Sometimes for clarity and in choosing the appropriate words I thumb through the dictionary; and it came in very handy today in helping me to develop a topic for my blog (extra help from Marcus Nunes does wonders also).
Mr. Nunes has a great post today that compares the average weeks unemployed, the CBO’s estimate of the ‘output gap’, with a look at NGDP to trend, and a longer term view of the various CPI measures all converging around 2% over the last handful of years. Please read it and check out the charts because it paints a picture about why we have no recovery from the crash of 2008.
As I read it, I felt a twinge of heartbreak. Not even back in the early 80s when the Volker Fed finally got a handle on inflation did the average weeks unemployed measure shoot up to what it is now. The record for post-war recessions, set in that early 80s recession was just above 20 weeks and held until the Fed put the “great” in the Great Recession when it nearly doubled and now stands at about 4/5 higher five years after the crash.
Given that we are well past the short run, when all of the associated shocks that caused the crash should have come out in the wash, it very much appears that the Fed has a problem. At the very least, it isn’t doing what that institution has done in prior recessions to kick-start the next business cycle. Instead, the Fed is holding steadfast to its 2% annual inflation target as is very noticeable in the rather strange convergence of the CPI measures around 2% – never have we seen anything like it and we can pretty much tell that something is quite different about this recession from the others.
The very puzzling thing about it is that the Fed doesn’t seem to notice there’s a problem with the 2% explicit target plan. It was supposed to provide certainty and stability, and subsequently prosperity. It doesn’t appear to be working as planned because we have nothing but uncertainty and instability, and there appears to be a tradeoff that I am positive was never mentioned in all of the inflation-targeting hype. The undocumented features of explicit inflation targeting Bernanke/Mishkin style includes a permanent increase in the natural rate of unemployment and a lot of churn in the employment market with some getting left behind altogether as demonstrated in another record set by this recession, the large percentage of long term unemployed that now seems pretty static.
Even worse than the doing without bothering to ask; and the Fed did need to ask because this economic condition is not consistent with the Full Employment and Balanced growth act (this monetary regime is NOT pro-growth), is that it keeps doing it even though it is pretty clear no one enjoys the effects. People are STILL screaming about inflation. They are still screaming about unemployment. They are screaming about terrible business conditions – and rightly so. We are all waiting for this nightmare to pass – with many of us not quite aware that until the Fed gives up this monstrosity, what we have, right here, right now is the new normal.
And here is where Merriam-Webster comes in so handy. I looked up the word dastardly and here is what it says:
2) Characterized by underhandedness or treachery
Examples of DASTARDLY
A dastardly attack on innocent civilians
And then for despicable it says:
Definition of Despicable
1) Deserving to be despised: so worthless or obnoxious as to rouse moral indignation
The examples of despicable were farther than I would go, as if using these words regarding the Fed’s insistence on stabilizing all prices around 2% isn’t bold enough; a comparison of the pedophiles in a prison population as being particularly despicable might just be carrying it a tad too far – but just a tad.
Considering the current state of employment, however, the Fed’s insistence on adhering to its target is quite obnoxious. It is so obnoxious, in fact, that it rouses a sense of moral indignation; and it is characterized by both underhandedness and treachery because it is illegal. Yet it continues on, unabated regardless of the lip-service paid to the mandates which constitutes a ongoing cowardly attack on innocent civilians who have their lives destroyed while forced into playing the Fed’s game of musical chairs.
God, who do these people think they are?