Who’s Profited Most from 7 Years of Fed Policy…. Well the Fed of Course!

So I’m often asked whether I really believe that government and policymakers intentionally create laws and policies that hurt the people and help themselves.  My answer is typically that “if you’re asking me this question you know I do but you don’t believe me; so either do your own research or continue to live in the world as you wish to perceive it.  I’m not here to beg you to open your fucking eyes”.

I started this blog about 18 months ago and I have chosen to provide my research with no income attached to it.  It means I have no axe but the truth.  I spent 13 years in major international banks and have been on both sides of the double edged sword that makes the financial services sector a place to reap riches and also to be thrown to the wolves.  That is, I am intimately familiar with the system.  That said, what I’ve discovered is that really very little effort is required to see the world for what it is.

The closest analogy is probably best left to Orwell with Animal Farm.  Humans around the world have been molded to believe they are part of a system to enable them to get ahead.  While some do manage to find a path that has substantial monetary rewards the vast majority (and growing) have, whether they realise it or not, succumb to a role of Boxer, the cart-horse.

That is, our lives revolve around putting in 8 to 10 hours of labour each day for which we receive enough to feed ourselves and our families, have a warm place to sleep and some of us are able to obtain some credit from which we can enjoy things like new cars every few years (while rarely actually owning them).  However, in terms of reaping rewards we sew, it is simply not reality.  The current system has a clear economic hierarchy which began taking shape centuries ago in Europe.  The problem which seems to exist is that people are willing to look at a calendar, see that it’s Thursday but believe almost any (false) figure of authority who says it’s Wednesday.  Let me give you an example.

The official’s unemployment figure is now down to 4.9%.  However, the U3 unemployment calculation, which is the one touted in mainstream media, excludes anyone unemployed that has not looked for work in the last 4 weeks.  That’s right, so if you don’t have a job but you looked for a job 3.5 weeks ago then you are considered unemployed.  However, if you are unemployed and haven’t looked for a job in 4.5 weeks you are no longer considered unemployed, you simply no longer exist according to the U3 figure.  The result is that after 4 weeks of not looking you fall off the radar and the U3 figure goes down.  Wonderful metric eh?

In order to see if people falling off the radar have found work or simply no longer exist we can look to labour force.  When we do it becomes clear that while U3 is moving down so too is labour force.

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This means people are not finding work they simply disappear out of the labour force and so no longer exist according to the unemployment figure we all follow.

Looking at the U3 chart we find another interesting pattern.

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Notice that there does not appear to be a steady state of ‘full employment’.  That is, unemployment declines until it explodes higher into a recession.  So the argument that simply appealing to the U3 figure as a forward looking gauge is nonsense.  Currently we are in the second longest pattern of decline (peak to trough) without entering a recession.  This is concerning because all hard indicators are now showing recession.  So in this sense the historical U3 figure too is signaling we are overdue for a recession.

But isn’t it just easier to accept whatever meme of happiness is being disseminated by those in charge?  Well let me bring this back to Animal Farm.  We are sold the American dream.  We are told the market is at all time highs and are led to believe that means Americans are doing fine.  We are told to continue to do our part to keep America strong and that means get out there and buy stuff and if it’s debt you need to do so well then it’s debt you shall have!  As long as you have stuff you should be happy.

And this continuous message of “you are doing just fine but if you’re not, well everyone else is so it must just be you” prevents most of us from even attempting to explore the truth. For what if it is just me that is failing??  I surely wouldn’t want to expose myself as not keeping up.  But the real message is there in the background.

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While the Pigs whisper words of encouragement into your ear their real message sits ever so faintly behind the facts.  The truth so very clearly is that we have become nothing more than Boxer, the cart-horse for whom the Pigs recognize must be kept warm with belly full but beyond that all equity from your labour and all profits from your debt will go to them.   Remember true capitalism has a natural relationship between profit and labour, but our existing policies have nothing to do with capitalism. Our policies are designed by the Pigs for the Pigs.  Why can we not see that??  It’s right there, now in front of you, have a look.  Stare at it for a moment and contemplate the implications if what I’m saying is true.

So continue to accept that unemployment is 4.9%, continue to accept a Fed manipulated all time high market indicates American workers are strong, continue to accept that 30 years of debt inflated GDP defines economic prosperity, continue to ignore the furnished facts and continue to accept the lies from the Pigs and you will continue to forge the chains of which your grandchildren will wear.  And while I recognize this all sounds very dramatic I expect you haven’t seen nothing yet.

7 thoughts on “Who’s Profited Most from 7 Years of Fed Policy…. Well the Fed of Course!

  1. And the Fed is going to be the most affected when their balance will be reduced as a result of rising interest rates the market will demand that on insolvents. It’s a matter of time.

  2. NONE of the BLS figures even BEGIN to accurately describe the true levels of unemployment and underemployment in the US:

    JUNE 16, 2015
    What’s the Real Unemployment Rate in the U.S.?

    http://charleshughsmith.blogspot.com/2015/06/whats-real-unemployment-rate-in-us.html

    An excerpt from his analysis which used the BLS’s own data, but NOT their conclusions:

    Based on income, I set the fully employed rate at 60%, and the marginally employed/unemployed rate at 40%. If we accept the BLS’s 121 million full-time jobs (which once again, doesn’t make sense given even minimum wage full-time jobs earn $14,500, and 50 million people report earnings of less than $15,000), we still get a marginally employed/unemployed rate of 25%: work force of 160 million, 121 million fully employed.

    These numbers align much better with the real economy than the official unemployment rate of 5.6%. It’s nonsense to count everyone earning a few hundred or few thousand dollars annually as being employed in the same category as full-time workers or those earning $15,000 or more annually.

  3. Thanks for your continuing exposition of our crony capitalist system. I always look forward to your posits on our collective predicament, even though it’s depressing in it’s exactitude. Do you think it can be, at some point, reset? Or are we now destined for serfdom, along with all the mindless numbers of sheeple? Is there any hope at all?

    1. Jim- I see it as two choices, maybe 3 if a leader emerges that can wake up the American people to just what Thad has been writing but I see the odds of slim to none and Slim left town. Choice 1, if you consider these actual choices, is to follow all past civilizations and spend a couple of hundred years sinking to essentially a survival mode for 99% of the people upon which enlightenment will happen and the 99’rs run out the “elites”. Number 2 choice is an actual revolution or a do over which would not guarantee good results BUT it could greatly shorten the path to having a country where it is ruled by and for the people. Lots of ifs and buts in this short reply and, quite frankly, I tend to go with a “not good” set of results due to the decreasing integrity of our citizens and the fact that the citizens of this country have not been in a true survival or hard times mode for 150 years.

      This is all about people, and we are all very unique in our thinking and mindset as is evidenced by the current happenings in the race for President. Just think about all the candidates and their supposed platforms and their followers, totally mind boggling to me. The spectrum is wider than I have ever seen, the democrats have a bona fide socialist and a criminal (in the same vein as OJ Simpson) both with strong support and the republicans have a huge selection from a 4x bankruptcy specialist to an evangelist to a couple of really slick attorneys. My point being, this diversity is very definitive of a country with no direction now and none to come which allows even more of the same.

      Our grandchildren will not have the liberties we have enjoyed without a complete overhaul of government (all three branches), the Fed and a return to every citizen being totally responsible for themselves.

      IMO, Bob

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