Monetary Insanity

M

Mav88

We all know the fiscal insanity of the current administration, but have you seen the 'analysis' that the fed is betting our farm on?

$85B a month QE, and rates close to zero to sometime in 2015. Why 2015? Well one of the new targets is 6.5% unemployment, and here is a plot that some geniuses are using to explain the target

<a href="http://s1274.beta.photobucket.com/user/AlexisNexus/media/Unemploymentprojection_zps31ac7fef.png.html" target="_blank"><img src="http://i1274.photobucket.com/albums/y432/AlexisNexus/Unemploymentprojection_zps31ac7fef.png" border="0" alt="Photobucket"/></a>


You have to be kidding me, someone please tell me this is a joke. A high powered economists did a linear extrapolation? A 4th grader could have done that.

Let me get this straight, the same people who have gotten everything wrong with their projections in the last 20 years are now setting policy based on another? and it's this fracking retarded? Ben says also that he will be 'watching' the participation rate.... so how can one even begin to express the stupidity? The participation rate is exactly the reason for the slope in the first place.

How did we get so damned delusional? this is a nightmare of epic proportion, sorry to depress you even more but make no mistake these a-holes have no clue, or they do and feel helpless

these rates and this level of QE into late 2014 means the end of this financial system
 
why not pile on while we are at it.... The CBO projections are just as dismal, especially with new entitlements, YET policy is based on it as if it were decreed by a deity. Never mind how horribly wrong they were on medicare, let look at overall performance for a 10 year prediction in 2000

<a href="http://s1274.beta.photobucket.com/user/AlexisNexus/media/actual_versus_cbo_projected_revenues_and_outlays_2000-2009_zps002c5fe8.png.html" target="_blank"><img src="http://i1274.photobucket.com/albums/y432/AlexisNexus/actual_versus_cbo_projected_revenues_and_outlays_2000-2009_zps002c5fe8.png" border="0" alt="Photobucket"/></a>

does anybody really believe they have it right on the next 10? on Obamacare?

Economic Doom, it's as clear a prediction you can make. Don't worry, the democrats will not cut spending, your check is safe
 
Morons are running the show. They have been elected by greater morons. These morons place other morons in positions to carry out their moronic policies. Obama is our head moron and he proves it almost every day.

Many of us are not morons but the morons control our fate.
 
Also, the linear downtrend in unemployment is largely due to drop in labor force participation and not QE

The fed must be abolished and Greenspan and Bernanke should be rotting in jail
 
Quote from pupu:

Also, the linear downtrend in unemployment is largely due to drop in labor force participation and not QE
More...

A major part of the drop in labor force participation is something that nobody's talking about:

http://www.usnews.com/opinion/artic...why-the-country-is-unhappy-under-obama?page=2

If you are on disability, you are not considered to be in the labor force either. As of April, we have added 5.5 million people to the disability rolls since the beginning of 2009, several million above the previous trend. There are now roughly 9 million people on disability. In 1992, there was one person on disability for every 35 workers. It is now about one for every 16 workers. It is hard to believe that so many people have become disabled; disability has literally become another fallback position for people out of work. If disability had stayed at the pre-recession growth rate, unemployment would be at least one percentage point higher, leading to a true unemployment rate much closer to 10 percent and perhaps significantly more.
 
Quote from tomdavis:

A major part of the drop in labor force participation is something that nobody's talking about:

http://www.usnews.com/opinion/artic...why-the-country-is-unhappy-under-obama?page=2

If you are on disability, you are not considered to be in the labor force either. As of April, we have added 5.5 million people to the disability rolls since the beginning of 2009, several million above the previous trend. There are now roughly 9 million people on disability. In 1992, there was one person on disability for every 35 workers. It is now about one for every 16 workers. It is hard to believe that so many people have become disabled; disability has literally become another fallback position for people out of work. If disability had stayed at the pre-recession growth rate, unemployment would be at least one percentage point higher, leading to a true unemployment rate much closer to 10 percent and perhaps significantly more.
More...

of course not, because liberal religion has a choke hold on gov't and media
 
Quote from pupu:

Also, the linear downtrend in unemployment is largely due to drop in labor force participation and not QE

The fed must be abolished and Greenspan and Bernanke should be rotting in jail
More...

yes that was sort of one of my points.

I don't think the bernake is dumb so much as he is incredibly desperate. He did mention that he will be 'monitoring' the participation rate. That's a 'C'mon man' deal since discounting that and SSID we are sitting at 10%.
 
I am trying to imagine the enormous pressure this new ZIRP policy might put on the fed to continue QEx as well.

Since we have
1) negative real GDP growth (8% GDP deficit to finance 2% GDP growth)
2) continued weakness in bond markets, no way to keep up ZIRP without QE
3) serious issues with demographics and economic competitiveness

The bernanke will have to pray for labor participation to continue dropping or QEx will have to go on for some time in an ever accelerating death spiral. I predict he is going to panick and have to drop this ridiculous new mandate, the exponential rate at which we are speeding towards some type of crisis is going to unerve him.

maybe we could put everyone on SSID?

Big question running through my mind- if this goes on another 4 years, and it looks like it will, then extend and pretend will be very near then end of its course. Something will have to give out, what will it look like? Americans are stupid, just like 2008 hit quick and hard, so will the next one. They don't seem to care as long as today they can eat and watch TV. How will the gov't react when it can't do much anymore?
 
Mav,

Isn't it all tied to the dollar? As long as the dollar isn't tanking, the Fed can contiue to monetize the debt. I can even see an argument that we are better off with more dollars out there than more bonds. Bonds have to be paid off.

The problem, as you well know, is that at some point the dollar does tank. We can only depend on the flight to "quality" to last for so long. Either europe gets its act together, ok that is unlikely, Germany withdraws and the new DM takes over, or China decides it's had enough and pushes the yuan as the new reserve currency. Then we are toast, and like you say, it will probably happen quickly.
 
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