{"id":15584,"date":"2015-12-23T11:27:06","date_gmt":"2015-12-23T16:27:06","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15584"},"modified":"2015-12-23T11:27:31","modified_gmt":"2015-12-23T16:27:31","slug":"the-keynesian-recovery-meme-is-about-to-get-mugged-part-1","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15584","title":{"rendered":"The Keynesian Recovery Meme Is About To Get Mugged, Part 1"},"content":{"rendered":"
\n

The Keynesian Recovery Meme Is About To Get Mugged, Part 1<\/a><\/h3>\n

Yellen said at least one thing of importance last week, but not in a good way. She confessed to\u00a0the frightening truth that the FOMC formulates its policies and actions based on\u00a0forecasts<\/strong>\u00a0<\/em>of future economic developments.<\/p>\n<\/header>\n

\n
\n

My point is not simply that our monetary politburo couldn\u2019t forecast its way out of a paper bag; that much they have proved in spades during their last few years of madcap\u00a0money printing.<\/p>\n

Notwithstanding the most aggressive monetary stimulus in recorded history\u2014-84 months of ZIRP and $3.5 trillion of bond purchases\u2014\u2013average real GDP growth has barely amounted to 50% of the Fed\u2019s preceding year forecast; and even that shortfall is understated owing to the BEA\u2019s\u00a0systemic suppression of the GDP deflator.<\/p>\n

\"\"<\/a><\/p>\n

What I am getting at is that\u00a0it\u2019s\u00a0inherently impossible to forecast the economic future, but\u00a0that is especially true\u00a0when the forecasting model is an\u00a0obsolete Keynesian relic which essentially assumes a closed US economy and that balance sheets don\u2019t matter.<\/p>\n

Actually, balance sheets now matter more than anything else. The $225 trillion of debt weighing on the world economy\u2014\u2014up an astonishing\u00a05.5X in the last two decades\u2014\u2013\u00a0imposes a stiff barrier to growth that\u00a0our Keynesian monetary suzerains\u00a0ignore entirely.<\/p>\n

Likewise, the economy is now seamlessly global, meaning that\u00a0everything which counts such as labor supply and wage trends, capacity utilization and investment rates and the pace of business activity and inventory stocks is planetary in nature.<\/p>\n

By contrast, due to\u00a0the narrow range of activity they capture, the\u00a0BLS\u2019 deeply\u00a0flawed domestic\u00a0labor statistics\u00a0are nearly useless. And they are a\u00a0seriously lagging indicator to boot.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Keynesian Recovery Meme Is About To Get Mugged, Part 1 Yellen said at least one thing of importance last week, but not in a good way. She confessed to\u00a0the frightening truth that the FOMC formulates its policies and actions based on\u00a0forecasts\u00a0of future economic developments. My point is not simply that our monetary politburo couldn\u2019t […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[11203,926,3598,2120,195,303,305,4512,451,467,534,670,4057],"class_list":["post-15584","post","type-post","status-publish","format-standard","hentry","category-economics","tag-balance-sheets","tag-bls","tag-contra-corner","tag-david-stockman","tag-debt","tag-fed","tag-federal-reserve","tag-fomc","tag-janet-yellen","tag-keynesian-economics","tag-monetary-policy","tag-recovery","tag-us-bureau-of-labor-statistics"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15584"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15584\/revisions"}],"predecessor-version":[{"id":15586,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15584\/revisions\/15586"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}