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Fed Bond Purchases Have Not Translated Into Jobs, But Higher Food and Gasoline Prices
Confounded Interest ^ | 10/24/2012 | Anthony B. Sanders

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 he’ll 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 Fed’s 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 Fed’s 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 hasn’t 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 ...


TOPICS: Business/Economy; Government; Politics
KEYWORDS: bernanke; employment; fed; inflation
Bernanke keeps on stoking the flames of inflation.
1 posted on 10/24/2012 11:55:51 AM PDT by whitedog57
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To: whitedog57

I meant Fed and not ed.


2 posted on 10/24/2012 11:58:47 AM PDT by whitedog57
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To: whitedog57

***Of course, M2 Money Velocity continues to decline...***

This is the only reason we’re not experiencing higher inflation.

When that reverses - watch out.


3 posted on 10/24/2012 12:00:53 PM PDT by MichaelCorleone ('We the People' can and will take this country back...starting today.)
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To: whitedog57

Ponzu scheme.


4 posted on 10/24/2012 12:02:46 PM PDT by TigerClaws
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To: whitedog57

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.


5 posted on 10/24/2012 5:10:46 PM PDT by NVDave
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