An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Friday, November 6, 2009
10.2% unemployment rate highest in 26 years and they still think the Fed can fix this with low rates!!
The nation's unemployment rate rose to the highest level in 26 years and there is not a word being spoken about additional--and aggressive--stimulus (tax cuts and government spending).
Instead, our President and our policymakers are leaving the job up to the Fed, which has ZERO ability to increase aggregate demand. The Fed can only set interest rates and it has set them at zero, which effectively acts like an income cut to so many people who rely on interest income to live.
The Fed's quantitative easing is not only not helping, it is making the situation worse.
RIGHT ON MIKE
ReplyDeleteMike, it nearly suprises me that Obama is so unconcerned about getting re-elected,although I'm suspicious of Summers and Geither. Maybe he's gotten some bum advice. However, I read that Romer wanted almost twice as much stimulus from the beginning.
ReplyDeleteWithout more stimulus, it's hard to see how Obama holds onto the White House.
Agreed. But I believe that his political advisers, principally David Axelrod, think that the deficit is a greater political liability than 10% unemployment. That is the only way you can explain Obama's constant mention of the need to "cut America's debt," while millions of people are losing their jobs. The irony is, cutting the deficit will almost certainly make him a one-term president.
ReplyDeleteI have been suggesting for some time that raising the interest rates should come even as early as before the stimulus and the German "crass keynesian" commentary from their finance minister.
ReplyDeleteIf they would have jacked rates up last year or more immportantly before instead of easing, a lot of money would have flowed from around the world into the USA, would have stopped the easing lending spree, would have stopped arbitrage.
The easy money created the problems, the low interest rates, the weak dollar, commodities run up.
The linkage between high oil, low dollar, spiking commodities, and all that which we have seen before and continued is a function of the set interest rates.
And we know the interest rate setting is a choice and nothing determines it.
It's the Fed's problem.
The Current Population Survey (CPS) that is used to determine the rate of unemployment (10.2% in Oct.) is a “Household Survey”, as there are actual phone calls made to households. It showed 558,000 jobs were lost last month. How convenient it is for the Obama administration that the focus for number of jobs lost is on the Current Employment Statistics (CES) which showed (only) 190,000 jobs lost.
ReplyDeleteCould this be why the unemployment rate and job creations are not jiving?