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Business/Finance See other Business/Finance Articles Title: The Keynesian Apotheosis Is Here—But Blame The Final Desttruction Of Sound Money On The Bushes The only thing that can be said about Janet Yellen’s simple-minded paint-by-the- numbers performance yesterday is that the Keynesian apotheosis is complete. American capitalism and all political life, too, is now ruled by a 12-member monetary politburo, which is essentially accountable to no one except its own misbegotten doctrine that prosperity flows from the end of a printing press. To be sure, this non-sensical and historically disproven proposition gets all gussied up in neo-Keynesian Fed-speak about dual mandates, monetary support to aggregate demand, “slack” in labor markets and remaining shortfalls from potential GDP, among endless like and similar jargon. But it did not take long during yesterday’s presser to reveal that Yellen’s mind dwells completely in a circular puzzle palace. For once she got a decent question or two, but answered by lapsing instantly into ritual incantation about the macro-cycle the Fed pretends to be superintending. Thus, when asked about the tepid rate of business investment in future productivity and growth, the answer was: Right, that’s why we need ZIRP for longer! That is, until we can inflate the GDP tire by monetary accommodation, expect CapEx to run flat. Heavens to Betsy Janet! CapEx has been running flat for 14 years. The compound growth rate of real plant and equipment spending is less than 1% since 2000 and is still 5% below its 2007 interim peak. There is nothing remotely this dismal during any extended period in modern history. Likewise, with the structural unemployment and labor force drop-out problem. This has been building for 14 years as documented by the fact that there are now 102 million persons in the working age population who do not have jobs compared to 75 million back in 2000 when the maestro was being hailed for his monetary policy genius. And no, Janet, these 27 million did not move to a golf course community in Florida for a much deserved and pleasurable retirement. In fact, there are only 7 million more people on OASI retirement today than there were 14 years ago. So don’t dismiss the graph below as representing retirement as normal; its actually an indictment of the Fed’s manic money printing during the interim. The monetary politburo has been pushing on an employment string for more than a decade, but this is not a cyclical problem. We have a debt-saturated failing economy that is not generating genuine growth, jobs or earned household incomes. Yet the Cool-Aid drinkers in the Eccles Building seem to think that a vast population (at least 30-40 million) that has moved onto food stamps and disability, or into mom and dad’s basement, or onto the student loan bonanza at on-line colleges, or on to the streets is just waiting for “lower for longer” to work it magic. In fact, Yellen’s lame answer to the chart below was “Its conceivable there has been some permanent damage”. Indeed. Post Comment Private Reply Ignore Thread
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