No recovery? There will be blood.
Today's U.S. job report will end in the same calls for ritualistic bloodletting that Washington has become so used to
Later today the U.S. Bureau of Labor Statistics will release its jobs report for April. Forecasts indicate that it won’t be for the faint hearted. The general reaction will, however, be fairly predictable.
Austan Goolsbee’s face will turn purple as he furiously spins the numbers on CNBC. James Pethokoukis will yet again point to the country’s hemorrhaging labor participation rate. Larry Kudlow will call for some supply-side solutions and smart immigration reform. Paul Krugman will definitely call for more spending and, more than likely, blame the sequester.
The White House will release – yet another – statement warning the public “that it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”
And there’s Ben Bernanke.
Reportedly poised to announce his retirement, the chairman of the Federal Reserve will savor the calls to play god and purchase more bonds in order to inject yet more “stimulus” into the economy, a term that should either stop being abused (‘something that rouses or incites to activity’) or given a new definition entirely.
Bernanke’s actions have, however, become far too predictable. Since taking the helm of the Fed, Bernanke’s handling of U.S. monetary policy has been something akin to a doctor still hell bent on pursuing the ruinous practice of ‘bloodletting.’ His actions, once based on seemingly credible academic theory, are now undertaken on hope at best, or as an intentionally deceptive placebo at worst.
For 2,500 years medical practitioners were convinced that ‘bloodletting’ would improve the condition of patients. The procedure, whereby patients were cut and drained of their blood until they fainted, was widely regarded as the most effective means for curing ailments ranging from leprosy to pneumonia and depression to backache. Like quantitative easing amongst some economists, it was widely seen as a panacea of its day in the medical community despite statistics suggesting that it likely exacerbated the condition of patients. The U.S. economy is showing similar signs of ill health.
Primarily due to the shameful failure of elected officials to hold him accountable, Bernanke is slowly bleeding the U.S. economy: devaluing its currency, undermining savings, reducing disposable income, and setting a ticking inflationary time-bomb. The medicine clearly hurts, we’re even witnessing first hand how it worsens our frail condition, but it will be worth it and recovery will be here soon—that’s what the book says.
For all the Ron Pauls, Bernanke is still widely revered on Capitol Hill. He can get away with heavy monetary intervention because it’s been such a common practice that’s rarely challenged by political elites, despite indications of understated inflation and massive surges in commodities. And like death, inflation doesn’t always come with a warning.
Bernanke’s cheerleaders often excuse his actions by pointing out that the U.S. will never go broke because it can double down and print money, cheat those with Treasuries, or simply don’t pay back debt. To others this sounds like first stage of death: denial.
For the time being at least observers in Washington (named after the most famous casualty of blood-letting) can see that the U.S. economy still has a pulse, even if it’s a faint one. But the patient, and the practitioners, are now beyond delirious.
Ewan Watt lives and works in Virginia and writes strictly in a personal capacity. You can follow him on Twitter at @ewancwatt
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