Freedom4um

Status: Not Logged In; Sign In

Business/Finance
See other Business/Finance Articles

Title: It Ain't So, Alan! Why Greenspanian Central Banking Is the Mortal Enemy of Capitalist Prosperity
Source: David Stockman's Contra Corner
URL Source: https://www.lewrockwell.com/2018/10 ... nemy-of-capitalist-prosperity/
Published: Oct 20, 2018
Author: David Stockman
Post Date: 2018-10-20 18:00:56 by Ada
Keywords: None
Views: 407
Comments: 2

We can thank bubblevision and the Maestro himself for a splendid reminder today that Greenspanian central banking is the greatest menace to capitalist prosperity ever invented. This was made abundantly clear by his pronouncement on CNBC regarding the current labor market:

“Tightest labor market I’ve ever seen.” – Greenspan on @CNBC

As an empirical matter, of course, that’s rank nonsense – and is among the stupidest quips the Maestro has ever uttered. That’s because the law of supply and demand dictates that if the labor market is actually the tightest since Greenspan began his career in the 1950s, wage rates should also be rising at the highest rate ever.

In fact, at 2.8% year-year-over year for September 2018, nominal wage growth (red line) is the lowest it’s been since the late 1960s; and in real terms, the story is even worse.

To wit, between 1955 and 2000, real compensation per hour grew at a 1.75% annual rate – and that’s the average across seven business cycle, including recession years.

By contrast, we are now at the top of the second longest business expansion in history, and real compensation (purple line) was up just 0.7% over the past 12 months. And that’s virtually the weakest late cycle growth rate on record.

Click for Full Text!

Post Comment   Private Reply   Ignore Thread  


TopPage UpFull ThreadPage DownBottom/Latest

#1. To: Ada (#0)

key points ~

At a high enough wage rate, you will get housewives out of the kitchen, students off their duffs, more volunteers for overtime, and, if need be, more peasants out of the Chinese or Vietnamese rice paddies. In today’s globally networked, traded and welfare-enabled world, there will never be a physical shortage of labor hours – just the right price to bring latent hours into monetized production.

Needless to say, the latent hours now sequestered in Federally subsidized basket-weaving classes or playing shuffleboard on early retirement or disability do raise market-clearing wage level s at the margin. But you can solve that problem by cutting welfare benefits, not giving the Fed a mandate to fiddle with interest rates and financial asset prices.

That latter only fosters increasingly destructive gambling, bubbles and malinvestments in the financial system, not higher production, employment and prosperity on main street.

“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken

Lod  posted on  2018-10-20   20:08:23 ET  Reply   Trace   Private Reply  


#2. To: Lod (#1) (Edited)

But, but, but Lod, all the kids need widget spinners!

How else he gonna get money for that shit?

“I am not one of those weak-spirited, sappy Americans who want to be liked by all the people around them. I don’t care if people hate my guts; I assume most of them do. The important question is whether they are in a position to do anything about it. My affections, being concentrated over a few people, are not spread all over Hell in a vile attempt to placate sulky, worthless shits.” - William S Burroughs

Dakmar  posted on  2018-10-20   20:17:15 ET  Reply   Trace   Private Reply  


TopPage UpFull ThreadPage DownBottom/Latest