The Fed Sees Increasing Unemployment As A Positive For GDP

Tyler Durden's picture

The economic mavens in DC have totally lost it. Now an increase in unemployment will allegedly lead to a rebound in GDP??? Is anybody besides Dick Bove drinking this kool aid any more?

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Anonymous's picture

Q: "And just who is supposed to buy this garbage any more?" \n
A: "We the dumb people"\n

I guess they figured government spending which is a huge factor in GDP is going to skyrocket with stimuli after stimuli that the GDP will naturally go up. Heck what's 1 trillion, let's make 3 trillion at a time.

Anonymous's picture

Fed looks at the stock market to make its predictions on the economy since it is a "leading indicator," however unreliable (like the Fed) it may be.

Hondo's picture

The Fed is looking at all the historical relationships and historical drivers of growth to bring us out of recession.  The only problem with that is..............not this time.  Their historical data points are worthless and the economy is not and will not act or be driven by post war historicals.  Which alas, is why they continue to make policy errors that put us deeper and deeper in the hole.  For such supposedly smart people their actions are insanely dumb.  Their actions (not only current but historical) have ruined the lives of millions of Americans……………in any other country they would have been strung up by now.  It really is pretty pathetic. 

Anonymous's picture

I agree. After WWII most of the other developed countries in the world were in ruins. This allowed us to step in and sell to the world. Minor detail our manufacturing economy is mostly gone....

crazyjerrygarcialover's picture
crazyjerrygarcialover (not verified) Hondo Jul 15, 2009 3:44 PM

Wouldn't we need, I don't know, an industrial base for post-war historicals to possibly be legitimate data points.  Last I looked, we've been purging our industrial base as quickly as possible for the past 15-20 years.

My cognitive dissonance's picture

Toto, I have a feeling we're not in Kansas anymore.

Steak's picture

The saddest part will be if they are right.  What if, in the best case scenario, we really did avert the big bad nasty?  Well then the next time the economy sneezes the clear answer will be to print trillions and fire everybody.


The force will remain out of balance until the Fed learns the lesson in Burn After never do it again.  Because as it stands right now, nobody in government can/has expressed a single negative consequence that we will face as a result of their actions. 

Bubby BankenStein's picture

I get the feeling that a draft of the meeting minutes was prepared in advance of the meeting.  A creative writer who is aware of the script could have the minutes for the August meeting ready for review today.

The minutes are PR propaganda put forward as the gospel from God Almighty.

zeropointfield's picture
zeropointfield (not verified) Jul 15, 2009 1:50 PM

The issue is that them and we are not working against the same set of standards. Most of us can see no recovery if the job market does not recover and salaries do not go up - and rightly so.

However, this is not the logic the Fed, banks, government and in general the elite are working with.
For them it is irrelevant if we have jobs or if we die of hunger, as long as THEY can continue to make money with their 'financial innovations'. If their business model doesn't stand up to reality, no worries. Go to the government for a bailout, siphon of your bonuses and to hell with it.

The have and the have nots live in different worlds and he who isn't rich by now, will never belong to the club.

Moe Speeks's picture

unfortunately I have to agree with everything you said.

what a shame this whole country has become

crazyjerrygarcialover's picture
crazyjerrygarcialover (not verified) Moe Speeks Jul 15, 2009 3:46 PM

Agreed.  It makes me very sad.

Anonymous's picture

Of course it is a positive just think of all the time the sheeple can spend shopping when they don't have to spend 8-10 hours a day at some job.

rahbii's picture

I'm glad I'm collecting then.  In fact I can show all my frieinds how to file for unemployment as well.  We'll all do our part. 

Anonymous's picture

They're still using the Phillips Curve at the Fed. Nevermind the theory was destroyed in the 1970s. The Keynesians just will not let it go.

Anonymous's picture

As GDP was inflated due to a credit boom, it appears logical to assume that, devoid of same, GDP will recede commensurately. If so, the question remains: what percentage of GDP in recent years was fomented via excess credit? That answer should suggest where GDP is headed - now that the bubble has burst - and what percentage of jobs will be lost.

Printfaster's picture

No problem.  This works if your inflation figures are derived out of whole cloth.  You just hide the real inflation, and oiula, you have "real" GDP growth. 

Kind of like gasoline sales increase by n percent and real gasoline prices are up the same n percent, but the Fed lists the gasoline price increase as n minus m percent.  Makes it look like consumption is up by n minus m percent.  Mmmm, more economic activity.

GDP and inflation are so butchered that they have not only become meaningless, they are dangerous to use.


Anonymous's picture


If we even get close to 2% in the next 5 years i will be mighty impressed.
So screwed. Official.


Comrade de Chaos's picture

Took me a minute, evidently they are planning to continue printing money. Free Launch, anyone?

Anonymous's picture

I just hope they keep buying treasuries so I might be able to re-fi since I was too much of a chickenshit to pull the trigger before... that extra money every month can help buy security gates for the neighborhood and more guns, ammo, and food to keep out all the jobless.

At least we probably won't have the same fate as iceland consumers... borrowing in foreign denominated notes... unless of course we move to a new currency in the next 30 years... and then I might have not wanted any of it... doh!