I am starting to feel like a broken record, except this time we have a little less than the same. And sadly, we see predictably bad monetary policy at work, doing the taper tease for God only knows why. Ten years ago it would have been unthinkable to talk about tightening policy in the onset of recovery, yet the Bernanke Fed has gotten away with it on a near constant basis since 2008. It’s as if our entire world has been turned upside down and shaken vigorously, with FOMC members’ drama about inflation, bubbles, and the world supposedly due to explode because of a large balance sheet being met with very little challenge while we have earth shattering financial crises for Average Joe every day of the week. It’s disgusting and despicable.
I’d like to thank commenter “bill” for helping me out with understanding what Scott Sumner was saying in his recent post about the meaning of the unemployment rate versus the labor force participation rate. Scott worded it slightly differently this time around and threw me off. In a nutshell, the report today confirmed that we are still very far away from a full, natural labor market adjustment from the bout of deflation in 2009. We need either much faster wage adjustment for the price level or much faster NGDP growth to see any real improvement in the report. And since the Fed appears to be going the wrong way, I wouldn’t count on seeing any positive surprises in the near future.
President Obama sure doesn’t seem interested in a monetary regime change, happy to accept the sloppy, negligent leftovers from the Bush era and stamp his name all over epic failure, failure so complete, the Republican Party is in shambles and will likely wander around in the wilderness for years. It really is no wonder Democrats lost the House. Perhaps that Bush derangement syndrome advanced to the last stage where the hatred turns to admiration. After all, love and hate are just two sides of the same coin. I can’t really think of any other explanation for the persistence of this monetary disaster that started with Bush’s appointment of Bernanke or Obama becoming trigger-happy over Syria – his transformation is complete.
In other news, I noticed that the financial editor at Reuters got the boot a few days ago. I can’t say that I am sorry to see Rosenbaum, whom appeared to have a direct line into Jens Weidman, Chairman of the Bundesbank, finally get his pink slip. At least the overall tone of the financial reporting done by Reuters had that liquidationist flair that I choked on quite often; and I wonder if perhaps after some period of time Mr. Rosenbaum might look at the world of macroeconomics a little differently. It’s a bit of a comfort to know that even in this crazy mixed up world that there is still the possibility for poetic justice.