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Fourth Turning: The Shadow Of Crisis Has Not Passed - Part 1

Tyler Durden's picture




 

Submitted by Jim Quinn via The Burning Platform blog,

“Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:

  • Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)
  • Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities
  • Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders
  • Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction” 

 The Fourth Turning – Strauss & Howe – 1997

When you read pertinent passages from Strauss & Howe’s prophetic assessment of history from a generational perspective, eighteen years after its publication and seven years into the Crisis they forecasted with uncanny accuracy, you find yourself shaking your head and appreciating their visionary generational appraisal of antiquity. Those who scorn The Fourth Turning either haven’t read it, are ignorant of the cyclical nature of history, blindly believe in never ending human progress, or their salary is dependent upon not acknowledging the truth. A year consists of four seasons – Spring, Summer, Fall, and Winter. A long human life of 80 years consists of four phases – childhood, young adulthood, mid-life, and old age. Human beings tend to associate themselves with the cohort born within the roughly 20 year period that makes up one phase of life.

 

Members of a generation share an age location in history, tend to share some common beliefs and behaviors, including basic attitudes about risk taking, culture and values, civic engagement, family life, and tend to have a sense of common perceived membership in that generation. The generational attitudes, moods, leaders, and events that occur during recurring 80 year cycles drive the pathway of history. Strauss & Howe have been able to document the Turnings of Anglo-American history back to 1435. Like the seasons in a year, there have been cyclical turnings every twenty years or so for centuries. They can be described as High (Spring), Awakening (Summer), Unraveling (Fall), Crisis (Winter). Each turning is a reflection of generational interactions, moods, and attitudes. We are now seven years into a Crisis that will likely not climax until the late 2020’s.

 

The beginning of the new year has seen the usual avalanche of 2015 forecasts from mainstream media pundits, Wall Street gurus, Ivy League economists, journalists and bloggers. Most are paid to produce forecasts which promote their employer’s agenda; convince readers to buy their investment products, newsletters, or service; propagandize the government storyline; or validate their Ivy League academic theories. Those in the employ of the Deep State always produce forecasts of economic growth, positive developments, and never ending progress. They’ve never seen a recession coming, the stock market declining, or war looming. None of these people saw the 2008 Financial Crisis coming. They all believe 2015 will be a great year. They are narrow minded linear thinkers who are willfully ignorant of history or purposefully peddling propaganda for a paycheck.

Making annual forecasts in the midst of a 20 year Fourth Turning Crisis is rather pointless. Predicting improvement or progress in the midst of a Crisis is nothing but a futile exercise in mental masturbation. Fourth Turnings, like a protracted, brutal, frigid, gloomy, stormy winter of discontent, may have an occasional let up in intensity, but will rapidly revert back to turbulence, danger, and volatility. When I wrote Fourth Turning Accelerating in June of last year, I made the case that core elements of this Crisis – debt, civic decay, and global disorder – were combining to provide an impetus to the next dire phase of this relentless blizzard of pain, suffering, chaos and war.

“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impossible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance.

Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – Strauss & Howe - The Fourth Turning

Putting forecasting into perspective during Fourth Turnings is easy when you have a grasp on history. Imagine there were pundits pontificating on CNBC or CNN in 1936, the seventh year of the Great Depression Crisis or 1780, the seventh year of the American Revolution Crisis. Most historians refer to the Great Depression as the period from the Great Crash of 1929 until our entry into World War II in 1941. Annual forecasts of improvement would be meaningless to people living through this brutal period in our history.

If Jim Cramer was assessing the period from 1934 through 1936 on his daily radio show, he would have been gushing about GDP growth of 10.8%, 8.9% and 12.9%. He would have been effusive about the 300% surge in the Dow Jones Index from the 1933 low to the 1936 high. CNN would be doing special reports about the tremendous success of New Deal programs, as Federal spending and handouts accounted for the entire surge in GDP. But, in reality the average American continued to struggle to survive, as unemployment ranged between 17% and 22% during this time and only the rich owned stocks. Another 10 years of hardship, war, and death on a grand scale awaited them. Perspective and context are essential when attempting to assess periods in history. You get no context from the entertainers passing for journalists in today’s world.

The beginning of 1780 saw Washington and his troops surviving the harshest winter of the 18th Century in Morristown, NJ as the 5th year of war still left the outcome highly in doubt. CNN would have blamed the polar vortex for the temporary lull in patriot fortunes. Defeats in battles against the British in South Carolina and the uncovering of Benedict Arnold’s plot to surrender West Point to the British would have been spun as minor setbacks. Cornwallis’ surrender at Yorktown was almost two years away. The Articles of Confederation hadn’t yet been signed and the U.S. Constitution wouldn’t be signed until 1787. The Crisis wouldn’t end for another fourteen years, in 1794.

Fourth Turnings have their own rhythm and pace. The reactions to events and mood changes of generational cohorts interact to provide the dynamic that drives Fourth Turnings. The specific events are not foreseeable but human weaknesses, faults, flaws, failings, strengths, intellect, and emotions are consistent across the ages. Human nature does not change, therefore it is predictable. Those who wish for this Fourth Turning to accelerate and get to the climax sooner may want to rethink their desire. The Civil War Crisis was accelerated because all parties were intransigent and unwilling to compromise or pause. The result was 700,000 Americans killed in four years, representing 5% of the entire male population. This Fourth Turning could be accelerated with the push of a button and millions killed in an instant. I don’t think anyone wants that kind of climax. We are entering a banquet of consequences where our choices will make a difference.

“A Fourth Turning harnesses the seasons of life to bring about a renewal in the seasons of time. In so doing, it provides passage through the great discontinuities of history and closes the full circle of the saeculum. The Fourth Turning is when the Spirit of America reappears, rousing courage and fortitude from the people. History is seasonal, but its outcomes are not foreordained. Much will depend on how tall we stand in the trials to come.” – Strauss & Howe - The Fourth Turning

The Shadow of Crisis

“Don’t think you can escape the Fourth Turning the way you might today distance yourself from news, national politics, or even taxes you don’t feel like paying. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted. The Fourth Turning necessitates the death and rebirth of the social order. It is the ultimate rite of passage for an entire people, requiring a luminal state of sheer chaos whose nature and duration no one can predict in advance.” – Strauss & Howe - The Fourth Turning

Just as you can’t turn the clock back to the glorious warm days of Summer or the delightfully pleasant cool days of Fall, the dark, foreboding, bitter days of Winter will bring forth raging blizzards, dangerous sub-zero temperatures, and vicious gale force winds. And there is no way to avoid, sidestep, or escape the trials and tribulations which will sweep away the existing social order and replace it with something better or possibly far worse. There are no guarantees this Crisis will resolve itself in a positive manner. The spark that catalyzed the Crisis mood in 2008 was the global financial implosion caused by Wall Street bankers committing the greatest control fraud in world history, corrupt captured politicians’ spineless failure to address the nation’s spending and debt problems, and the Federal Reserve creating a housing and stock bubble through their loose monetary policies and complete failure to regulate the Too Big To Trust Wall Street banks.

The inability of the linear thinking ruling class to acknowledge the seriousness of our current circumstances and the implications of the era of depression and violence the country is about to experience can be witnessed on a daily basis by listening to mainstream media talking heads or politicians of all stripes who bloviate about economic improvement and progress just ahead. Could there be a better example of myopia, delusion and willful ignorance than the theme and opening line of Obama’s State of the Union speech:

“THE SHADOW OF CRISIS HAS PASSED”

Do Obama and his advisors actually believe this Crisis is over? Or is he purposely misleading the American people about the seriousness of our circumstances because he has been instructed to do so by the men who really pull the levers of this country – Wall Street bankers, shadowy billionaires, and the military industrial complex.

 

If the Crisis has passed, why has the 30 year bond yield fallen to an all-time low? Why does the Fed maintain an emergency stance by continuing to keep interest rates at 0% if the economy is really growing at over 4%, unemployment has really fallen from 10% to 5.7%, corporate profits are at all-time highs, and the stock market has risen by 200% to record highs?

*  *  *

In Part Two of this article I’ll prove the shadow of crisis has not passed, and the core elements of Crisis – debt, civic decay, and global disorder – get worse by the hour

 

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Tue, 02/10/2015 - 20:02 | 5769160 Newsboy
Newsboy's picture

Global Financial Reset Without WW-3.

NOW!

Tue, 02/10/2015 - 20:03 | 5769169 Newsboy
Newsboy's picture

The Shadow of Crisis passed just ahead of the crisis this time.

Tue, 02/10/2015 - 20:15 | 5769212 Alberich
Alberich's picture

Just like in '36, when Chamberlain promised "peace in our time", and the top Euro powers fought by proxy in the civil war of a marginal European country, and goal-seeked economic statistics showed an ongoing recovery, and the top Asian power consolidated its military on a shaky economic foundation, and the US president was physically crippled.

So it's not quite the same because this time the US president is mentally crippled.

Tue, 02/10/2015 - 20:16 | 5769223 spinone
spinone's picture

The president is smart enought to do exactly what hes told to.  Youre not naive enough to believe the president runs the country, are you?

Tue, 02/10/2015 - 20:21 | 5769238 Alberich
Alberich's picture

It's possible that FDR just had better writers.

Tue, 02/10/2015 - 21:02 | 5769387 spinone
spinone's picture

The president's speeches are carefully targeted to the audience.

Tue, 02/10/2015 - 22:22 | 5769701 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

FDR was of the ruling class, he had power. The current idiot is just the bastard child of a Kenyan, a puppet.

Tue, 02/10/2015 - 23:11 | 5769874 Yes_Questions
Yes_Questions's picture

 

 

First, Area 51

 

and now this

 

Wed, 02/11/2015 - 04:13 | 5770340 stacking12321
stacking12321's picture

oh ffs!

why do you post crap from "veterans today"?

if putin does have evidence of us govt involvement in 9/11, and reveals it, that's great, i'm all for it. no doubt the us govt is not honest about the events of 9/11, and no doubt the us govt is the world's biggest sponsor of terrorism.

but don't go muddying the waters by linking to unreliable sources.

Tue, 02/10/2015 - 20:18 | 5769232 A Lunatic
A Lunatic's picture

That makes me feel a bit better, because I thought that shadow was the hand of doom.......

Tue, 02/10/2015 - 20:39 | 5769300 JuliaS
JuliaS's picture

Financial reset without WW3 sounds like a weight loss program with no exercise.

Tue, 02/10/2015 - 21:01 | 5769384 Ballin D
Ballin D's picture

I think most of us will be on a diet too.

Tue, 02/10/2015 - 21:11 | 5769415 No.Fifth.Turning
No.Fifth.Turning's picture

Yes we're in it.

Tue, 02/10/2015 - 21:12 | 5769426 junction
junction's picture

The solution to everything: Suspend Brian Williams for six months without pay.

"As Managing Editor and Anchor of Nightly News, Brian has a responsibility to be truthful and to uphold the high standards of the news division at all times." NBC News President Deborah Turner.

What high standards?  NBC News has embargoed all mention of the pedophile scandal in the UK, a 30+ year festering sore where Scotland Yard gave child rapist-murderers a pass, on directions of people like Home Secretary Leon Brittan.  Brittan was just buried last week, his grave intentionally unmarked.  NBC News is no better than Pravda under Stalin, a lying mouthpiece of crooked politicians.  

Tue, 02/10/2015 - 21:50 | 5769593 SWRichmond
SWRichmond's picture

Limited hangout?

Tue, 02/10/2015 - 22:10 | 5769661 NoPension
NoPension's picture

Herd needs to be thinned. Big time.
I don't say so. Nature does.

Wed, 02/11/2015 - 07:16 | 5770445 supercelld
supercelld's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Tue, 02/10/2015 - 20:04 | 5769173 lordbyroniv
lordbyroniv's picture

Fucking Prophets and Shitty Heroes !!!!!!

Tue, 02/10/2015 - 21:04 | 5769393 DavidPierre
DavidPierre's picture

There are thousands of people out there, like SmokeyQuinn, puking up other writers prophecies. 
Some of them, especially the more vague ones, are bound to come true.
Quinn bases his prophecies on questionable, and wholly USSA centric cycles, as he just lightly skips over the truth of the 9/11 WTC  false flag tragedy.
Why would anyone believe this Strauss&Howe badly written junk "science"? 

Try Tarot cards!
After all, out of the whole pack, there are bound to be a few cards that accurately correspond.
SmokeyQuinn is just another wannabee Nostradamus.

Once again Quinn FAILS!

https://www.youtube.com/watch?v=p6O4LE0eTYc

Tue, 02/10/2015 - 20:12 | 5769210 kaiserhoff
kaiserhoff's picture

The productive sector has been in a depression for years.

The parasites are about to get a taste.

Tue, 02/10/2015 - 21:55 | 5769611 SWRichmond
SWRichmond's picture

Amen, brother.  44% of American working age adults are working full time. 

http://www.gallup.com/poll/141785/Gov-Employment-Ranges-Ohio.aspx

no less than 12% of workers in any U.S. state report working for the government.

So a third of the working age adults have actual private sector full time jobs.  This third must produce enough wealth to sustain the remaining 67% of working age adults, PLUS all of the retired, infirm, and children.

I, for one, am fucking tired of it.  The patrasites can starve or freeze to death.

Tue, 02/10/2015 - 23:45 | 5769976 jerry_theking_lawler
jerry_theking_lawler's picture

Haha. You think our 1/3 of productive private sector jobs support the other 67%....that is funny. Its the borrowing, kicking the can, and general money printing that is keeping this turd afloat (no offense TF).

This baby is gonna pop and when it does, its gonna be U.G.L.Y.

https://www.youtube.com/watch?v=5orRsvdZeUA

Tue, 02/10/2015 - 20:20 | 5769219 Son of Captain Nemo
Son of Captain Nemo's picture

"Or is he purposely misleading the American people about the seriousness of our circumstances because he has been instructed to do so by the men who really pull the levers of this country?"...

Here maybe this verbal misdirection queue laced with a dash of genuine treason might help you to identify the current situation you're leader is putting you in?!!! 

I know what you're thinking. 

He's done this to you a million times before.  But never on another nuclear superpower that's your Country's equal that unlike you isn't running an $18 trillion deficit and hasn't been at war for the last 14 years with not too much left in the old "tank"!

 

Tue, 02/10/2015 - 21:49 | 5769586 Omen IV
Omen IV's picture

it would be very easy for Obama and the rest of his cabal to launch nuclear missiles on the USA and blame the Russians

They planned the demolition of the WTC and murdered 3,000 - why not 30,000,000 with friendly fire - knocking out all the areas they dont want like detroit or whatever ?

they dont care - they want the population gone - it's of no use to them

 

Tue, 02/10/2015 - 22:06 | 5769641 Son of Captain Nemo
Son of Captain Nemo's picture

OIV

There was a time I would have completely dismissed such thoughts, but after 9/11 and still no justice including the largest funded theft by the commercial banks in the history of the World 8 years later -who's to say that couldn't be played out?

And to make matters even worse the cows in the field that are the American people chew their cud and "still" move in the direction they are told by their government!

Never a good combination!!!

Tue, 02/10/2015 - 22:53 | 5769825 zen0
zen0's picture

When cows are in the slaughter pens, there are no other ways to move. They are designed that way. All activity funnels toward the killing floor.

You cannot move in another direction, and if you try to turn back, you will be faced with a surging mass hastening to their demise.

 

Don't be concerned, I am sure their will be entertainments on big screens and refreshments in small packages.

 

Tue, 02/10/2015 - 23:35 | 5769944 Yes_Questions
Yes_Questions's picture

 

 

god damn Temple Grandin

 

Tue, 02/10/2015 - 20:14 | 5769220 spinone
spinone's picture

"May you live in interesting times" - Chinese Curse

Tue, 02/10/2015 - 20:15 | 5769221 eddiebe
eddiebe's picture

And we just ignore WW1?

Tue, 02/10/2015 - 20:36 | 5769294 kaiserhoff
kaiserhoff's picture

Wilson's war to end wars.  How's that working?

Tue, 02/10/2015 - 20:47 | 5769336 JuliaS
JuliaS's picture

Catch 22: "Gotta start wars to be able to end them."

Tue, 02/10/2015 - 20:15 | 5769222 Dollarmedes
Dollarmedes's picture

The only thing Obama knows is politics. He is utterly ignorant of economics, other than to know a bad economy is bad for him politically. He lies about the state of the economy because there's no downside: it may create a self-fulfilling perception which is good for him. If he's wrong, it's not like the people will care that he lied (again). They'll have other things to worry about.

Tue, 02/10/2015 - 20:16 | 5769224 A Lunatic
A Lunatic's picture

There is no unemployment, there is no inflation, there is no crisis and there is no Queen of England......!!

Tue, 02/10/2015 - 21:41 | 5769554 Kprime
Kprime's picture

what happened to the dandies?

Tue, 02/10/2015 - 21:41 | 5769556 Kprime
Kprime's picture

what happened to the dandies?

Tue, 02/10/2015 - 20:17 | 5769227 eddiebe
eddiebe's picture

""Or is he purposely misleading the American people about the seriousness of our circumstances because he has been instructed to do so by the men who really pull the levers of this country?"...

"Is the pope catholic" comes to mind.

Tue, 02/10/2015 - 20:25 | 5769252 Fun Facts
Fun Facts's picture

"Bloviate" is closely associated with U.S. President Warren G. Harding, who used it frequently and was known for long, windy speeches.

Tue, 02/10/2015 - 20:33 | 5769275 Sinnedi
Sinnedi's picture

"The Third World War must be fomented by taking advantage of the differences caused by the "agentur" of the "Illuminati" between the political Zionists and the leaders of Islamic World. The war must be conducted in such a way that Islam (the Moslem Arabic World) and political Zionism (the State of Israel) mutually destroy each other. Meanwhile the other nations, once more divided on this issue will be constrained to fight to the point of complete physical, moral, spiritual and economical exhaustion…We shall unleash the Nihilists and the atheists, and we shall provoke a formidable social cataclysm which in all its horror will show clearly to the nations the effect of absolute atheism, origin of savagery and of the most bloody turmoil. Then everywhere, the citizens, obliged to defend themselves against the world minority of revolutionaries, will exterminate those destroyers of civilization, and the multitude, disillusioned with Christianity, whose deistic spirits will from that moment be without compass or direction, anxious for an ideal, but without knowing where to render its adoration, will receive the true light through the universal manifestation of the pure doctrine of Lucifer, brought finally out in the public view. This manifestation will result from the general reactionary movement which will follow the destruction of Christianity and atheism, both conquered and exterminated at the same time." 4

Tue, 02/10/2015 - 20:36 | 5769291 A Lunatic
A Lunatic's picture

From page 2,075 of the Affordable Care Act......??

Tue, 02/10/2015 - 21:26 | 5769457 American Dreams
American Dreams's picture

+10 if I could Sinnedi.  To quote Albert Pike is a rare thing.  And for those of you that do not know of Albert it would serve you well to do a bit of research.

Know your enemy

AD

Tue, 02/10/2015 - 23:40 | 5769964 Atticus Finch
Atticus Finch's picture

Religion, the great divider of the human race and the source of its destruction.

Wed, 02/11/2015 - 05:08 | 5770377 stacking12321
stacking12321's picture

as a militant agnostic, i find your comment extremely offensive!

i am fanatically certain that i don't know the truth about god, and if you claim that you do, then you are my enemy and i shall slay you!

Tue, 02/10/2015 - 20:44 | 5769321 Lmo Mutton
Lmo Mutton's picture

WTF did he say anyway?

Tue, 02/10/2015 - 21:09 | 5769406 Cloud9.5
Cloud9.5's picture

Sitting in front of what is coming for us is like sitting in front of a glacier we can hear the moans and groans of a monster that is about to calve and drop a shit load of ice in the ocean.  We are pulling the chain on a nuclear power that can put us in the dark ages with one submarine.  We have idiots running around Washington opining on how we can win this war. They for some reason think the ship of state will hold together when the lights go out.  Fools damn fools all of them. When marauders by the hundreds are working through the burbs looking for a can of beans there will be no state.

 

 

I feel like the Cyclops who foresees his own death and there is not a single thing I can do to prevent it. My kids are in the blast zone and they will not leave their million dollar home and their six figure salaries.  They are less than twenty miles from MacDill. I am on the verge of becoming extinct and there is nothing I can do about it.

Tue, 02/10/2015 - 22:00 | 5769627 Omen IV
Omen IV's picture

maybe !- this last summer i was in Argentina in front of the Perito Moreno Glacier - i stayed a few hours watching the ice calve just like you say - waiting and watching and then the boom and the waves - huge pieces - right at the front edge of the glacier - spectacular!

the point is-------> the southern hemisphire is part of an answer

The bush family bought a ranch this summer in paraguay i think 100,000 acres near a US Military base - americans are buying from  El Calafate in the south to the north border and in Paraguay  - i think for the jet stream since the fallout will be minimal down there

Tue, 02/10/2015 - 21:11 | 5769420 tarabel
tarabel's picture

 

 

Anybody else think we're good to go until 2025?

Me neither.

Tue, 02/10/2015 - 21:56 | 5769606 booboo
booboo's picture

All things are wearisome; Man is not able to tell it. The eye is not satisfied with seeing, Nor is the ear filled with hearing. 9That which has been is that which will be, And that which has been done is that which will be done. So there is nothing new under the sun. 10Is there anything of which one might say, "See this, it is new "? Already it has existed for ages Which were before us.…

Ecclesiastes 1:8-10

or as they say "been there done that" No, the world is not going to end.

Tue, 02/10/2015 - 22:56 | 5769835 zen0
zen0's picture

Or as Spengler/David Goldman put it,  " Its not the end of the world, its just the end of you."

Tue, 02/10/2015 - 23:37 | 5769953 Atticus Finch
Atticus Finch's picture

Except for the nuclear exchange.

Wed, 02/11/2015 - 00:00 | 5770005 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

March 10th 2008<----------------------------------March 10th 2015

 

People don't get that the entire World Banking system imploded

almost exactly seven year ago and that this time is different from

previous turnings in the economy. Casino Capitalism should never have happened and as a result of the securitization process, and the financialization process, along with the deinstitutionalization of Glass-Steagall, the conditions have been set to completely wipe out all economies in the World through the destruction of the $1.5 Quadrillion Petro-dollar Derivatives Universe that dwarfs all economies of the World en masse. This universe is imploding as we write here and has merely been loaned the facade of still being in a functional state because the ruling classless kleptocrats in the 1% don't know what way to turn or which way to go with the implosion that they have on their hands. In brief, this is not a fourth turning this time and the cyclical rhythm that the Equilibrium Economists

have always depended upon in past centuries or decades of market behaviour is not the same this time round. All out destruction of all economies in the World will not lead to a return to normalcy in society and we are witnessing the complete breakdown of civilization itself. Modern cinvilization cannot afford to break down even for a day let alone years on end. There will be no reset this time, my friends, this much I know. Mathematics and Probability Theory are NOT to be fucked with when the numbers are as high as this.

Wed, 02/11/2015 - 00:27 | 5770075 Gab Timov
Gab Timov's picture

so i won't have to pay back my loans, right? cool.

Wed, 02/11/2015 - 08:34 | 5770519 polo007
polo007's picture

http://in.reuters.com/article/2015/02/11/usa-fed-employment-idINKBN0LF0AF20150211

Shifting goal posts on employment may signal slower Fed rate hikes

(Reuters) - Federal Reserve officials are debating a historic shift in one of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels.

According to interviews with half a dozen current and former Fed policymakers and staff, the concept that the economy can produce far lower levels of unemployment without stoking inflation is being built into Fed models and becoming increasingly entrenched in the central bank's views.

That shift may not delay the timing of the Fed's first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on to bring as many people as possible back to work and to push inflation back up to the Fed's 2-percent target.

Fed policymakers' December projections show most expect the Fed's benchmark rate to rise to 2.5 percent or above by the end of 2016 from the 0-0.25 percent range now.

On Monday, Fed governor Jerome Powell became the latest of policymakers to suggest the "natural" rate of unemployment, also referred to as a level of full employment, had fallen.

"Maybe the natural rate is lower...That it is five (percent) or even lower," Powell said. That would be significantly below current unemployment rate of 5.7 percent and the 5.2 percent to 5.5 percent range Fed officials have recently estimated as the level of unemployment at which inflation is likely to increase.

LOWER DESTINATION

Atlanta Fed President Dennis Lockhart said the question of the true level of full employment will come into focus when the Fed will have to decide whether to allow unemployment to drift to unusually low levels to push inflation towards its target.

“I am quite open to the idea that the destination we are trying to get to is lower than we have cited in the past,” he said on Friday.

The chiefs of the Boston Fed and the Minneapolis Fed have also said they are considering lowering their estimates, as did several staff at other Fed branches who declined to be quoted, in line with the central bank's policy for briefing the media.

For months, Fed policymakers have been puzzling over how the accelerating economy kept adding jobs but failed to spur wage and price increases that would cement the recovery and allow them to wind-down crisis era policies.

Now, there is growing sense that the point where the job market tightens enough to start pushing up wages and prices may be further away than earlier thought.

The U.S. central bank has no official target for full employment - generally expressed as the unemployment rate that is consistent with stable prices. But accurately estimating it is critical for the Fed, given its mandate is to safeguard economic conditions that allow maximum employment consistent with stable prices that the bank defines as 2 percent inflation.

Since the 1960s estimates of that "natural rate of unemployment" have averaged 6.3 percent, according to data published quarterly as part of the Fed's main economic model.

Beginning in 2013, however, its staff has been marking that rate down, from 5.6 percent to 5 percent by late last year. That may lead regional Fed presidents and board members to cut their quarterly estimates due next month.

Research at several Fed banks, both published and unpublished, puts the estimate as low as 4.7 percent.

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