The employment report is out for December 2012 and it reflects more of the same. For those who have come to accept the status quo as the new “normal,” it is a positive thing that toward the last half of the year, the employment situation didn’t worsen as seemed to be the direction at the beginning of the 3rd quarter. My personal take on it is that being put in the position of having to settle for stabilization at the level of awful is unacceptable. Being three months into a “commitment” by the Fed to do something about the situation and we see simply stabilization of employment at an undesirable level, it means the Fed must do more and there should be no discussion about tapering off QE3 until the target is within reach.
I was aghast to see that the FOMC minutes from December were published with hawkish Nervous Nellie chatter in the mix. It seems completely irresponsible to set a goal for a given level of employment and then publish official documents that contain hints of contradiction that have no theoretical basis attached to them. It is likely the same exact problem that caused NGDP start an 18-month long plunge in 2008 – irresponsible hawkish chatter about the inflation bogeyman and screaming fire in Noah’s Flood. It really is too bad that the minutes do not identify those who raise such concerns – because they do so with impunity at great expense to society while not needing to justify them.
In all honesty I do not believe anyone inside the Federal Reserve can solve the monetary problem that vexes us. The entire institution is dysfunctional and needs to be remade or we will not have seen the last of crisis and the wanton destruction of countless lives of average people at random as a result of criminally negligent technocrats. If a foreign country had been responsible for the kind of financial destruction wrought upon this country since 2008, we would not hesitate to shoot first and ask questions later. But these irresponsible bankers get a pass – at least half of them should be clad in stripes working the chain at the very least.
I am not being melodramatic, either, considering having personally had only a taste of the kind of preventable desperation many have had foisted upon them over the last few years. We’re talking droves of formerly middle class people facing homelessness and/or the brink of starvation; predicaments no one can understand until they are at the threshold of it. We don’t teach the social history of the Great Depression; and it’s really too bad because today’s generation cannot recognize or comprehend the signs of plunging NGDP all around them and have no understanding of the gravity of the situation for society as a whole. It’s an entirely different situation than the willful or personally consequential economic disassociation from society that is generally associated with those occasions on an individual basis. Most of the victims of the Great Recession did not choose the path – it happened to them with no way out – and saying so or denying there are victims, as I have quite often read, is a kin to saying all those people who did starve or had to leave their children at orphanages because they couldn’t feed them during the Great Depression did it to themselves.
I believe the problems at the Federal Reserve are far past being grave enough to warrant Congressional action. Congress cannot apply any criminal sanction to behavior of the technocrats in the past; but it can restructure the Fed to prevent the past from repeating itself, leaving those responsible without a job, benefits, or pension – and it should do it – yesterday.