The Fed keeps Printing Money and People keep Leaving the Labor Force

Posted by PITHOCRATES - September 22nd, 2013

Week in Review

The Federal Reserve has failed to bring down the unemployment rate.  So the Fed will continue to devalue the dollar.  In their fervent Keynesian hope that it will actually do good.  While it continues to do a whole lot of bad (see STOCKS EXPLODE, RATES COLLAPSE AFTER FED SHOCKER: Here’s What You Need To Know by Sam Ro posted 9/18/2013 on Business Insider).

No taper. The Federal Open Market Committee (FOMC) shocked the markets by announcing that it would continue its monthly purchases of $85 billion worth of Treasury Securities and mortgage bonds. Most economists were looking for a reduction, or tapering, of around $5 to $10 billion dollars…

Markets went nuts. The Dow and S&P 500 surged to new all-time highs. Interest rates collapsed, the dollar tanked, and gold surged.

During the press conference, Bernanke said that the tightening of monetary policy (i.e. raising the Fed’s benchmark rate) may not begin until the unemployment rate is considerably below 6.5%. He also said that an inflation rate floor could be a sensible modification to its forward guidance policy.

The only thing lowering the unemployment rate is people leaving the labor force.  The labor force participation rate is at record lows.  Which means more and more people who can’t find work have just given up trying.  And because they have the labor department doesn’t count them anymore as unemployed.  Which brings down the unemployment rate.

So for the Obama economic policies to lower the unemployment rate below 6.5% will require bringing the labor force participation rate lower still.  Because the Obama economy is not growing.  Obama’s policies, especially Obamacare, are the greatest job killers to ever come down the pike.  If the unemployment rate drops below 6.5% in this jobless ‘recovery’ we’ll have Great Depression unemployment.  Tens of millions of real people out of a job despite what the official unemployment rate says.

And you know it’s bad when “interest rates collapsed, the dollar tanked, and gold surged.”  They’re printing so much money ($85 billion each month) that massive inflationary pressures are building up in the pipeline.  There’s so much money out there that there is more than people (other than Wall Street investors) want to borrow.  Hence the low interest rates.  Because they’re printing so much money each dollar is worth less and less.  Which is why the dollar tanked.  Because the Fed is going to continue to devalue it.  And when inflationary pressures are building and are just waiting to explode people want to protect their assets with gold.  So when inflation explodes and our money becomes worthless gold will hold its value.  Why?  Because you can’t print gold.  That’s why Keynesian economists hate it.  It forces governments to be responsible.  Something anathema to a Keynesian.

The economy under the Obama policies is now just a train wreck waiting to happen.  And when it does the fallout will be Great Depression bad.  Because of Keynesian economics.  The worst and most destructive theories ever to be implemented by government.  In fact, everything wrong in government finances today can be traced to Keynesian policies.  Expanding the money supply to stimulate the economy has only made recessions worse.  And increasing government spending (to replace private spending during recessions) has burdened governments so much that they are flirting with bankruptcy throughout the world.  Even a city in the United States.  The City of Detroit.  A harbinger of what is to come.

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