Federal Reserve and Monetary Policy: Living in a Sitcom

Living in a Sitcom.

I feel like I'm living in a horrible sitcom. “Ted TV” without the commercials. Here are just some of the poorly written plot points to this sitcom:

• The FDA has lost control of drug safety.
• 3 million(according to Time) illegal aliens enter this country each year.
• Homeland (In)Security has fallen behind in its time table for securing US's ports of entries.
• Congress has not approved the money needed for more INS and Customs agents.
• Our borders are porous as Swiss cheese and just as effective as a deterrent to illegal entry.
• BushCo is happy that 2.3 million jobs were created during their first term. However, foreign economist and traders think it is half as much. Nobody, at least those who work on Wall Street and in Washington D.C., have mentioned the 7.2 million jobs that were not created during BushCo's first term. 12 * 4 * 150, 000 = 7.2 million. The US needs to create 150, 000 jobs a month to absorb new workers entering in the job market.
• Delta has became the latest member of the airline group to off-shore it aircraft maintenance.
• The FAA has delayed for another year, guidelines on minimum aircraft maintenance.
• Florida is on the verge of becoming the first Christian Fundamentalist state. This is going to help out a lot in Democratizing the “Muslin” Middle East.
  
  There is no longer any “government” in the US government. BushCo is exactly that, a corporation whose very job is to insure that mega-corporations are served first. If that is not enough for one to change the channel, here is another plot point; Greenspan is due to step down as the Chairman of the Federal Reserve and Wall Street is pushing for Bernake as the next chairman.
  
  My reservation about Bernake as chairman of the fed comes from the following two speeches he made this year. See link: The Global Saving Glut and the U.S. Current Account Deficit
  and
  Productivity
  combine these speeches with
  Ferguson's Speech: Interpreting Labor Market Statistics in the Context of Monetary Policy
  and one can see that there is a conflict.
  
  A few things jump out:
• 5% of the labor market was in school (at least in the year 2003). They can not stay in school forever. Eventually those 7 million (5% of 140 million) will enter the job market and expect to find a job.
• The Output per Unit Captial has been decreasing since the year 2000. See previous post: I've read this year's fed speeches and a horrifying thought has just occurred to me. for the importance of this data.

Bernake having no knowledge of this data implies that he does not have the education nor the experience in current economic analysis. This means he is not qualified for the job of Chairman of the Federal Reserve.
Or
He knows about the current US's economic state and does not wish to acknowledge the challenges ahead. This implies that he is of the “Old Guard” and can not be trusted.

The Federal Reserve can no longer “talk” down the dollar. Nor can the Fed “talk” up the yield on the 10 year note. This means that the Federal Reserve needs to be swept clean of the “Old Guard” in order to regain the respect of international financial markets.

Somebody from the academic world is needed. The Global market has radically changed and someone with vision is needed to recast old and out dated theories for the 21st Century. Somebody who can recognize that the US trade gap is going to get bigger because of high oil prices. Not just because of the imported oil, but because a recent survey reveled that if gas prices goes higher and remain there, 35% of the those who were surveyed indicated that they will buy “Econo-Cars” or some sort of hybrid. The late 1970's, Deja Vu. "As it was in the past, so it will be again in the present". I'm talking about foreign car makers having the right type of car at the right moment. The big three only make big, gas guzzlers in the US. Their small, compact “Econo-Cars” are made off-shored. The new Chairman of the Federal Reserve is going have to deal with future US dollar volatility and the economic softness that comes with US auto makers in financial distress, Deja Vu again.