A couple of things struck me about today’s jobs report. One was the regularity of the straight line trend in non farm payrolls. I mean, even casual observers know that markets and the economy move in trends, (which are your friends) but come on! This steady state 1.6% annual gain for the past 4 years is a bit ridiculous, even for a normally credulous guy like me who is willing to believe almost any statistic the government publishes. But now… NOW… they have just gone too far.
This chart shows the actual, not seasonally adjusted nonfarm payrolls number for the month. The headline, seasonally adjusted payrolls number was reported higher by 192,000 which was a little less than conomists’ consensus guess of 195,000.
That’s a fake number, a smoothed and stylized attempt to represent the trend. It will get a big revision next month, the month after, and then when the data is benchmarked to the tax data once a year. Then it gets revised 4 more times in following years as they try to fit the number to what actually happened. It’s amazing that it actually does, on occasion, more or less accurately reflect the trend of the data. Whether the data represents reality is certainly arguable.
For example, take the birth/death adjustment. Please.
I won’t get into all the statistical arcana. It bores me. I track the real time Federal withholding tax data, and based on tremendous strength in that data in March, I have no quarrel with this jobs data as reported. It might even be too low, to be revised upward next month. But even if so, it won’t be enough.
Which brings me to the other thing I noticed in the data, which is that in spite of the steady trend of improvement for the past 4 years, in terms of a truer measure of employment, the US is still in a Depression. That’s right, not a recession, a Depression. There has been virtually no recovery in the percentage of Americans with full time jobs since the pits of the crash in 2008.
Admittedly it’s a selective Depression, but if you are among the selected, your suffering is real. And the drag that millions of unemployed Americans exert on the economy is real. The downward pressure they put on middle class wages is real. Jobs that paid well in the past no longer do. With labor oversupplied, the plutocrats, empowered by the courts and friendly legislators have wiped out the bargaining power of labor in the economy. ZIRP/QE have encouraged unproductive speculation, not job creation. So there are simply far too many millions of Americans so selected to be the losers, to experience the Depression. All of the money printing in the world, all of the ZIRP, has not helped them and has not reduced their numbers. Nor can it ever do so.
This is the fraud of Ben Bernanke’s legacy. In addition to discouraging job creation, ZIRP has also stolen the savings of seniors, suppressing their returns to the degree that they have been forced to spend their principal down to zero in many cases. For these people, ZIRP stands not for Zero Interest Rate Policy. It stands for Zero In Remaining Principal. For the millions who are unemployed, it stands for Zero In Rehiring Prospects.
Bernanke’s policy of financial repression was designed to prop up the very bankers and speculators who, along with the Fed, caused the housing/credit bubble and ensuing crash. In that regard, the policy has succeeded. But Bernanke continues to protest that his real purpose was to save jobs. Either he’s an idiot who believes that ZIRP and money printing will accomplish that, or he’s a criminal liar, simply lining up for his ultimate payoff.
There’s a de facto case for Bernanke not being an idiot. One piece of evidence is the millions he receives from his former banker clients and plutocrat funded industry groups just for showing up for a photo op and excuse-making session. He took care of them, now they’re taking care of him. But he’s just following the rules of the game–the golden rule. Those with the gold, make the rules. And this week the Supreme Court again ratified the rules and control of government by the plutocrats.
Like Benny himself said, in monetary policy there are winners and losers. He picked those who played by the rules, who worked hard and put money aside all their lives, to be the losers. The wild gunslingers and con men who, along with him, caused the crash, he rewarded with endless free money with which to gamble ad infinitum. By promising to keep interest rates at zero until he told them otherwise, he virtually guaranteed their profits.
The result is yet another massive credit and equities bubble, while millions suffer and wait to win the jobs lottery. History has shown again and again that the bubbles created by too easy credit and too much money can only end one way–financial crash and economic contraction. And if they do see some jobs created they are fake jobs, gone with the wind when the air goes out of the bubble.
The fake jobs from the last bubble have never come back. The few fake jobs created in this bubble will disappear too, never to return. At least the housing bubble created fake jobs that fed a few million families for a few years, and even temporarily falsely enriched some. This bubble has been a jobless bubble.
Bernanke’s excuse for ZIRP and QE was that the resulting higher securities prices would cause a trickle down that would increase job creation. It was one of his many self justifying excuses– a bald faced lie from the bald little man. To encourage real investment that might result in real job creation, investors need real returns that encourage rational investments, rather than the rank, gross, wild speculation in credit, equities, and exotic derivatives. The speculation that Fed policy promotes and enables, creates only fictitious capital, not real tangible investment in ventures that create employment opportunities. In this sense, the end of ZIRP and QE cannot come soon enough.
The question is whether it can come at all. With the US Government owing trillions, for the Fed and Federal Government any material rise in interest rates is simply unthinkable. Rising interest rates would force a brutal austerity. They will do anything to fight that. Under the circumstances, the steady hollowing of the middle class in America could go on indefinitely. The only way out that I can see would be a crash and reset. This hideous mess is Bernanke’s legacy.