At least one Fed governor understands the Bernanke Fed's hyper-accommodative monetary policy has no exit.
Today on CNBC "Squawk Box", Dallas Fed governor Richard Fisher complained Fed Risks 'Hotel California' Monetary Policy.
Dallas Fed President Richard Fisher told CNBC that he's worried the U.S. central bank is in a "Hotel California" type of monetary policy because of its "engorged balance sheet." Evoking lyrics from the famous song by The Eagles, he said he feared the Fed would be able to "check out anytime you like, but never leave."
Fisher said on "Squawk Box" that he argued against revealing the new inflation and unemployment targets set by the Fed this week, saying he's worried that the markets will become "overly concerned" with the thresholds.
Fisher would not comment on any contingency plans at the Fed should Republicans and President Barack Obama fail to strike a deal to prevent the automatic tax increases and spending cuts from taking effect in the new year.
"What you see is what you get here," Fisher said. "We have a hyper-accommodative monetary policy here ... cheap and abundant money that the Fed has made widely available."
Any rational thinking person understands the Fed has no exit policy. I have stated that for years, most recently in Exit Strategy? What Exit Strategy? just a couple days ago.
Recall when the Fed pretended it was working on an exit strategy to reduce its balance sheet at the appropriate time?
It was a lie then and it's an even bigger, more apparent lie now (which is why you no longer hear Bernanke mentioning it) . The simple fact of the matter is that every Fed asset purchase makes it more difficult to exit.
When interest rates do start to tick up (which could be a while based on Fed statements), interest on the national debt would soar if the Fed unloaded treasuries. Likewise, mortgage rates would soar if the Fed unloaded agencies at a time interest rates were creeping up.
There never was an exit strategy and there never will be one.
Perhaps this comment by Fisher will wake some people up as to what is happening, but don't count on it.
Hotel California Video
In Tribute to the Eagles, and also Fed governor Richard Fisher I present this video from the Eagle's Farewell Tour.
Link if video does not play: Hotel California
A week ago in Startling Look at Job Demographics by Age I posted the following chart made with data that I downloaded from the St. Louis Fed.
Employment Demographics by Age Group
click on chart for sharper image
One person suggested the chart was "very misleading" because it did not properly reflect the aging workforce.
However, I did comment at the time 'Boomer demographics certainly explains "some" of this trend'.
I could not quantify the amount at the time because there was no civilian population data on the St. Louis Fed website (at least that I could find).
Since then, I asked my friend Tim Wallace to see what he could come up with, and with a few calls to the BLS he did get the population data from which we could make more accurate assessments. Here are the key comparisons.
2007 vs. Now for Age Group 25-54
- In 2007, the Civilian Noninstitutional Population for age group 25-54 was 125,978,000
- Currently the Civilian Noninstitutional Population for age group 25-54 is 124,248,000
- In 2007, Employment in age group 25-54 was 101,083,000
- Currently, Employment in age group 25-54 is 94,523,000
- Since 2007, the Civilian Noninstitutional Population for age 25-54 declined by 1,730,000
- Since 2007, Civilian Employment declined by 6,560,000
Quantification of "Some"
I can now quantify "some" more precisely: 279% of the decline in employment in age group 25-54 between 2007 and now is due to economic weakness as opposed to shifting demographic trends.
Here is a collection of interesting jobs charts by reader Tim Wallace.
click on any chart for sharper image
Civilian Population by Age Group
Percent of Work Force by Age Group
Participation Rate by Age Group
Work Force Percent Unemployed by Age Group
Percent of Work Force Employed by Age Group
Civilian Population Not Working by Age Group
Definitions and Notes
- The participation rate is the ratio of the civilian labor force to the total noninstitutionalized civilian population 16 years of age and over.
- The noninstitutionalized civilian population consists of civilians not in prison, mental facilities, wards of the state, etc.
- The labor force consists of those who have a job or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized.
- There are strict requirements on what constitutes "seeking a job". Reading want-ads or jobs on "Monster" does not count. One actually needs to apply for a job, go on an interview, or send in a resume.
- Please see Reader Question Regarding "Dropping Out of the Workforce" for an explanation of how the BLS determines someone is actively seeking a job.
The final chart above shows the number of people in each age group that is not working. Recall that, "not working" and "unemployed" are different things.
I would prefer a more simple definition of unemployment: those who want a job but do not have one. Instead, we have definitions that purposely mask (by many millions) the current sorry state of affairs.
Mike "Mish" Shedlock