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The Problem With Letting Academics Run the Economy
There is a common adage that “book learning” is not the same as “street smarts.” In the case of economics PhDs like Janet Yellen, we could adapt this to say that “theory” is not the same as “reality.”
Janet Yellen is a career academic. This is not necessarily a bad thing. Career academics play a critical role in terms of both research and teaching future generations of leaders.
However, unlike most career academics, Janet Yellen is in charge of the US economy. In this light, one has to ask aloud, “why would you put someone with absolutely zero experience in creating jobs, growing a business, lending money, hiring, firing, etc. in charge of the US economy.”
Has Yellen ever had to personally decide whether or not to expand a business? Has Yellen ever had to develop a marketing campaign to increase sales? Has she ever had to concern herself with employment benefits for her staff?
Let’s take the other component of the Fed’s work, the financial markets, into consideration. Has Yellen ever managed a portfolio of any significant size? Has she ever guided a trading team? Has she ever even run a bank? Has she ever had to unwind a bankrupt institution?
The answer to all of these is no. And yet, we’re supposed to entrust her to guide the economy. This would be like asking someone who has never even run a 5K but has read a lot of books on running to win the New York marathon.
We do not mean to pick on Yellen in particular. Indeed, she is not unique in her total lack of qualifications for the job of Fed Chair.
Bernanke was another career academic with next to no real world experience. We’ve since discovered that ALL of his theories on economics misguided. Indeed it is difficult to find a single economic metric that has improved since 2008 other than household net worth which has largely been driven by gains in the stock market.
1) The labor participation rate is virtually the same.
2) Median incomes have fallen.
3) Real unemployment (not the phony official number) is only marginally better.
4) Costs of living are significantly higher.
And yet, Bernanke spent over $4 trillion trying to prove his misguided theories. It was the single most expensive academic study ever performed. Unfortunately it punished billions of people (the Fed’s inflationary policies lead to record food prices which incited starvation and civil unrest globally).
Not once during the five year period between 2008 and 2013 when he retired, did Bernanke change course. Any normal person would have reconsidered their positions after $1 trillion or $2 trillion didn’t do the trick. The Arab spring, record high food prices, food stamp usage and the like would also have given most folks pause. Not Bernanke. And apparently not Yellen either (she was the Fed’s second in command for most of Bernanke’s tenure).
We all know how this will work out: another, even larger crisis is looming on the horizon. And this time around, the Fed has already used up virtually all of its ammo. When and how it will hit, no one knows. But the fact that a mere 10% drop in stock prices from RECORD HIGHS was enough to induce panic around the globe should tell you all you need to know about the fragility of the financial system.
Be warned…
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Best Regards
Phoenix Capital Research
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"However, unlike most career academics, Janet Yellen is in charge of the US economy. In this light, one has to ask aloud, “why would you put someone with absolutely zero experience in creating jobs, growing a business, lending money, hiring, firing, etc. in charge of the US economy.” "
Actually, I want someone with zero experience running the economy, in the sense given in the article. Everytime I go to the Stop 'N Rob, I want to make decisions for me as to what brands of coffee I buy. I don't need a Political Intermediary. What has happened, however, is that a few people ARE making my purchasing decisions for me and I don't like it.
Bring back Capitalism, please!
CW
“why would you put someone withabsolutely zero experience in creating jobs, growing a business, lending money, hiring, firing, etc. in charge of the US economy.”
Better question.
Why would you put a private, for profit corporation, in charge of the US economy?
No one is suppose to be in charge of the economy, that would be central planning and central planning is bad.
Because private sector people understand the economy, and don't major in statists giving other statists academic blow jobs.
The private sector is failing becasue the cream didn't rise to the top. It's run over with incompetant nepotism. Why else would they buy off politicians? Look at Wall Street for example. Hollywood didn't have to bribe our politicians to rob taxpayers for their billion dollar profits (Hollywood got entry into China's market).... Wall Street nepotistic morons had to bribe Congress to rob people because they lacked liquidity.
you are exactly right sleigher,
apparently "Phoenix Capital" misleadingly overlooks that the Fed Reserve is a
PRIVATE organization,
and Yellen is merely the banking cabal's choice to be
its public face.
"All present politicians in Europe and United States, or other countries, are children of this culture and this is clear from the technocratic way through which they take decisions. When they are not able to decide, they act through the logic of giving the problems to other advisors-technocrats which due to this specific culture can be found everywhere around them."
http://failedevolution.blogspot.gr/2014/01/how-western-societies-lost-th...
We should put Danny Elfman in charge of the economy. At least he could make a song about it.
https://www.youtube.com/watch?v=Jm-upHSP9KU
Yellen has the US Treasury, JPM and the entire PPT on her team. She may not have a clue but the system does. The path we are on has been traveled by numerous other countries with dying currencies. Everyone in charge knows what needs to be done. Financial repression did not happen by accident. Support of key indictors and the manipulation of data is typical.
I think the problem is that many just do not want to see where we really are in this journey. It is easier to pretend everything is as it was 30 years ago. Even those who understand monetary history have trouble admitting we are where the Weimar was in 1922 (or maybe even late 1923).
When it is over it will be easy to see the road to ruin of the dollar. It will be the same as the road every other dead currency took in the past 300 years.
Lucid, insightful comment.
Well, I hope not. I hope that this time it is different, and that Bernanke knows that and Yellen knows that Bernanke said that, and this motivates their actions - and that it really is true, it really is different this time, no matter how many times before it was not different after all.
They are fixing a big, fat break in the system or maybe nobody would have noticed or acted on this putative "difference", at least not for another few years. But when the student is ready the teacher will come, or so they say, and when the disaster is ready the deciders will come. If you'd asked me in 2008 what would happen if Bernanke did what he did, I would have (and did!) projected disaster. And even Bernanke was wrong, he desired and expected inflation which he did not get, but he was more right than wrong and here we are, six years later and still on the map.
And so maybe we still will be six years from now, in spite of many appearances. Then the job will be even more so, "How *is* it we are still alive?" Maybe by then Bernanke will write and publish his book and tell us more or less honestly wtf he thought he was doing.
The only "fix" they implement is that bankrupt, insolvent TBTF banks and sovereigns (like the US) remain liquid, and that their owners, CEOs, politicians and all their crony friends continue a fat payckeck - at the cost of most everyone (~ 90%) else. Heck of a "fix", but that's just my 2 oz.
Fed is tantamount to financial terrorists with a chokehold on prices of every asset class only the top 5% have access too. It should be criminal activity under RICO Act.
"We do not mean to pick on Yellen in particular."
I have no problem with picking on this bitch in particular...as I had no problem with picking on the previous bitch.
These people are sexless, they have no gender, they are mere machinations of the oligarchs that claim to own us They are merely gollums that squint at us with googly-eyes and fart pronoucements.
We have the option of ignoring them and continuing on with our lives.
Personally I'd like to see a gollum bar-b-que once in a while. But that's just me.
The Fed has only 1 mandate ...to prop up bankrupt banking bums
All Fed pontifications about 'the economy' and 'unemployment' are mere smoke and mirrors and should be ignored as attempts to cover their rotten monopoly on money to prop up Rothchilds, Rockerfellas etc in sugar
Bingo! she doesnt give a fuck, thats why she is in that position because she cannot see the wood for the trees, ignorance is bliss.