Caveat from Fed Reserve Graphs

In the top squiggly line graph, you are looking at the unemployment job RATE (of job losses vs. peak employment month or the start of the decline) and the period of TIME of the losses. Notice both items. The rate of loss no longer fits within the channel of recession losses.  After 47 months we have moved UP to a 4.5% percentage of loss. Forget the nonsense TV rate of unemployment and understand the horror of what is happening. 


FOR 34 MONTHS our rate of losses as a percentage of peak employment has been over 5%.  You just know the Harvard types advising Obama figured the economy would always fit the earlier projections, so did what they wanted anyway fully confident the graphs control reality, rather than reflect it.


There was a long negative rate in 2001, but look.  It never dipped below 2%.  The old view is that our Keynesian system will produce an increase in the magnitude of crisis, as the  Fed throws money into the burning fire which, by definition, it must do. We have a Ponzi approach to fueling the bon fire and as all such schemes, the input disappears. Out work and productivity has its limits and we are past them.


The older recessions were over quicker. Going back to 1921, there was a very fast, deep shock to the system that repaired itself quickly; that was before the Fed used geniuses to prevent cauterizing wounds and amputating the dead. Their theory is to set up a clinic of life support experts. Hence, the "Great Depression" where FDR and friends, they admitted, just made things up to spur the economy.




In the second graph, is the RATE of change in the M1 money supply.  This is all the money in the system with bank reserves removed.  Bank reserves include Fed funding, which was forced in 2009.  Those funds were just created.


Th e reserve numbers are very high. The theory is that the banks will have to do something useful to the economy to offset the  reserves the Fed dropped on them. Gee, people wonder why it is not really working. This is you economy at work - a mad jerry-rigging of abstractions turned into independent creatures.


By the way, Jamie Diamon, boss of JPMorgan Chase, which just traded away $2,000,000,000, is on the board of the New York Fed. Something, impossible thanks to the Dodd-Frank bill of 2012.  Of note:

Kenneth Guenther, the former head of the Independent Community Bankers of America, told American Banker:

“I do think there is a public perception problem when the head of the largest bank gets into a massive highly publicized trading loss, which he articulately condemns, when he’s tied to the Federal Reserve Bank of New York, and the president of the Federal Reserve Bank is vice chair of the Federal Open Market Committee. There is a perception problem. I don’t think there’s any way around it.” 

Diamon doesn't see any problem with bankers feeding bankers.  


An absolutely required movie: Inside Job.   It won an Academy Award last year and makes the melt down of the system painfully clear.  It is clear and entertaining, if one can use that word.