The Fed Is Destroying Jobs: Ken Griffin

Is QE at this point counter productive, even if ideally it could be correct ?

  • Yes. QE is now counter productive.

    Votes: 30 78.9%

  • No. The economy is too weak and this is the correct course of action.

    Votes: 1 2.6%

  • I don't know.

    Votes: 3 7.9%

  • I don't care.

    Votes: 4 10.5%
  • Total voters
    38
nitro

nitro

http://www.cnbc.com/id/100686676

I agree at this point in time, mid 2013. I understand QE during the debacle of 2008/2009/2010, and perhaps even into 2011 or 2012. At this point, all indications are that this is just creating fake wealth to the people that least need it, with little or no expenditure into hiring new workers by business.

One thing is, the FED strategy would work if the masses re educated themselves into more tech savvy careers, but people are just giving up instead of doing that.

Ideally, what it is trying to do is probably correct, but human beings in this country at least are not ready for it. Just look at the language we use to address technical people and the way we portray them in the media, geeks and nose picking "nerds." That is why these jobs are going elsewhere in the world or we can't get enough H1B visa residents.

Manufacturing jobs do appear to be making a very trickling comeback, but nowhere near enough to make a dent in the unemployment rate [for men].
 
The Fed is strongly "encouraging" investors to take on more risk assets than otherwise they might be inclined to do.

What could possibly go wrong?
 
Nitro, if i'm correctly understanding the main point here, it's that while QE was useful in ameliorating the effects of the 2008-9 crash and financial system breakdown, and probably succeeded in heading off a major depression and deflation, it may have outlived its usefulness. QE might even be more harmful than useful at this point. It may be time to wind down QE.

Is that it? If so, may I suggest that there is another component, besides Fed action, necessary to full recovery from the severe U.S. recession. That's the need for more hard and soft infrastructure investment and progressive legislation aimed at job creation. We've had some of this, but far too little.

The Fed may have done its job; may in fact have done an outstanding job where its tools are well matched to its responsibilities. But that can only go so far. One of the Fed's responsibilities is to achieve full employment (whatever that is) through management of the economy. For this, it seems the Fed's tool kit is only partially suited. When responsibility is assigned without the requisite tools being in place, we shouldn't be surprised when the results are not as good as we had hoped.

It seems to me the present state of economic recovery in the U.S. can be summed up as resulting from competent Fed policy but lacking nearly all of the essential initiatives from Congress that are needed. In fact, it seems that much of the House wants to sail in a different direction from the Fed and its Executive Branch partners. The result of this non-cooperative spirit seems to be a ship with half its sails still on deck and consequently making very slow progress.

The way to rapid, full recovery is to combine further QE with progressive Congressional action. So far, Congress, hasn't cooperated and some of its initiatives have been downright harmful.

We still have more than half our Congress believing in economic theory that has been shown by both research and practice to be utterly false. Their ideas are at complete odds with Fed policy; as though they believe themselves to be more capable economists then the economists. I daresay there are even some congressmen that want to go back to the gold standard; an impossibility!

Is the U.S. caught in a self-destructive, positive feedback loop, where ignorance breeds more ignorance at a continually accelerating pace?

P.S. I suppose I should offer a comment on Griffin's remarks since that's what started this thread. His comments make little or no sense. Low employment may be correlated with low interest rates -- isn't that what happens in recessions!-- but they are not related as cause and effect. Nor do low interest rates cause extraordinarily high medical costs. How is it possible for such a flawed thinker to become head of an outfit like Citadel?
 
His point makes sense, yet it is just one of many factors at work that are harming jobs, particularly decent paying jobs.

-Technology, even without zero financing would still be killing jobs.
-Global wage arbitrage - both outsourcing and immigration are harming middle class and working class incomes
-increasing costs/uncertainty created by obamacare
-Busted government budgets means cutting back on make-work jobs like most of the post office, etc
-All this has occurred while the Bernanke asset inflation has stoked the fortunes of asset owners (the rich) which has had the unfortunate effect of stoking class resentment.


Ultimately people will need to face reality: The productive economy does not need a large percent of the workforce. Neither political party has a solution, or even a shred of a solution, to this basic and growing problem. The country needs new ideas.
 
Low rates also encouraged public companies to load up on debt to buy back shares (and increase dividend per share), which has caused those stocks to soar as investors pile into dividend stocks while ignoring the additional debt burden.
 
Quote from piezoe:



Is that it? If so, may I suggest that there is another component, besides Fed action, necessary to full recovery from the severe U.S. recession. That's the need for more hard and soft infrastructure investment and progressive legislation aimed at job creation. We've had some of this, but far too little.

The Fed may have done its job; may in fact have done an outstanding job where its tools are well matched to its responsibilities. But that can only go so far. One of the Fed's responsibilities is to achieve full employment (whatever that is) through management of the economy. For this, it seems the Fed's tool kit is only partially suited. When responsibility is assigned without the requisite tools being in place, we shouldn't be surprised when the results are not as good as we had hoped.

It seems to me the present state of economic recovery in the U.S. can be summed up as resulting from competent Fed policy but lacking nearly all of the essential initiatives from Congress that are needed. In fact, it seems that much of the House wants to sail in a different direction from the Fed and its Executive Branch partners. The result of this non-cooperative spirit seems to be a ship with half its sails still on deck and consequently making very slow progress.

The way to rapid, full recovery is to combine further QE with progressive Congressional action. So far, Congress, hasn't cooperated and some of its initiatives have been downright harmful.

We still have more than half our Congress believing in economic theory that has been shown by both research and practice to be utterly false. Their ideas are at complete odds with Fed policy; as though they believe themselves to be more capable economists then the economists. I daresay there are even some congressmen that want to go back to the gold standard; an impossibility!

Is the U.S. caught in a self-destructive, positive feedback loop, where ignorance breeds more ignorance at a continually accelerating pace?

P.S. I suppose I should offer a comment on Griffin's remarks since that's what started this thread. His comments make little or no sense. Low employment may be correlated with low interest rates -- isn't that what happens in recessions!-- but they are not related as cause and effect. Nor do low interest rates cause extraordinarily high medical costs. How is it possible for such a flawed thinker to become head of an outfit like Citadel?
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I hate to break this to you, but everything you suggest, has already been done in Europe and they are worse off then we are. Infrastructure is not going to do squat if there is not a real economy working behind it. Why don't you Keynesians understand that? It's YOUR theories that are outdated. They have been practiced in Europe for 100's of years. I don't know if you have HBO, but you should check out the latest episode of VICE (surprisingly produced by Bill Maher) that highlights what is happening in Europe right now.
 
Quote from Maverick74:

I hate to break this to you, but everything you suggest, has already been done in Europe and they are worse off then we are. Infrastructure is not going to do squat if there is not a real economy working behind it. Why don't you Keynesians understand that? It's YOUR theories that are outdated. They have been practiced in Europe for 100's of years. I don't know if you have HBO, but you should check out the latest episode of VICE (surprisingly produced by Bill Maher) that highlights what is happening in Europe right now.
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Piezoe is hopelessly naive OR purposely obtuse (hard to figure out which), but given the fact that he is into his 70's, I'll go with the latter.
 
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