Skip to comments.Fed Bond Purchases Have Not Translated Into Jobs, But Higher Food and Gasoline Prices
Posted on 10/24/2012 11:55:50 AM PDT by whitedog57
Federal Reserve Board Chairman Ben Bernanke plans to keep buying Treasury bonds and agency mortgage-backed securities (MBS) until unemployment improves substantially. Otherwise, little was announced today at the FOMC meeting.
Oct. 24 (Bloomberg) Federal Reserve Chairman Ben S. Bernanke says hell stoke the economy until the job market recovers substantially. That promise may force him to keep buying bonds until the final months of his term ending in January 2014.
The Federal Reserve and the Obama Administration were hoping that continued manipulation of Treasury and mortgage rates by the Fed (in terms of massive purchases of Treasuries and agency mortgage-backed securities) would translate into large growth in employment. But this is not the case.
Here is a chart of U6 unemployment/underemployment charted against the New York Feds Total Treasury purchases. It is unclear whether U6 unemployment is slowly declining because of Fed asset purchases. In fact, that is dismal payoffs for all that QE!
If I compare non-farm payroll growth to the Feds asset purchases, we can see that recent Fed purchase activity has done virtually nothing to improve Non farm payroll growth. NFP is growing, but the growth is pretty stagnant. Particularly for all that QE.
Of course, M2 Money Velocity continues to decline indicating that GDP growth hasnt improved due to the increased supply of money in the economy.
But what HAVE seen is the food and gasoline prices have skyrocketed since December 2008. And many foods and gasoline have exceeded even gold!
(Excerpt) Read more at confoundedinterest.wordpress.com ...
I meant Fed and not ed.
***Of course, M2 Money Velocity continues to decline...***
This is the only reason we’re not experiencing higher inflation.
When that reverses - watch out.
It’s not so much that as a bank bail-out scheme. The Fed realized, with a horrible sense of being completely ignorant in 2008, just how large the liabilities and bad debt was on bank balance sheets. All the actions taken since 2008 have been to prop up a failed banking system of “too big to fail” bankers.
The public-facing PR has been about “stimulating the economy,” but that’s simply not possible, since the US economy has been hollowed out since the early 90’s and most all of our growth since then has been financed with ever higher levels of debt. If the debt on the bank balance sheets collapses, then the US would go into a for-real depression with for-real deflation. Some (myself included) think that this is inevitable, because all the Fed is really doing here is moving bad debt off the banks’ balance sheet onto the Fed’s balance sheet... where it’s out of the public view and review that would come with the bad debt being on public-traded corporation bank balance sheets.
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