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Yellen Bamboozling With Bllsht At Jackson Hole

Friday, August 22, 2014 9:45

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(Before It's News)

TND Exclusive: Eric Dubin |

Interesting policy discussion does come out of these Jackson Hole banker love fests. But more often than not, when it comes to the Fed chair speech, it’s more about jawboning and hot air intended on shaping market expectations and taming Congress. Case in point: one of the big takeaways from Yellen’s speech was how the US economy’s employment creation and utilization engine is seriously lagging the pattern of previous economic recoveries. ”Underutilization of labor resources still remains significant,” she said.

Well, duh…

Perhaps the biggest problem is that Yellen’s traditional hardcore Keynesian worldview prevents her from fully appreciating that the level of debt expansion in the US and many other western economies (and Japan) has passed the point where the reliance of still further “credit” creation has muted impact, excessively inflating asset prices rather than the boosting of the capital saving and investment cycle of a bygone, more traditional capitalist economy.

The dirty laundry the Keynesian economic establishment is unwilling to talk about and often fails to even understand is that malinvestment and distortions within the economy are now fostered by monetary system micro-management beyond anything previously seen in the United States. Yes, we’ve had periods of significant government involvement in the economy, such as the Great Depression. But we’ve never had the combination of a fiat credit system inflated as ours today, combined with a gigantic levered shadow banking system.

Add on top of this the excessive involvement of the federal government in the US economy. Estimates vary, but roughly 10% of the gross domestic product is nothing more than the cost of complying with federal regulations. Impacts of government policy have equally profound force on the labor market. To a large extent, the explosion in the size of the part-time labor force is directly related to the fake healthcare reform program known as Obamacare.

This graphic comes from Bloomberg and you can click on their tweet link below to read the associated story.

RT @BloombergNews: BREAKING: Yellen says FOMC sees ‘significant’ under-use of labor resources. http://t.co/Lty3thWYbn

— Bloomberg Markets (@BloombergMrkts) August 22, 2014