Stop Calling it an Economic Recovery!

The Fed met this week and delivered the news: the economy is recovering & the end of QE is near. The end of QE may be near but the economy is not recovering.

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Don’t Call it an Economic Recovery.

Podcast Summary:

0:00-4:05 Introduction

Could Just About Anyone Do Janet Yellen’s Job?

4:05-5:05 discussion of Janet Yellen’s recent press conference following the FOMC meeting earlier this week and the difficulty of Ms. Yellen’s job.

Seems it’s harder to be a reporter listening to Janet Yellen, than to do her job. Yellen on Unemployment and Inflation Unemployment 5:05-7:20 discussion of Yellen’s testimony re unemployment. Discussion of the initial jobless claims data and how the Fed and the media interpret declining claims as a strengthening of the labor market and the economy.

Bloomberg: Jobless Claims Drop as Confidence in U.S. Picks Up

The drop in initial jobless claims is a function of labor force that has become smaller over the past five years, so there are fewer people left to fire. While initial jobless claims are at “pre recession levels” hiring is not and still is far less than is needed to claim “recovery” in the labor market.

Number of People Claiming Unemployment Benefits are Down

There are lower amounts of jobless benefits being paid because fewer people are losing their jobs as there are fewer left to fire and the benefits of those fired previously are running out. Yet the lower unemployment rate, declining initial jobless claims and jobless benefit claims are touted as signs of an improving labor market. Inflation

7:20-9:40 discussion of Ms. Yellen’s views on inflation. Inflation remains below the Fed’s 2% target. Ms. Yellen does not admit that the CPI understates inflation. Ms Yellen stated that for the Fed to achieve their inflation and employment targets highly accommodative policy is necessary and overshooting the Fed’s inflation target is an acceptable risk if continued accommodative policy helps the Fed attain its employment objectives.

This caused gold and silver to soar as it indicated the Fed is willing to be behind the curve on inflation.

Discussion of why inflation does not increase consumption and spending.


9:40-10:46 discussion of how the Fed no longer seems to be counting on a housing “recovery” to drive the economy, yet insists the economy will get better even without a robust housing market. The Fed’s focus now appears to be solely on hitting its inflation and employment targets.

10:46-14:15 The Fed’s plan to impose exit fees on bond funds is discussed. Discussion of the Fed’s non recovery and its reliance on rising stock prices.

Could Practically Anyone Do Janet Yellen’s Job?

14:15-15:18 discussed again!

Who Will Buy the Bonds that The Fed Won’t as QE Ends?

15:18-16:40 Ms. Yellen was not asked who is buying the bonds that the Fed is not buying. Discussion of the elimination of a market dynamic in the bond market.

Is There a Jobs Recovery?

16:40-18:18 According to the U.S. Bureau of Labor Statistics the economy added 217,000 nonfarm payroll jobs during May. Doctor Paul Craig Roberts disputes these statistics as being overstated by the entire amount and being derived using faulty data collection methodology.

Assume, however, the non farm payroll numbers are correctly calculated and the jobs are full time well paying ones, – they are still not enough for a real recovery according to Rep. Kevin Brady (R-TX), chairman of the congressional Joint Economic Committee who claims 371,000 new jobs are needed.

Using the Word “Recovery” is an Insult to the Unemployed and Struggling Workers

18:18-20:45 discussion of the insistence of the narrative that there is a economic and labor market recovery when in reality there is just a recovery in stock prices.

The Mortgage Lending Business is Not A Good One- Jamie Dimon

20:45-23:54 discussion of whether mortgage lending is a good business and whether people moving in and out of increasingly more expensive houses is a good way to drive an economy. Discussion of the housing inventory shortage myth. The issue with housing is not supply it’s lack of demand.

What Will the GDP be in the 2nd Quarter?

23:54 -26:00 discussion of what the 2nd quarter GDP will be.

Central Banks Talking About a New Era of No/Low Growth

26:00-29:15 Discussion of how central banks are floating the concept the growth may no longer be attainable and therefore central bank intervention is and will always be necessary. Discussion of hedge funds and their pitches to investors- buy stocks. Discussion of how the Fed backstops the markets since the original Greenspan put.

What Happens if there is Another Stock Market Crash?

29:15-35:15 Will the Fed be able to prop up the stock market again?

What you think? take our poll

Discussion of the disconnect between the economy and the stock market.

When it’s Good Business to Do Bad Business

Discussion of why companies buy back their own stocks and divert capital from capital investment and employee hiring. Discussion of when it makes sense for lenders to make bad loans. Discussion of the flaw in the Fed’s outcome based policy (higher home and stock prices) without a corresponding underlying basis for higher prices.

35:15-36:15 Discussion whether long term low rates encourage inaction by borrowers, discussion how the Fed can manipulate rates low and keep them there.

36:15 Are the recovery and its gains “real? Discussion of how the artificial gains in the stock market have provide some large real gains for some investors. These gains will be used to justify the Fed’s performance. The probability of a stock market crash and its aftermath are discussed. Discussion of whether the Fed and its allies can control the political and economic environment. Republicans vs Democrats, banking lobby vs. oil lobby

How Capitalistic Wealth Attracts Socialism

41:45-44:10 discussion how the gains of capitalism sow the seeds of socialism and how socialism destroys it. Each centrally planned mistake (guaranteed loans causing higher student loan and home prices) leads to more centrally planned mistakes (lower government lending standards, forgive/defer debt). What is the real value of a college education?

Is a Harvard AND a Princeton Education Enough To Fully Understand Nutrition?

44:10-50:48 Discussion of Michelle Obama’s comments on how even with all her education she had trouble making good food choices for her children. Discussion of the educational and work background of U.S. policy makers and their insistence in constant intervention in the economy and other aspects of civic life.

50:48-59:18 discussion of the options for people if they wish to buy a home. Discussion of homeownership rates and happiness. Surveys show happiness is tied to income not home ownership.
Discussion of speculative investing and Buffet investing.

Can Market Forces Overcome Central Bank Manipulation

59:18- discussion of whether market forces will be able to overcome central bank manipulation. Government and central banking control health care insurance and banking.

Stop Calling it an Economic Recovery!

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Further Reading:

How To Buy Gold

How To Buy Silver

The Fed’s $4 Trillion Victory Lap

QE Encourages Stock Buy Backs and Discourages Hiring

The Fed on the Housing Market

The Housing Inventory Shortage Myth

The Dark Side of Artificially Low Interest Rates

Initial Jobless Claims

Obama, Freddie Mac and Fannie Mae Hit the Panic Button on Housing

How QE Encourages Share Buy Backs and Discourages Hiring

Housing Inventory Shortage Myth

Largest Foreign Holders of US Treasuries

Obama, Fannie Mae and Freddie Mac Hit the Panic Button on Housing

Royal Canadian Mint

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