- The Fed’s huge dilemma…
- Two vital questions all Americans should ask…
- TRUMP’S CURSE: A $35 Trillion Meltdown Ahead? Robert Kiyosaki just issued his boldest warning yet — and he says the clock’s almost out of time.
Dear Reader,
I hazard the Federal Reserve is hung upon the hooks of a gorgeous dilemma.
Shall it reduce its target rate — and let inflation run?
Or shall it hold its target rate steady — and let employment dwindle?
Recall the Federal Reserve’s dual “mandate.”
It must hold up “price stability”… while fostering “maximum employment.”
Price stability and maximum employment appear, presently, in conflict.
Consider first price stability.
Inflation Just Won’t Die
Like a lingering influenza… or a protracted visit by a dreaded mother-in-law… the Federal Reserve cannot shake inflation loose.
The past two months’ inflation readings have exceeded consensus expectations.
How then can the Federal Reserve reduce its target rate under persistent inflationary influence?
It is not clear that it can. Now take in mind the labor market.
Recall the second leg of the Federal Reserve’s dual “mandate” — maximum employment.
Recent unemployment data suggest a pronounced slackening of this market.
What’s Happening to Jobs?
The United States economy registered 73,000 fresh payrolls in July. Consensus expectations had come in at 106,000.
A straw swaying in an unfavorable economic wind!
Meantime, the June unemployment data has undergone a revision — a downward revision.
Government data-manglers presently inform us the United States economy spun forth a mere 14,000 June jobs.
In all, the Bureau of Botched Labor Statistics has struck some 258,000 May and June payrolls.
Those payrolls, we are now informed, had no actual existence.
Can 258,000 phantom payrolls credibly constitute “seasonal variation” or what have you?
I am far from convinced that they can.
Why then employ such “experts” when they never strike bullseye?
You’re Fired!
The president has terminated the employment of the bureau’s commissioner — a certain Erika McEntarfer.
Said he on Friday:
- In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad — Just like when they had three great days around the 2024 Presidential Election, and then, those numbers were “taken away” on November 15, 2024, right after the Election, when the Jobs Numbers were massively revised DOWNWARD, making a correction of over 818,000 Jobs — A TOTAL SCAM.
Yet I hazard the president fails to appreciate Ms. McEntarfer’s contribution to his well-being.
The lady represents a disguised gift to the fellow. But how?
That’s How to Get the Fed to Cut
The president has been hollering about “Too Late” Powell’s adamance against reducing the Federal Reserve’s target rate.
Yet he should understand that a pronounced revision of the labor market — downward — alarms the Federal Reserve.
The revision could, in fact, send Mr. Powell and mates to the roundabout. They could at last heed the president’s yells.
I am not convinced the president understands his opportunity.
In light of the revisions, CME Group’s FedWatch presently gives 81% odds of a September rate reduction.
As recently as July 25, those odds came in at 62%.
Two Vital Questions
Yet here Mr. Ryan McMaken of the libertarian Mises Institute raises a forceful hand into the air… and poses two vital questions:
- The first is this: why are we still expected to take initial BLS job estimates seriously when they are often reduced by 75 percent or more upon later revisions?
- The second question is this: what use is the Fed’s supposed devotion to being “data-driven” when the data itself is unreliable, and the Fed is basing its policies on data that turns out to be thoroughly wrong? The answer is: we can’t.
- The spectacle of the FOMC making policy based on wildly inaccurate employment numbers simply illustrates the absurdity of claims by Fed officials that the central bank can centrally plan the economy by divining the “correct” monetary policy based on government data.
His Questions, My Questions
Mr. McMaken’s questions are my questions.
Why should we trust the government data-manglers — or the central bank that takes their botchwork very heavily?
Why should we trust a weatherman who relies upon a barometer known to put out false readings? Whose weather vane constantly points wrong?
Thus today I once again mount my tub… and rage against the distortionist government statistician.
Few understand the extent to which modern government depends upon him.
Without him government is pure thumbs, a plodding doofus.
It is a fumbling cyclops speared through its one and only eye.
The Eyes and Ears of Government
Explains the late libertarian economist Murray Rothbard:
- Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control or reform various industries — or impose central planning… on the entire economic system.
- If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances and other affairs? How could the government impose price controls if it didn’t even know what goods have been sold on the market, and what prices were prevailing?
More:
- Statistics… are the eyes and ears of the interventionists: of the intellectual reformer, the politician and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge and the whole threat of government intervention is almost completely eliminated.
Ask yourself then… in a private moment… why the central bank treasures the erring government statistician.
In that private moment? You will likely discover the answer.
Beware: It may not be the answer you want.
Brian Maher
for Freedom Financial News
