The U.S. economy produced 80K new jobs in October vs expectations for 90K. Not a great number, not an awful number. Revisions were higher and the unemployment rate fell to 9%. This far into a recovery and the unemployment rate has fallen from a peak of 9.5% to 9%. No one in their right mind can say that the American economy is operating at a high level right now. I pretty much agree entirely with Warren Mosler’s thoughts on this:
“Utter failure of policy.
The Fed was certain it knew what Japan had done wrong and wasn’t going to make THOSE mistakes. So it cut rates much more aggressively. Said it would do whatever it takes. Figured out how to do it’s job as liquidity provider after only 6 months of alphabet soup programs. Did heaps of qe. Did the twist. And now, realizing it’s done about all it can do, says monetary policy can’t do it all. And still fails to recognize publicly the actual problem is the budget deficit is way too small. And doesn’t directly inform Congress that there is no such thing as a solvency problem, the Fed controls govt. interest rates, and not the market, there is no long term deficit problem with regards to finance, the only thing we owe China is a bank statement, qe and rate cuts remove interest income from the economy, which allows the deficit to be that much larger, etc.
We continue to go the way of Japan….”
The world’s Ferrari of economies is acting like a Pinto because the driver is blindfolded and mentally disabled….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.