Tuesday, August 30, 2016

Main Street and the Fed

As I tell young people all the time, the single greatest threat to their financial well-being is the Fed because there is over $4,000,000,000,000.00 sitting on the Fed balance sheet.

They look at me like I just mentioned calculus.

Main Street was banged up in 2008.   The middle class had to stop using their homes as savings banks.  That was a good thing.

Today, the Fed does nothing for Main Street.  Here is Stanley Fischer of the Fed..........



FISCHER: Well, clearly there are different responses to negative rates. If you’re a saver, they’re very difficult to deal with and to accept, although typically they go along with quite decent equity prices. But we consider all that and we have to make trade-offs in economics all the time and the idea is the lower the interest rate the better it is for investors.

And there you have it: ignore the economy, it's all about "decent equity prices" and whatever is "better for investors." We point this bizarre justification for the central banks' latest failure, just in case there was still any confusion why they keep pushing the same failed policies day after day: it's all about keeping stocks artificially inflated.
Now remember this, in June 2011, Fischer applied for the post of IMF managing director to replace Dominique Strauss-Kahn, but was barred as the IMF stipulates that a new managing director must be no older than 65, and he was 67 at the time.

This is where we are today.  Tax reciepts are down at the corporate and personal level.  Productivity is down while GDP is under 2%.  

 Mr. Fischer said,  "employment is very close to full employment."

With that statement, Stanley Fischer may have just become the biggest liar in the history of the Federal Reserve Bank, which, in itself, has a history of pathologically lying Fed Governors. How does having the historically largest number and percentage of working age male Americans out of the workforce and having over 70% of new jobs created being part-time and/or minimum wage jobs equate to anything near "full employment"?

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