Stockman Slams "Simple Janet"'s Incoherent Babble
. . . right now! "Listening to even a small portion of Simple Janet’s incoherent babble makes very clear that the nation’s central bank is well and truly impaled on its own petard. According to the dictionary, the latter term refers to... ...a small bomb used for blowing up gates and walls when breaching fortifications. It is of French origin and dates back to the 16th century. A typical petard was a conical or rectangular metal device containing 2–3 kg (5 or 6 pounds) of gunpowder, with a slow match for a fuse." I always thought it meant jockstrap, ok, I jest. The article is worth a read, it is short, and pretty thorough. Yellen made a mistake last year raising the rate. But as the article so clearly establishes, the rate is completely artificial. We need a return to serious, thoughtful, non-keynesian economic policy. Until that happens expect negative economic outcomes, recessions, and imperceptible "recoveries." Boy howdy, I can hardly wait!
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Instapundit on the Pension Crisis
Here is the Mead article: The Pension Crisis Keeps Getting Worse "The $2 trillion public sector pension shortfall created by decades of interest group bullying and political fecklessness is not going away on its own. In fact, according to a recent report from a major consulting firm, it’s getting steadily worse. The Financial Times: The health of the US public pensions system is deteriorating. The latest figures reveal that retirement plans have less than three-quarters of the assets they need to pay current and future retirees. … According to Wilshire Consulting, an institutional investment advisory company, state-sponsored pension plans in the US had just 73 per cent of the assets they needed in mid-2015, down from 77 per cent in 2014." Unsettling, but consistent for our current crop of craptacular politicians. "At least some state and local governments are taking steps to reform their public pension systems before it’s too late. For others, that moment may have already passed. It’s probably only a matter of time before the most indebted states and localities start going hat-in-hand to the federal government requesting massive bailouts. Time for think tanks, academics, and policymakers to start preparing for this eventuality: Should Congress be prepared to offer any assistance, and if so, on what terms?" This is not the subject for a federal bailout. The states need to come to Jesus on this issue with their own voters finding responsible solutions. It seems likely that this could be catalyst for great positive change in the public sphere, if it is allowed to work itself out. If the federal government simply offers bailouts, nothing will be learned, except how to petition, hat in hand. If the various states are allowed to experiment with solutions, we are likely to see valuable change. Progressives are not ready for the damage this will bring to the tattered remains of progressivism in the US. "At least some state and local governments are taking steps to reform their public pension systems before it’s too late." Two Cheers for Arizona ". . . [T]he Arizona Capitol Times reports on the State Senate’s recent vote to make it more difficult for localities in Arizona to restrict AirBnB apartment rentals without permission from the state government, part of Ducey’s “pre-emptive strike” on sharing economy regulation. (In his State of the State address in January, Ducey said that “Arizona should be to the sharing economy what Texas is to oil and what Silicon Valley used to be to the tech industry.”) To be sure, the full slate of pension reforms (which include changes to the cost-of-living index and requiring new employees to create their own retirement accounts) has yet to be fully implemented, and the AirBnB bill has yet to pass the House. But if Arizona does manage to execute these changes successfully, and they yield the kinds of returns Ducey is hoping for, the Grand Canyon State could plausibly offer itself as a model model for how to slay the worst features of blue model governance—in particular, crony capitalist carveouts and budget-busting union payoffs—and pave the way for a social system better adapted to the economic and demographic realities of the new century. We’ll be watching." Kill the pensions by shifting current workers to a defined contribution plan. Calculate how much each of these worker had vested in the pension system and deposit that amount into their new defined contribution account. Then find a way to live with the existing pensioners. This will not be easy, but the federal government does not need to step in and bail out these states. Oh, and you Oregon public pensioners, don't get too comfortable, this specter also comes for you. Plan accordingly. Economic policymakers are at sea on inflation
Here, let me fix that for you, "Economic policymakers are adrift on a sea of stupid." Better! "Imagine that in a brief period, inflation expectations around the industrial world, as inferred from the indexed bond market or the inflation swaps market, rose by nearly 50 basis points to a level well above the 2 percent target, with larger increases foreseen at longer horizons. Imagine that at the same time, survey measures of inflation expectations such as those calculated by the University of Michigan and New York Fed in the United States were rising sharply. Imagine also that commodity prices were soaring and that the dollar experienced a once-every-15-years decline. Imagine that the market anticipated future monetary policy in the United States that was far tighter than the Fed’s own policy projections. Imagine that measures of gross domestic product growth were accelerating, with increasing signs of a worldwide boom. Imagine also that no serious efforts were underway to reduce budget deficits. Finally, suppose that policymakers were comfortable with current policy settings based on the argument that Phillips curve models predicted that inflation would revert over time to target due to the supposed relationship between unemployment and price increases. I think it is fair to assert that in this hypothetical circumstance, there would be pervasive concern that policy was behind the curve — that much was at risk as inflation expectations were becoming unanchored and that a substantial set of policy adjustments were appropriate. The key point would be that allowing not just a temporary increase in inflation but also a shift to above target inflation expectations could be very costly. We are living in a world that is the mirror image of the hypothetical one I just described. Market measures of inflation expectations have been collapsing and, on the Fed’s preferred inflation measure, are now in the range of 1 to 1.25 percent over the next decade. Inflation expectations are even lower in Europe and Japan. Survey measures have shown sharp declines in recent months. Commodity prices are at multi-decade lows, and the dollar has only risen as rapidly as it has in the past 18 months twice during the past 40 years when the value of the dollar has fluctuated freely. The Fed’s most recent forecasts call for short-term interest rates to rise almost 2 percent in the next two years, while the market foresees an increase of only about 0.5 percent. Consensus forecasts are for U.S. GDP growth of only about 1.5 percent for the six months from October to this month. And the Fed is forecasting a return to its 2 percent inflation target on the basis of models that are not convincing to most outside observers." It's enough to give a Keynesian economist the vapors! And Larry is nothing, if not a card carrying Keynesian. The proposed solutions to all of our problems from these people is always the same, more debt, more government expenditure, more monetary pumping, and more Keynes. After decades of easy money, Keynesian policies, progressive governance, and fiscal irresponsibility, these yammerheads cannot believe their policies have failed. So, they double, or triple down. The last doubling down gave us the slowest recovery in US history. Do we really need another go at slow? It is time to take economists like Summers unseriously, for they are unserious. It is time to return to sane, rational monetary policy, responsible fiscal policies, and frugal governance. But I expect none of this, instead, I expect more foolishness. The nation is being run by a clown college of fools, elected by us. We truly get the government we richly deserve. Money Bomb Coming
All because the Chinese economy is collapsing. China's Economy Collapses with Exports Mish nails it, the IMF foolishly believes the solution to decades of excessive debt is consumer activity, when the solution is restrained monetary policy, and fiscally responsible government. I am not holding my breath. |
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