stls.frb.org
Sent: Thu 11/16/06 9:55 AM
To: Spencer Hall (sbh….@hotmail.com)
“Spencer, this is an interesting idea. Since no one in the Fed tracks reserves”
Then I repeated myself:
To: anderson@stls.frb.org
Subject: As the economy will shortly change, I wanted to show this to you again – forecast:
Date: Wed, 24 Mar 2010 17:22:50 -0500
Dr. Anderson:
It’s my discovery. Contrary to economic theory and Nobel Laureate Milton Friedman, monetary lags are not “long & variable”. The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically, always, fixed in length. However the lag for nominal gdp varies widely…
Assuming no quick countervailing stimulus:
2010
jan….. 0.54…. 0.25 top
feb….. 0.50…. 0.10
mar…. 0.54…. 0.08
apr….. 0.46…. 0.09 top
may…. 0.41…. 0.01 stocks fall
Should see shortly. Stock market makes a double top in Jan & Apr. Then real-output falls from (9) to (1) from Apr to May. Recent history indicates that this will be a marked, short, one month drop, in rate-of-change for real-output (-8). So stocks follow the economy down.
&
flow5 Message #10 – 05/03/10 07:30 PM
The markets usually turn (pivot) on May 5th (+ or – 1 day).
———————-.
I denigrated Nassim Nicholas Taleb’s “Black Swan” thesis 6 months in advance and within 1 day.
“… Since no one in the Fed tracks reserves.” You don’t suppose this could be sarcasm, do you?
That’s a true statement. Reserves ceased to be binding c. 1995. RR requirements dropped by 40% in the early 90’s. Dr. Anderson is brilliant. He is the world’s leading guru on bank reserves. He was responsible for the reconstruction of the FRB-STL’s monetary base [sic]. But my friend Dr. Leland Pritchard, Ph.D, Economics, Chicago, 1933 (Milton Friedman was his classmate. Pritchard had an IQ of 200.
Pritchard’s amusing anecdote:
Friedman at “the Chicago School” in 1932: Friedman “stopped Viner in his calculus and finally went to the blackboard and worked the whole problem out, which Viner was unable to do”…
In Mints’ class “Price and Distribution” Friedman “discovered some of the errors in Keynes’ fundamental equations. Mints wrote Keynes on Friedman’s behalf – & for the class. That Keynes admitted the errors and this gave him, at least in part, the impetus to write the General Theory.”…”Keynes’ subsequent repudiation in the General Theory of those parts of the Treatise on Money grew out of these criticisms.”
‘banks would pass on the cost of the [mortgage] reserve requirement to borrowers’
Bad news, Tom: mortgages overwhelmingly are bundled and securitized. Banks are more likely to hold mortgage securities than to retain individual mortgage loans.
If banks are penalized for holding mortgage securities, then mortgage securities will simply be sold to institutional investors and bond funds instead.
The underlying false premise is that central planners can somehow add value by dictating credit flows and interest rates. Nothing in the historical record supports this fantastic claim.
Like the British monarchy, FOMC members serve as decorative figureheads. One would prefer that they wear judges wigs to lend an appropriate air of faux solemnity to the occasion of their academic debates.
Some would prefer they wear a fine hemp necktie …… !
The French method is much more colorful and avoids some though not all of the collateral embarrassments.
+ 100 ?
When I worked at 1st Pennsy in the 60s, an officer explained to me that the bank didn’t “hold” mortgages, it sold them to factors and acted as collectors: most people didn’t know their mortgages weren’t held by the bank bc their payments were still sent to the bank. It was a smoothly functioning system of hand-offs almost entirely invisible to the public. At the time, the banking system was undergoing enormous change but factors still figured in the equation. Front line lenders have always, I think, laid off risk by paying other businesses to take it on. I believe the re-insurance industry is another form of risk diversification.
Spreading around risk, à la the bookie business, is not the problem, brigandage is
“…since very narrow hiring specifications are a relatively recent development.”
I appear to have missed this phenomenon, so any references to a discussion on it, either here on NC, or elsewhere, would be appreciated. (I’m assuming this refers to more that just the piece-work/”gig-ification” of the labor market, which have been much discussed here).
This has been regularly discussed here and in the business press. Employers now overwhelmingly specify jobs so that the candidate must have done virtually the exact same sort of work for another employer in same field to get a serious look. That’s a huge departure from normal hiring practices as recently as the 1990s, where employers would hire someone with generally relevant training and experience and expect to either train them a bit or have them get up to speed on their own.
II didn’t tell anyone for 37 years. Not one of the 300 Ph.Ds. on the Fed’s technical staff knew (and still don’t).
See: Dr. Richard Anderson, former V.P., and senior economist, FRB-STL:
From: Richard.G.Anderson@stls.frb.org
Sent: Thu 11/16/06 9:55 AM
To: Spencer Hall (sbh….@hotmail.com)
“Spencer, this is an interesting idea. Since no one in the Fed tracks reserves”
Then I repeated myself:
To: anderson@stls.frb.org
Subject: As the economy will shortly change, I wanted to show this to you again – forecast:
Date: Wed, 24 Mar 2010 17:22:50 -0500
Dr. Anderson:
It’s my discovery. Contrary to economic theory and Nobel Laureate Milton Friedman, monetary lags are not “long & variable”. The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically, always, fixed in length. However the lag for nominal gdp varies widely…
Assuming no quick countervailing stimulus:
2010
jan….. 0.54…. 0.25 top
feb….. 0.50…. 0.10
mar…. 0.54…. 0.08
apr….. 0.46…. 0.09 top
may…. 0.41…. 0.01 stocks fall
Should see shortly. Stock market makes a double top in Jan & Apr. Then real-output falls from (9) to (1) from Apr to May. Recent history indicates that this will be a marked, short, one month drop, in rate-of-change for real-output (-8). So stocks follow the economy down.
&
flow5 Message #10 – 05/03/10 07:30 PM
The markets usually turn (pivot) on May 5th (+ or – 1 day).
———————-.
I denigrated Nassim Nicholas Taleb’s “Black Swan” thesis 6 months in advance and within 1 day.
Who do you know that’s this good?
Brent Crude’s trough occurred on 2016-01-20 @ $26.01.
It goes to prove that Alfred Marshall’s “cash-balances” approach (a schedule of the amounts of money that will be offered at given levels of “P”), is apropos, viz., at times “K” is the reciprocal of Vt.
Thus, my prediction for the bottom in oil was:
“Lags are constants but “K” is not. K is the reciprocal of Vt. The bottom isn’t Dec. but Jan. (like last year)”
Sep 24, 2015. 11:56 AM
&
The upshot is that an immense deceleration (c. a 50 percent drop in 3 months), in money flows, or the proxy for inflation, now confronts the U.S. economy in Dec this year. It is my recommendation to short commodity input prices mid-Nov. for the accelerated last-leg decline persisting into Jan 2016.
Sep 28, 2015.
————————
And here we go again this year. @ Nov. month-end short oil/commodities.
“If the Federal Reserve is concerned about house price inflation, it should impose a temporary reserve requirement on new mortgages.”
—————–
How does that work? Constrict the supply of housing –and housing prices fall? I don’t think so.
Money flows differentiate the same 2 policies actions between: Whip Inflation Now (Gerald Ford’s wage-price controls, his attempt to outlaw price increases) — and Paul Volcker’s imposition of credit controls: (the Emergency Credit Controls program). The first didn’t work because M*Vt rose. The second worked too well (M*Vt was already falling).
“Those tools, viz., Yellen’s, include interest on excess reserves (IOER), large scale asset purchases, and explicit forward guidance”
————
So count on an economic depression – because Yellen’s clueless. Never are the CBs intermediaries in the savings-investment process.
The most dominant capitalistic predator is the ABA, public enemy #1. It is an oligarch that eliminated usury ceilings.
An historian could figure this out. The CBs ROE, and ROA decline as bad debt increases (as savings are further impounded).
CB Time deposits vs. demand deposits:
1939……..15~~~~~~ 33
1954……..47~~~~~ 121
1964……126~~~~~ 156
1974……421~~~~~ 274
1979……676~~~~~ 401
1986…1,215~~~~~ 491
1996…1,271~~~~~ 420
2006…3,696~~~~~ 317
2016…8,222~~~~1,233
The ratio of TD/DD in 1939 = 0.45
The ratio of TD/DD in 2016 = 6.67
might throw a few bones to those with savings
yeah ….just try to suck the marrow out of those burn offerings !!
lets be honest … the federal ‘reserve’ does NOT care one whit about the plebes … not one !
This recent talk by Richard Koo about the current Balance Sheet Recession is really good. Japan-watchers will really appreciate it, too. He discusses the Fed’s prior mistakes and its now limited options (almost impossible to manage). His Balance Sheet Recession approach is compelling.
Due to his background it’s no surprise he’s still working within the conventional money creation scenario that is created by debt. It’s still worth a listen. He shows a major hole in economic education, even within the existing paradigm.
His graphs are exceptionally clear.
The link is here.
Koo is clueless. All these people have learned their catechisms.
Why are we even preoccupying ourselves with .25% interest instead of needed stimulus?
The most important thing mentioned here is occupational licensing. The stupidity of HR departments and hiring managers in this era is through the roof. Personally, I believe that this likely accounts for 20% or more of the unemployment problem today. People want to act like jobs are so difficult whereas in reality, most aren’t. Just look for intelligence, hire, and train.
In accounting, places always seek candidates that have used their accounting software before. Meanwhile, any accountant worth a lick ought to become proficient in a new system within an hour.
God knows Wall St “investment bankers” (aka professional gamblers) have no actual job skill. Many are geniuses when the market goes up, but then scared little children when it tanks.
LA Mike:
Your right. I took over HR’s job because they were sending me the wrong applicants (and I was under the gun to hire 85 people). I wrote my own ads. I had my own PO box to collect them. I screened them and called them in for interviews in my office. My division outperformed the other 6 by unbelievable margins.
‘Raising U.S. rates in such an environment threatens to cause an inflow of hot money into the United States that will appreciate the dollar’s exchange rate and further fuel US financial markets.’
Ha, ha. Good for you. As a native son living in a country where that inflow of hot money happened – Singapore – I wait with undisguised glee to see the look on the Fed’s face when that happens. Turn about is fair (if not appreciated) play.