How The Federal Reserve’s Rate Policies Are Out Of Sync With Our Economic Reality

The Federal Reserve is the weakest of the links in the US economy.  Their timing is poor. They operate under two mandates and one works in direct opposition of the other.

Maintaining a stable money supply is one objective.  Full employment is another.  However, the Fed has a goal of 2% inflation and not 0% inflation, which is not stable, but inflationary.  Additionally the Fed includes data in calculations that are not inflation based on monetary policy, but rising and falling prices due to greater or lesser demand.

That leads us to their second objective: full employment.  When we get towards full employment, wages should rise and businesses compete for labor.  But as soon as this were to happen, the Fed will stomp on the brakes. Continue reading

Quantitative Easing and The Impact on Jobs: Disaster Looming Straight Ahead

If you have been following my work for some time, you know that I have expressed belief that there is a strong correlation between Corporate Profit Growth and job growth in the United States.
My research had shown that there was a very high correlation between those two numbers. The higher the profit growth year over year, then the higher the job growth 4-5 quarters later.

Have a look at the following data. We have higher job growth with profit at lower levels? What is wrong with this picture?

Profits Jobs
Sep-10 -29.11% 0.09%
Sep-11 32.94% 1.66%
Sep-12 6.55% 1.48%
Sep-13 11.77% 1.79%
Sep-14 1.10% 2.04%
Sep-15 1.89% 2.05%
Profit Growth % from previous year
Job Growth % 4 quarters ending date shown

At the time I discovered this relationship, the correlation was .91 or so. This would imply that 81% of job growth was related to profit growth. And as I have written and suggested to anyone that would listen, if you wanted more job growth, you enabled more profit growth in the business sector. Using the same time frames as before, I watched the correlation fall from .81 to .57, suggesting that only 32% of job growth was now due to profit growth. Disappointing to me to be sure, but it was still a positive correlation Continue reading

Rand Paul’s Falling Behind-Is There Anything That Can Be Done?

rand paulRand Paul faces a series of major decisions. He has lost the edge he came into office with. His positions are dulling as he listens to advisors that tell him he needs to be more inclusive. WRONG WRONG WRONG.

Paul needs to be so clear on his positions that anyone(and I mean anyone friend or foe) knows where he stands and what his reply would be.

Rand has made some critical mistakes along the way. But he is still young. Let’s see if he can learn from them and correct his course.

Here are three things I suggest he do immediately:
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1) Apologize for supporting McConnell

Let’s face it. This was a mistake. Rand showed us that his loyalties were to the party and a fellow Kentuckian, even if that Kentuckian was wrong for America. And since then we have paid a heavy price for this choice. Rand could have had another ally in the Senate had he not supported McConnell.

2) Take a hard line on the border and illegal immigrants. Libertarians support an open border ONLY if crossing it does not come with food stamps, welfare, housing and medicare. Crossing the border into the US should not mean you get all the perks of citizenship.

Donald Trump has shown clearly that this is the single biggest issue we all have at this moment. We have been told for decades that something would be done. It hasn’t. The needs of law-abiding citizens are secondary to the wants of illegal aliens. And we are being bullied from all directions that we must accept illegals. We do not. If your native country sucks, I am sorry. But it’s NOT my problem.

3) Start attacking the Fed. The Fed has painted themselves into a corner. We are screwed. If you cannot make the most of this opportunity, you never will.

We are on the cusp of a major economic event. The Fed is at the root of the problem. It’s going to be hard. But we must remove our economic outcome away from the idea that printing more money, and borrowing future demand to shore up businesses today is the answer. Our future is dismal if we do not act soon. It may very well be too late. But Paul can boost his standing by continuing to highlight the mistakes the Federal Reserve is making(and who is getting rich on their coattails).
End the Fed

Rand has decide where he stands if he wants us to stand with him. As of now, I think he is trying to play both sides. I am not sure where he stands.

That will be a fatal mistake to his campaign. There are 15 flavors of vanilla being offered by the Republican slate. And then there’s Trump. Rand needs to show what his true flavor is.

Paul has potential. He has shown courage. But he has faltered over the last twelve months. I suggest he pause and look around. Are those advising him of what he needs to do palying inside the box? Or are they thinking outside the box?

This game will be won outside the box. So why continue to play inside the box?
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