The Clueless and Naked Empress Janet Yellen on Display

Janet Yellen was just surprisingly asked a good question in the House version of the Humphrey Hawkins testimony, which is turning out to be much better than the Senate version, which is usually not the case as House members tend to be woefully ignorant of anything that goes on in the world or how it works.  When asked why this recovery was so much more lame than previous economic recoveries over the last 100 years she kept replying that perhaps the economy has not rebounded strongly because this crisis was a financial crisis in its origin.  When then pressed on why that would make a difference, she essentially said nothing of any substance whatsoever and was saved by the bell as the questioners time expired.

What she really demonstrated is that she has no idea whatsoever what is going on.  At all.  Let me help her out.  There are several reasons why the current recovery is poor comparatively.  First, the world is simply saturated with debt.  Debt levels are higher by almost any measure now than they were when the crisis hit in 2007-8.  Janet’s approach and that of Bernanke and even Greenspan before her is to create MORE debt as if that might help.  And the Fed’s lackeys, like Steve Liesman at CNBS are on record as saying the problem is that we are creating too little debt.  God help us with brains like these running the show.

Second there is a demographic problem all over the world where large bubbles of population are entering a period of life where their spending patterns do not support economic growth.  There are also just fewer babies being born and some countries have falling populations, notably Japan, but also major European countries like Germany and Italy.  They have some influx of immigrants, mostly Muslim which will present its own problems eventually.  In the US we would be having similar issues as our birth rate has fallen below replacement, but we have larger immigration so we still have population growth, which along with productivity are the only two ways to have growing GDP (increasing government expenditure does not do it, the cries about “ascetic ” austerity by authorities including Janet Yellen notwithstanding – proving in yet another way just how clueless they are).  Janet and the Fed generally apparently takes no notice whatever of demographics, which is the driving force behind how all of economics works.  Amazing in their blindness.

Third, the policy worldview of the current occupant of the White House is pretty much 180 degrees from that which promotes growth.  As an uber statist, Bowbama is death to capitalism and the wealth it brings to all.  Crony capitalism is no substitute for the real thing.  Obama is to politics as “stock guys” (including NY and London hedge fund guys) are to the stock market:  they know the price of everything but the value of nothing – Maobama knows how to employ language and tactics to rally his idiotic base of sycophants but understands nothing about how things work out in the real world (I will anticipate objections by agreeing that most Republicans are as challenged as Dear Leader, though their party tends on balance to be more friendly to policies that reflect capitalism in its purer form, just barely, and are much less intellectually dishonest about that and everything else).  Janet, who has espoused further fiscal recklessness as a sop to her faulty Keynesian ideas that the G in the GDP equation (GDP = C+I+G+NE) has a positive multiplier – it does not, though certain infrastructure expenditures might come close despite the fact that contracts will be awarded through crony means.

At the end of the day we have outsourced price fixing for one of the most important prices in the world to people who are clueless academic ideologues.  We should not be surprised when the results over long periods of time are non-optimal.  At some point it is likely that enough people lose confidence in the system which will precipitate a new instance of the ongoing crisis.

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