Quote from piezoe:
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?
The wealth effect isn't working. Real estate hasn't inflated, appreciably. Equities have, but 80% of Americans own a measly 7% of all financial wealth. The rest went into commodities - energy, industrial metals, agricultural products - which inflated the real CPI, dramatically. As a Keynesian, you would know increasing factor input costs shifts the supply curve left-ward, pushes up the price level, and causes a reduction in GDP/employment. Iow, prices rise, and wages remain stagnant = drop in living standards and employment. So his analysis is right. All the QE, while propping banks, and staving off the inevitable Great D 2.0, eroded living standards and destroyed jobs by inflating supply costs. That's the problem. The Fed has a broad sword, but it can't dictate which asset classes that money flows into. In this case, under these circumstances, the desired effect (reflating the housing bubble), wasn't achieved. Now, actually consider why that's a good idea, when the last one just popped with disastrous consequences?!?!
What isn't discussed, is the other side of that equation - wages. Wages are in decline. Offshoring, H1B and illegal "migrant" labor exerts massive downward pressure on wages. Take any metric, but good jobs are far fewer, shitty jobs are more prolific, and hours are being cut. The result - wages are in decline and prices are rising. So ya, consumption has taken a massive hit, so output is down, along with GDP etc. While the FED is more responsible for escalating supply costs, it's Congress that's to blame for destroying wages.
And the idea that technology kills jobs is bogus. If that were true, nobody would have a job. Technology has evolved considerably since cave-dwellers invented the wheel 100,000 years ago. And here we are. Most people, with a job. Strange?
