More Fed Nonsense from Janet Yellen

Yellen's statements yesterday were ridiculous.  She said that the decision as to whether or not to raise rates would depend upon "further improvements in the labor market."  What exactly does that mean?  Employment creation is anemic and has been since the Fall of 2008.  That's seven years.  So, what does she mean?

If given a healthy dose of truth serum, here's what I think she really means:  "I have no idea why rates haven't gone up.  We've been hoping and praying for years that rates would rise, but they never seem to.  We plan to keep hoping and praying.  Obviously, we have no ready mechanism to raise rates.  Just saying "go up rates" doesn't make it so and, as everyone knows, open market sales to reduce reserves could easily be destabilizing."  Okay, I got that.

The Fed has the power to add to and subtract from the monetary base.  Outside of that, the only other power the Fed has is to badger big banks to bend to their will when they feel in the mood to badger.  But, one power the Fed does not have is the power to precisely control interest rates.  That they cannot do.  The past five years is pretty demonstrative evidence.

Paul Volcker, the greatest Fed Chairman in history in my view, always said that "we are just following the market," at the time the Fed announced a new target range for the Federal Funds rate.  Volcker understood what was going on and, I suspect, Yellen does as well.

But, it is so much easier to believe that the Wizard behind the curtain controls all of this than to accept the reality that markets control rates, not the Wizard.  So, look for more Fed speak nonsense.  Rates will rise when markets make them rise....not before.

The Real Divide

Bureaucrats with protected job security don't worry about economic growth.   Why should they?  From their point of view, private sector job creation is a nuisance issue.  Bureaucrats and others who live off taxpayers are far more interested in social issues and climate change.  Mundane, routine issues like getting a job are not of much interest to someone basking under the "tenure" positions in public education and higher education.

The private sector is full of folks concerned about profits and about jobs.  How crass?  The bureaucrats, protected from the vagaries of free markets, are able to mull over the big issues of the day like creating safe spaces for transgenders and climate change.  These issues are very appealing discussion topics for people who don't have to worry about how to support their family.  Protected, as they are by taxpayer-provided funds, they are free to mock ordinary citizens who fend for their life in the private sector.

This is the real American divide -- between taxpayers funding all of this and those "five-percenters" sitting loftily in government, non-profit, or education industry luxury.  They can talk all they want about the issues they like, which are mostly irrelevant to poor folks and low income folks, who need jobs and hope.  These "five-percenters" are busy finding ways to impose higher and higher barriers to the hopes of those less fortunate.

So, if your living room is dominated by discussions of climate change, it is likely that the bread winners in your house are bureaucrats or taxpayer-funded clericals who don't face a market test - ever.  If your living room is dominated by discussions of how to find next month's rent or a job, you are likely a participant in the private sector.

This is the true American divide.  That's why the media and their friends in the bureaucracy are interested in climate change.  They don't need to worry about economic growth and the standard of living of the average family, as long their personal economics is unaffected by any of that.

The Taxpayers as Bad Guys

There is a remarkably block-headed article by Gretchen Morgenson in today's NY Times about the student loan crisis.  Morgenson, who sometimes makes sense, makes no sense in today's article.  Her article is about the repayment, or lack of it, process that takes place when it is time for the borrower to repay.

Wow!

You would think that these college students were totally incompetent to read a loan document.  You would probably be right.  It is highly likely that very few of these borrowers should have gone to college in the first place, much less had a convenient, taxpayer-backed, way of borrowing.

There was no discussion in the article about whether or not any of these students worked during their college years -- a phenomenon that is all too infrequent these days.

There is no concern in this article for the interest of the lenders, who are out the money.  They turn out to be the villains in Morgenson's article.  This is the usual NYTimes narrative -- those lending money are villains.  This theme was the usual tale of 2008, where mortgage lenders were villified while those who lived high on the hog -- way above what they themselves could reasonably support -- were portrayed as the victims.

Why do you think students need so much loan money today?  Could it be that all of those administrators pulling down high six figure incomes, while working a six month year, are costly to support?  Take a look at the pay rate of deans, provosts, university presidents, sexual assault specialists, gender studies directors and on and on. These folks make a fortune and they have dramatically added to the cost of education.

Those who, unwisely, expanded student loan access to prop up the current over-bloated, wasteful colleges and universities, are the real villains.

Rather than blame lenders and innocent taxpayers, Ms. Morgenson should look into the root causes of the absurd costs involved in obtaining a college education today.  While she's at it, take a look at the absurd courses of study that these borrowers are pursuing.  No wonder they can't pay these loans off.

This problem results from an unholy alliance of university administrators and folks like Elizabeth Warren and Bernie Sanders who think that the average American should pony up for every cause that those motoring around in limousines and fancy jets can dream up.

America's Future - On Display in Venezuela

Take a look at the political program of Hugo Chavez, the late popularly elected leader of Venezuela.  Then compare that program to the political program of Obama/Clinton.  Both programs claim that the issue of the day is wealth and income inequality.  Both propose major taxes on "the rich."  Both demonize the business community.  Both argue that retail stores overcharge for their products and underpay their workers.  Both propose dramatic increases in the minimum wage.

Neither program ever references economic growth -- ever!  Both programs see capitalism as an essentially evil institution.  Both see American foreign policy history as essentially predatory.  Both see the Castro regime in Cuba as benign and see American history as a history of evil and exploitation.  Both have little or no respect for the rule of law and are prone to arbitrary "executive actions," put forward by unelected bureaucrats, ignoring the duly elected representatives of actual voters.

Similar programs tend to produce similar results.  So, now that the Chavez program has been thoroughly implemented in Venezuela and Chavez is dead and gone, how is Venezuela doing?

Check out today's NYTimes.  An article by William Neuman and Particia Torres describes the now-desperate plight of the average Venezuelan.  What few goods and services are left in Venezuela are funneled to government workers and political supporters of the regime, reminiscent of the old Soviet regime and the modern day economies of North Korea and Cuba.

Venezuelans now resort to black market activities to provide even the most basic goods and services while the political elite bask in luxury.  Credit cards are now being replaced with barter as the economy increasingly backs up toward stone-age economics.  Except for government employees and the political leadership of this disastrous country, everyone else is broke, starving, lacking health care and basic education and bereft of hope.

In that sense, inequality of wealth and income has been eliminated in today's Venezuela, but that is mainly because wealth and income have collapsed to poverty levels.  This is the end game of the "inequality" gambit.  Meanwhile, the political leaders of Venezuela live high off the hog in a style that even Obama and Clinton would envy.

The "inequality" cause is a political ploy promoted by folks, like the Clintons and Obamas, who possess extreme wealth, unearned by any free market activities.  The end game is political domination and reduced living standards for the masses.  Cuba and Venezuela are the icons for this "inequality" dream.

No country in the history of the world has improved living standards by adopting the Chavez-Obama-Clinton program.  Only free markets can deliver higher living standards.  Every time free markets have been abandoned for political sloganeering, the average citizen's life style collapses.  There are no exceptions throughout history.

Notice that in the recent nationally televised debate featuring Ms. Clinton and others, no one bothered to mention economic growth at all.  Growing the economy no longer matters to these folks. Instead the focus is on dividing a dwindling economic pie.  The average American should check out the NYTimes article on today's Venezuela to get a glimpse into their future, if the Obama-Clinton regimes get their programs fully implemented.

Tough Call on TPT, But "No" Is the Right Answer

The president received the authority to negotiate the Trans Pacific Trade agreement with several Asian countries -- the biggest is Japan -- from the Congress.  Now, the Obama-negotiated trade agreement is headed to Congress for approval.  For reasons apparently known to no one, some of the agreement details are "classified" and even Congressmen, expected to vote on the measure, are not permitted to read it in detail.  If that sounds absurd, it is.

So, do you vote yes or no?

The first question is: can you vote on something that you are barred from reading?

The second question is will approval of this deal further the expansion of free trade or make free trade more difficult to implement in the future.  Why?  The president has loaded this deal with concessions to big labor and to environmentalists that gut most of the "free" in "free trade." If this deal becomes a pattern for future deals, then it should be rejected for that reason alone.

If you can't read the details in the agreement, then it should be rejected for that reason alone.

Is there much left to say?  This deal should be rejected.