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SSA on NFP, Unconventional Policy and the Hangover
The Social Security Trust Fund (SSA) has provided key operating data for the month of September. This information allows for a rough estimate of this Friday’s NFP number.
The following chart compares the monthly data for FICA tax revenues at SSA (a proxy for total payrolls) for 2012 versus 2011:
A few observations:
-Payroll Tax revenues are up in 2012 versus 2011 for every month this year.
-The rate of improvement has declined in each quarter so far this year.
-The September increase was 2.25% YoY. This is a slight improvement from the 2.0% gains in July and August.
-The gain in PR receipts in Q3 is consistent with payroll growth of 150,000 per month.
My conclusions after looking at the numbers:
-The July NFP # of +163,000 is above recent trend and is not supported by the SSA PR numbers. The July number may be revised down by 15K.
-The current street estimate for the August NFP is 118,000. I would take the “over” on this estimate. My range is 140-150K.
-The SSA data suggests that 3Q 2012 GDP is lagging that of 2Q 2012. It is certainly less than 2%. It could be less than 1.5%.
Assume we do get an NFP of 150K. The question is, would this relatively good result tie Bernanke’s hand regarding the September 13 decision(s) by the Fed? I would think so, but I don’t think like Bernanke.
If the economy produces, on average, only 150k new jobs per month, then the unemployment rate will remain high (8+%), for a long-time to come. Ben doesn’t want that to be his legacy. The talk on Wall Street (and the manipulated financial press) is that a new round of QE is coming in a fortnight. It will be $500B in size (spread over 6 months). It will be directed at MBS securities.
Bernanke has referred to QE as “unconventional” monetary policy. He has said that prior unconventional policy actions were what saved the financial system during the “emergency” days of 2008. Maybe. But the story of QE has not been fully told as yet.
Bernanke needs to change his definition of “unconventional policies”. While QE1 and 2 may have been considered unconventional, QE3 will confirm that what was once unconventional, has morphed into something that has become very conventional. There is nothing “conventional” about QE. It’s dangerous that QE has gone from something contemplated only during an extreme emergency, to an everyday policy tool.
I know that some folks at the Fed will read this; I ask that they pass two questions along to the Chairman.
A) - What are the Fed's expectations for the market/economic response to another round of QE? Assume we get a six-month, $500Bn LSAP targeted at MBS.
Now turn it around.
B) - What are the Fed’s expectations for the market/economic response when the Fed announces that it will sell $500Bn of ten-year paper from its bloated inventory over a six-month period?
I grant the Chairman that if A is undertaken, there would be some modest positive consequences to both the capital markets and the broader economy. Something like a temporary 5% increase in the S&P and a 0.1 to 0.2% decrease in the unemployment rate might follow.
.
B must follow A at some point. When it happens, it will have very substantial consequences. Interest rates will shoot up as the Fed crowds out all other borrowers (including the US government). The stock market will fall like a stone at the announcement and continue down each month as the Fed sells. The global markets will see/feel the consequences. Banks, pension funds and savers who are loaded to the gills with long-dated bonds with 1% yields will get crushed. Some financial institutions would have to fail. A recession would be inevitable under these circumstances; unemployment would rise as a result.
My point is that there are extremely asymmetrical results associated with more QE. Yes, there might be a few more months of “party time”. But when the party ends (it will), the cost of the party will be ten times the short-term gain.
Ben Bernanke can afford to throw another party in September. The reason is that he will not be around when the inevitable cleanup of his mess starts. He’ll be back in Princeton when the SHTF.
How can one man poison the country's well ? Easy. There is no one around to tell Ben, “No more!” This is a one-man show, and this man is bent on destroying the future, in exchange for a few pips in the unemployment rate and another pop in the S&P today.
At some point in the future Ben and his policies will be discredited. The cost will be the undoing of the country. Ben has converted monetary policy to a three-month time horizon. He gives zero consideration to the long-term consequences of his actions. I get little comfort knowing that the history books will prove that he erred at a critical time. I have kids; they will be paying for Ben’s mistakes for the rest of their lives.
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I was listening to NPR Saturday broadcast from a station that plays enough good music that it overcomes the NPR/Democrat unrealistic view of the news and events. It only goes to the heavy propaganda on the weekend so I can hear what the left is up to and keep my enemies close, without getting burned out.
This week it got my attention with a program about how to survive the economy. This had people who were in trouble and seeking help, a bunch of them. Recurring in the “expert’s” advice was this idea/ideas-----
This is in sharp contrast to the progression of recent months and a few years of------
So how does this relate to what Bruce wrote? It doesn’t. Or maybe it does.
Having been on ZH when Cheeky Bastard and many brilliant $ guys were here and now many are gone, there is a shift of readers. There has also been a shift of making $ in the markets. Rapid shift as it were. ZH IMO now has more of the everyman like myself and fewer of the light brights. That is good in a way because the readership is broader and we certainly need more informed citizens.
To the point, the economy and this Nation will need people to understand the nuts and bolts of the economy and governmental functions to resolve and repair the broken parts. Somewhat like fixing a car or the plumbing in your abode. Not many people understand or can do it. With the current economic shift, back to basic self reliance is needed, both in every day life and in being a productive part of the workings of our society.
Bruce and others lay the nuts and bolts out with understandable instructions for understanding. IF we as serfs can grasp the basics of how it works then we can get to the part of getting involved with REALITY of how to fix it.
This is not an optional course. This is swim or die.
Things that break won't get fixed. What we are seeing looks like the bargaining phase after diagnosis of a terminal illness. The Federal Government is tightening its grip on us, as if that would ensure its survival. If peak oil is proven correct, and I haven't seen anything to suggest that it won't be (after all, the US ran out of cheap oil right as predicted), more and more of the infrastructure is going to be let go out of necessity. That has been happening for years already. Maintenance is not being done. Needed updates are not being undertaken. In many cities the water mains and sewer systems are nearing the end of their functional lives and there are no plans for replacement. There is no money for such massive undertakings. They will slap a Band Aid on point failures. How many bridges are ready to fall into their rivers like that one in Minneapolis? How many dams are structurally unsound? They will keep cable TV going as long as they can, to keep the underclass anesthetized, but we are seeing systemic failure of terminal disease.
But Bruce, have you not heard that the FED can withdraw from its positions at will ? At anytime? Miraculously ?
And have you not heard that this time is different?
THIS MESSAGE BROUGHT TO YOU COURTESY OF THE FEDERAL RESERVE, KEEPER OF CENTRALLY PLANNED MARKETS.
In one word. OBAMA
in three words : Pax Americana morph.
Give the Caesars of this imperial construct their due; everyone of them, since 1913 and the FED.
Pretty sad when we talk about NFP of 150,000 as "good" when it needs to be 750,000 to signal any real growth/recovery from our depression.
BK is usually pretty smart, but I don't understand this one. The Fed never needs to sell back MBS to the market. They plan to just let it roll off (over decades, yes, so what) unless by chance the market someday becomes hot and they can sell off tidbits early.
The new normal is -- the Fed will hold unprecedented large amounts of assets all the time, letting them roll gently off in not-so-bad times or laying in more in especially bad times.
Exactly. Since the Fed has an infinite lifespan, it can hold everything to maturity.
And if we have really hard times again, the Treasury can issue perpetual bonds at zero interest, with the Fed as the only buyer.
FYI: This is the 3rd US central bank. The other two did NOT have infinite life spans.
hey tut are you saying we having an Andy Jackson on the horizon?
Peking r-andy toutenkhamon jackson five jive band?
A kind of perverted Keynsianism, though, ironically closer to the original model that Keynes advocated than the current excuse for it being used by central banks all over the world.
Weird how a simulacra can come 'round to model the original.
:D
Hence the inherent danger of all simulacra.
Ben back to Princeton? LOL
He's qualified to pump gas dressed as Pedro at South of the Border in his native South Carolina.
Agreed. As he hails from Dillon SC (SOB's home) he should be improsioned there for life.
Fire rises.
Someday there may be an odd and unexpected pathos to the narrative of our story, long after it unfolds.
For one brief moment in time, the acts of the Villain will be seen through his eyes. This being that Bernanke could only do that of which he was capable, and he would be betrayed by all of the usual cohorts, who he has acted to serve.
You always pay, one way or another, for your sins and ignorance. Coming upon and refining their power, Greenspan, Bernanke, and the Fed ministered to its role of the "softlanding". Nothing could more clearly explain the price for a softlanding than the ubiquitous chart of Months of Unemployment Recession at Calculated Risk Blog. Where the rubber meets the road in the everyday lives of Americans, there is no sub-plot to this story. In and of itself, it is the story. It speaks to both impact and duration of the storyline.
http://tinyurl.com/94z9aqt
The Fed's interference in the normal course of human events modifies the seeming amplitude of the impact, and by barter of trade-offs grants it a more protracted duration. ('90,'01,'07)
Bernanke's hubris, and that possessed by those enmeshed in the predominant Economic Belief System, did not provide for an airplane with zero wing lift. One with its nose pointed directly to ground. Interest Rate manipulation, the normal means of lessening the carrying weight of the asset-cargo was clearly pallid of power this time around. This would move Bernanke deep into unchartered waters.
In an attempt to maximize any arrival of wing lift, Bernanke would off-load the threatening troubled cargo to his economic plane. At the same time, his cohorts in the schemes would redouble their efforts to keep themselves and their cargo intact, while they did as little as possible to improve the trajectory angle of the entire flight.
The Banks gambled with the new money. The PTB Businessses fed deeply on Foreign markets. While their fully owned friends in Wash DC moved the freight charges to the passengers, and initially deployed crash nets of questionable sustainability.
The only definitively clear and irrevocable plan to maintain the PTB and cohorts was and is to throw the passengers from the plane.
Looking beyond his arrogance, even Bernanke has to admit to himself, at some point he inflected from Enabler, to main Orchestrator for a limited breadth of participants. Who during our electoral Season of Expediency begin to turn on him.
Bernanke and Friends bailed the Creditors, and by doing so, foiled and follied a System which demands destruction and reversion to means for spectacular returns based on acts of ignorance.
Although his intention was Noble, and his Theory appears to him void of errata, the complexity he has brought to the situation fails to dissuade the natural forces of the System. The System he so notes for those unrelenting forces.
The worst still remains for all factions of the Elite as they continue to desperately and hastily decouple themselves from the prospects of the Middle. Caught in the final contradiction, they dine on the seed corn, while they watch the balance of it burn.
The most sure and simple of Laws evades them. It can come in the slip of a moment, or in a broad wave of intention.
Fire rises.
QE to infinity is not the ends. A few PIPS as a result of QE is not the ends. Economic demise may well not be the ends but serve much as QE has.
QE is the Means and the Ends at this juncture can only be postulated upon, popular conspiracy theory's aside..
"B must follow A at some point" ... I don't think anyone is worrying about 2022 quite yet
There are other fish in the sea, there are other sharks in the financial arena. The big sword over the FRB is the FRB owners, the banks, extra deposits at the FRB. When the banks want to make all their long term security puts good the banks will be pulling those deposits out, otherwise forcing the FRB to sell those 10 year etc securities back to the banks. But the other shark in the game maybe the right of the Treasury to "coin" money. While the FRB does not now "directly" buy securites from the Treasury except to replace interest and maturing securities, the Treasury could deposit a "coin" over at the FRB in exchange for those 10 year securities, thus keeping them off the market?
Since the Fed is a branch of the Government, any Treasury bonds owned by the Fed are not really debt. On a consolidated balance sheet of the Government they do not exist. The Fed buying Treasuries is equivalent to a corporation buying back its own bonds at a discount. Congress could simply cancel those bonds with legislation, something that is often mentioned in the British press.
The Federal Reserve Bank is privately owned, not a branch of the government.
Bruce,
Help me out here.
"The talk on Wall Street (and the manipulated financial press) is that a new round of QE is coming in a fortnight. It will be $500B in size (spread over 6 months). It will be directed at MBS securities."
Would this be the SAME Wall Street and manipulated financial press that have been predicting a NEW round of QE was coming in "Whatever is the nearest conceivable point in time" for the last 14 months?
If it is the Usual Suspects, I'll stick with my prediction of more jawboning until actual market events (i.e. S&P 950), EU/euro collapse or war in the Middle East (obviously the last two drive the S&P to the trigger point) provide him with the political cover to act.
Bernanke's legacy is beyond redemption ... but it would be particularly upsetting to his patrons if he acts, one of the three scenarios above happens (Anyone want to bet in favor of NONE of the above scenarios happening before the end of Bernanke's term?), and an outraged Congress & President decide to use Bernanke as the scapegoat and justification for ending the Fed.
Note: Conspiracy monkeys, do not bother us with your rants about false flags, Illuminati or other bogeyman - or even the idea that a cabal of bankers would NEVER let the Fed be ended. If the public rises up in anger, Bernanke's patrons will support shutting down the Fed ... and then come back after the public goes back to sleep and use another means to their end.
There will be only ONE more QE and it will be QEEND pushed through to "save the world" and will be at least $ 5 trillion in size.
barliman
I am happy that someone else on ZH has finally pointed out that Fed only does QE when the stock market crashes. Here is the chart history:
http://www.calculatedriskblog.com/2012/06/qe-timeline.html
http://www.vickerycreek.net/insights/
http://www.financialsense.com/contributors/chris-puplava/panic-like-its-march-2009 (global QE)
I have been writing about this while arguing why QE3 will be the last one and why it won't come until there is a stock market crash and the 5 year minus TIPs falls below 1.5%:
http://www.zerohedge.com/search/user_comments?name=Shelby+Moore+III
http://www.zerohedge.com/contributed/2012-08-31/open-letter-qe-crowd-give#comment-2755547
More specific to Bruce's prediction of 140,000+ NFP, Fed centrist voter member Lockhart said 3 days ago that any number higher than 100,000 would preclude any QE3 at the Sept 13 meeting:
http://www.reuters.com/article/2012/08/30/us-usa-fed-lockhart-idUSBRE87T0NX20120830
The pre-JHole minutes clearly stated that the only agreeable "accomodation" would be to extend rate guidance:
http://www.zerohedge.com/news/fomc-minutes-indicate-no-shift-feds-views#comment-2728458
Fed hawk voting member Lacker (also Bullard) have said that QE3 can not come until inflation expectations (5 year minus TIPS below 1.5% or at least declining) decline (which we won't get until stock market crashes, because even food prices are rising):
http://www.foxbusiness.com/news/2012/06/22/lacker-says-fed-stimulus-wont-help-us-economy/
The Fed has not added NET assets since end of 2010:
http://fingfx.thomsonreuters.com/2012/08/03/125446cd36.htm
In other words, the Fed has been sitting on its hands and using the illusion of its potential power, to keep the markets up with a cresendo 90% of the people believing QE3 is coming Sept 13, while the global PMI is at the August 2008 crash moment:
http://www.zerohedge.com/contributed/2012-08-31/open-letter-qe-crowd-give#comment-2754637
There is a flash crash coming to PIIGS, BRICs, and it will domino into S&P, which will provide the political cover for coordinated massive central bank action. This will be the last time, and the global economy will be toasted by it. Prepare for nasty.
Fed is allowing the dovish voting members to squawk, in order to pump up the markets (maximize QE expectations effects) before the big Sept 13 disappointment:
http://www.bloomberg.com/news/2012-08-31/williams-calls-for-at-least-600...
Remember that chart from a recent Fed study, that showed they only need to talk, in order to pump up the markets. No need to actually do more asset purchases.
P.S. Ancillary reasons the Fed won't QE3 now, is because as Bruce points out, the effectiveness is quite limited right now, and they should thus save their ammunition for the coming fiscal cliff, where it will be necessary to fight an avalanche deflationary wave. The problem is of course that the globe has reached negative marginal utility of new debt, thus also a stagflationary wave (i.e. asymmetrical results that Bruce mentions). But still the Fed must conserve its ammunition for crashes.
Also the Fed doesn't want to add fuel to the "audit the Fed" movement and the election prospects of Republicans, who have promised to oust him. The Fed must wait for the political cover of a crisis. Ditto the ECB, Germany, and PIIGS politics, they will need a flash crash and the crisis spreading into the EU core, before the Germans will accede to massive bond buying and the PIIGS will accede to loss of sovereignty. No one is going to act until they are forced to by economic reality. Remember we are dealing with collectivist socialists leftists. They never act on cuts and hard choices, until their bread is missing (then they turn their soft-stealing into bludgeoning theft mode "who took my bread!"). Don't dare tell them they stole it from themselves (damn bleeding heart centrist thieves).
No need to QE, just talking is lifting the markets.
QE will be necessary if the markets decline significantly. But remember the election is decided in people's minds by about the 3rd week of Sept.
QE now when it isn't necessary would just help add fuel to the Tea Party's movement to take more congressional seats.
But the election argument is really not central. The main reason the Fed won't QE is because they only QE during crashes in order to maximize their effectiveness. Bernanke said at JHole that he is very concerned about doing a QE that is dismissed by the market as ineffective. He said this would cause loss of confidence in the Fed and lead to massive instability.
A new QE Twist announced in June and new QE3 in September. Data suggest Daddy Bernanke is in panic mode. Faith and Trust are precious and fragile assets that Daddy Bernanke is risking.
Bruce - You, me and a lot of reasonable people hope that the debt will be paid and the FED balance sheet will be reduced. I am more and more coming to the conclusion that the debt is perpetual. Some of it is paid and will continued to be paid as its turned over in the refinace process. As a lumpt sum however, it will not be repaid.
Every other major central bank knows this and will play along. The bond game will contunue as it fits everyone interests to do so.
The subject matter and grafitti pics just reminded me of a great old song by "War":
http://www.youtube.com/watch?v=RFSWW4O6QNM
The FED is a terrorist organization that funds global destabilization operations. At one point their corporation had a differentbut objective but now the proof of wealth distribution to a select group of corporations and individuals exists. They should brought to justice and it is beginning to be politically viable for candidates to campaign on this. Good luck Ben you're going to need it.
Mr Krasting
How can you say that this is one man show?
Isn't it crystal clear that Bernanke is just taking orders from the congress and WH?
Why no QE3 since Republicans won the house but we had QE1 and 2 when the Dems owned House, Senate and WH?
You see, if the holder of the debt is "unfriendly" like China and Russia, printing money to pay interest on the debt and meet margin calls of Primary Dealers, is NOT and I repeat is NOT a financial decision, it is a political decision.
Case in point:
- USA tells China and Russia to take a loss on fannie and fredie bonds
- Russia responds by attacking the country of Georgia and China responds by claiming South China Sea as chinese territory.
( I have no evidence to back this up since it would be impossible to provide evidence, but extensive reading will take you to this conclusion)
Reaction from USA: China and Russia were paid 100 cents on a dollar, full payment. This is a politicial decision, not financial.
The Fed is no longer in driver's seat sir, no longer is.
Fed is run by the TBTF banks. So is the WH and so is Congress.
Period.
Both the Fed and the TBTF banks are run by a quite larger boss, the Military Industry. There is no higher power in USA.
I am not qualifying it as good or bad, I'm just saying: THIS IS REALITY.
So far, I think that US military might is a good thing for the world. It makes sure that goods go from point A to point B in the globe.
And again, so far, I haven't seen any good argument as to why US military is a bad thing. I'm ready to change my mind, but so far, I'm still saying: God bless US Military.
http://www.breitbart.com/Breitbart-TV/2012/09/01/Out-of-Touch-Rebuke-of-Clinton-and-Obama-from-the-Heart-of-a-Mother
I think military is against Obama, at least as per the media spin. For me, that's the clearest sign that Obama has zero chance of winning in Nov until he somehow manages to convince the military industry he's the guy for them, but I doubt it. Romeny is getting all the big money whereas Obama is begging for $3/each from the dems base. This is despair.
ekm said:
"Both the Fed and the TBTF banks are run by a quite larger boss, the Military Industry. There is no higher power in USA."
I think that Smedley Butler USMC(ret) would have disagreed strongly with those statements. International banksters and their subsidiary corporations(interlocking boards of directors) own and/or control/run the 'Fed', the TBTF banks, and the military industry.
But maybe I'm just a "conspiracy monkey' and no longer believe that everything is as it's proclaimed by the status quo establishment. If things were as proclaimed, why is everything in such a clusterfuck? Answer possibilities:
A: It's sheer dumb incompetence
B: It's the plan(for the United States that means a long term design to reduce us to third world status, which looks to be going swimmingly)
My 'lying eyes' and my gut tell me the answer is B. After all Ben Shalom Bernanke is only an employee, as are all 'FedHeads', and is doing what he's told to do...implementing the plan. The US Govt/Congress isn't running the show either. The President, whomever it might be, and which political party has the majority in Congress is meaningless noise.
You sound trapped in the red/blue pill paradigm.
Our kids are led to slaughter in the military. God bless the young men and women, not the military itself (unless of course they decide to restore the Constitution and clean some house in the other branches of government).
A dozen of our soldiers killed in August by wacked out jihadist Afghan military.
What in the hell are we doing there?
I have yet to hear a goal worth lives.
I have no answer to your questions.
Inbetween all that bondo drama you have the Saudi's and Japanese, which first means no cars and no gas.
Saudis and Japan are friendly.
USA provides protection to Saudis in exchange for selling crude oil only in USD. Anybody ever wondered why Saudis do not sell oil in their own currency?
Sir, please watch and draw conclusions.
Mandatory viewing.
http://www.foreignaffairs.com/discussions/audio-video/%EF%BB%BFforeign-affairs-live-the-us-army-with-raymond-odierno
I believe this is how Biederman front runs the NFP number, and he's usually more accurate than other analysts.
SS is already in deficit, $50B last year(?). It would be interesting to compare these numbers to the rate of growth in SS benefits. Does 2% keep up with new retirees? I'm thinking NOT, but would still like to see the data.
there was something on the other day about how all of these new jobs pay shit wages compared to what the same people got paid on their previous job- so it makes no difference. people WILL NOT BE buying anything more than essentials. when it takes more than a half hour's minimum wages to buy 1 gallon of gas then the game is over
'B [sales of $500 billion of paper from the Fed's bloated inventory] must follow A at some point.'
That's what Bernanke said when QE1 began. Notice how quickly he dropped that promise in order to embark on QE2?
Now the 535 dwarves in Kongress no longer even ask about it. After all, it's election season -- 'free money' is a plus.
In all seriousness, central banks' balance sheet bloat is PERMANENT. They are perfectly aware of the dire consequences outlined by Bruce K., and they simply won't sell assets and crash the global economy.
There won't be a Paul Volcker to stop the inflationary madness this time round. The 21st century may well overtake the 20th for the title of 'most inflationary in human history.' And the Bernank helped!
Agree about the unlikelihood of sales by the Fed. FRNs are printed, the assets are acquired at par, and then stored securely "in the vault" behind the Fed's Monetary Event Horizon (MEH). They will hold those assets to maturity - they have no choice but to do so, and also print away the losses, which, lying beyond the MEH, do not "matter". Unless - there is a collapse in confidence in the USD, which I humbly submit, will simply not be allowed. Guns will dictate the currency that matters - it all boils down to guns and gasoline.
Bruce, I recall you being a bigger fan of QE around this time last year.
Glad to see you've changed your tack, and I laud you for it.
Bruce Krasting says, “How can one man (Ben Bernanke) poison the country's well ? Easy. There is no one around to tell Ben, “No more!” This is a one-man show, and this man is bent on destroying the future, in exchange for a few pips in the unemployment rate and another pop in the S&P today. At some point in the future Ben and his policies will be discredited. The cost will be the undoing of the country.”
All the political bastards in Washington, including President Obama, are complicit in this.
Bruce, I have kids to....But when I read your column and listen to Paul Ryan on TV saying "my kids" will be saddled with debt and be paying for our sins today, it sounds so me-centric. Guess what, someone's kids are paying right now, not in the future, but right now, due to the loss of jobs to China. Now for chrissakes, Paul Ryan can't gut the safety net because his kids will have to pay in the future, cuz that's just too freakin bad.
Maybe Mitt's kids should say to dad, maybe we should look how we got so rich, burdening companies with excessive debt and then bankrupting them and the people who work there. Dad, that's the legacy you and your kind left for us to pay.
Of course QE looks quite destructive in the long run - but we're looking at it wrong - for the ultra wealthy predators this is just another policy to continue the Robin Hood for the Rich plundering.
So what if it destroys jobs - people will work for cheaper - so whatif it destroys the economy - the share held y the oligarchs will be bigger -
When the Econmy crashes part of the middle class and retirees wealth will disappear into the ethers - the rest will be swallowed by the plundering class -
And these sociopaths will gladly destroy vast sums of our wealth In order to steal a dime. The effectiveness of the policy always depends upon where you stand. If one is looking at a fiscal policy and it's effect upon the middle class or savers then you're reading the wrong book.
I didn't mean this to be 'Me centric". It is a "We centric issue".
Do you really believe that another round of QE will magically reverse the tide of manufacturing jobs going to China? Not a chance.
I think that a $500bn QE will goose GDP by 1/4 percent for six months. Nothing more. When it is unwound, it will cause a steep recession. You like those odds? I don't.
Bruce, the classic way to reverse the tide of manufacturing jobs leaving for overseas is known. It's called tariff barriers.
With tariff barriers, the typical blue-collar and middle class job rises in value. Without, it competes with the whole world.
For the first century of it's existence, the US used tariffs to finance it's near totality of government expenses.
It's a very interesting fact that tariff is a taboo word. Like that nobody remembers that the highest marginal rate under Eisenhower/Nixon was over 90%. That the general assumption is that we all experienced a kind of "End of History".
Politically, the US has two parties that don't seem to agree on nearly anything except using the big USD credit card. And let the multi/transnational corporations do whatever they want, tax-free. This is historically unsustainable.
Ghordius. two thoughts....Smoot-Hawley and Triffin's dilemma....those should silence talk of tarrifs
that's what I thought, too, it's practically canonical, isn't it? but I start to doubt it
Smoot-Hawley describes the excess of going from one extreme policy to the opposite extreme policy in short time
Excess and extreme policies also describes the current Chinese-American reserve currency battle
I'm starting to ask myself if this second globalization round is as unsustainable as the first one
Yeah, we'll call it the Full Employment Act for ... Domestic Robots!
The future doesn't need us. Not so many of us, anway.