FedSpeak, as we call it around here, is what happens between FOMC meetings. The regional Fed chieftains (and chiefettes) go on the rubber chicken circuit where the pronounce upon all things economics.
Off in the background, though, we’d point to two rather uncomfortable facts.
These will give you “cause to pause” and wonder what the Fed is really thinking about…
And example this week came from NY Fed head William Dudley who gave a speech this morning in which he heaps praises on Globalism and the all-too-familiar “Free Trade” rhetoric.
In remarks to the Bombay Stock Exchange in India, here’s the kind of perspective Dudley has on globalism:
“First, the important role that trade plays in promoting higher standards of living globally.
Second, how changes in trade can create challenges for industries that become less competitive. We have not adequately considered and remedied the very large costs this can impose on certain communities and households.
Third, the answer to those challenges is not greater protectionism. Instead, we need to provide greater support to displaced workers so they can obtain the skills needed to find new well-paying jobs. We need to do better in preparing workers to deal with the challenges of globalization and technological change. “
Where Dudley runs off the rails (more than slightly, as I see it) is in failing to point out that there MAY BE NO NEW JOBS to retrain workers into. Well-paying jobs will be leaving the real economy by the container load as everything from self-driving cars and trucks, to crew-less trains to a whole class of “useless people” emerge who will have no jobs to go to…even with training.
We would recommend he consider the view in “Sapiens: A brief history of humankind” for a little more realistic (and longer-term) outlook.
That stuff we call “progress” is about to begin to swallow its own tail, in a manner of speaking.
Dudley’s sales pitch doesn’t stop here, however. He gets v ery supportive of “free trade, as well…”
Increased trade, through its longer-term impact on productivity, has been a key contributor to global growth and prosperity since the Second World War. Openness to trade brings many benefits to the supply side of the economy. These include:
- larger markets, greater specialization opportunities, and the increased ability to exploit economies of scale and scope;
- faster transmission of technology and innovation; and
- greater competitive pressure on domestic firms to increase their productivity.
Collectively, these forces lead to a more efficient allocation of a country’s scarce resources—one that is more closely aligned to its international comparative advantage. “
To read Dudley’s remarks, you’d think globalism was in trouble, along with so-called “free trade.”
But, it ain’t.
A reality check from the Association of American Railroad’s excellent Railtime Indicators, reveals there’s not even a hint of any problems on the trade front. As they reported on May 10:
“Total carloads for the week ending May 6 were 251,182 carloads, up 8 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 264,123 containers and trailers, up 1.6 percent compared to 2016.
Six of the 10 carload commodity groups posted an increase compared with the same week in 2016. They included grain, up 22.2 percent to 21,848 carloads; coal, up 17.7 percent to 73,386 carloads; and metallic ores and metals, up 15.6 percent to 23,743 carloads. Commodity groups that posted decreases compared with the same week in 2016 included petroleum and petroleum products, down 18.5 percent to 9,247 carloads; motor vehicles and parts, down 6.4 percent to 17,160 carloads; and farm products excl. grain, and food, down 1.3 percent to 15,723 carloads.
For the first 18 weeks of 2017, U.S. railroads reported cumulative volume of 4,598,584 carloads, up 6.4 percent from the same point last year; and 4,703,804 intermodal units, up 1.6 percent from last year. Total combined U.S. traffic for the first 18 weeks of 2017 was 9,302,388 carloads and intermodal units, an increase of 4 percent compared to last year.
No, that doesn’t sound to me like EITHER globalism or mis-named “free tradc” is at peril in any way.
What IS going on in background – for those who follow the Fed closely – is the highly regarded Minneapolis Fed Inflation Calculator was recently updated for the year.
And here’s what Dudley ought to be concerned about in our view.
Go to the Minneapolis Fed home page here and click down the right side column until you come to “What is a dollar worth?”
Imagine that you had $100 in 1913, then scroll the right side date to 2017 and see how much $100 worth of goods in 1913 would cost today.
Or, we could reverse the problem and divide the 2472.67 into 100.
When we do, we find the current Federal Reserve Note retains 4.044% of its 1913 purchasing power.
In other words, the Fed orchestrated corruption of the monetary base has stolen (through interest/inflation) just under 96% of a worker’s purchasing power.
The Fed, unfortunately – or fortunately – has gotten into the “dual mandate” mindset. These are maximize employment and stabilize prices. The third – less often expressed – mandate is to moderate long-term interest rates.
In about 100 years, the banker class as reaped a 95% reduction in purchasing power. As I’ve explained until I’m blue in the face, when you have a closed economic system, the only place interest (rent on money) can come from is by reducing your purchasing power.
Yet here we are, another Thursday between FOMC “decisions” and the talk is of globalism, free trade, and the “dangers of nationalism.”
At UrbanSurvival, and our subscription Peoplenomics.com premium service, we remain focused on economics that are personally actionable.
Take the minimum wage of $1.40 in 1967. According to the Minneapolis Fed number crunch, that means the present-day min-wage ought to be $10.25 per hour. It’s not: Since 2009 it has been locked at $7.25 per hour with a few federal contractors paying more.
So while the NY Fed head is off defending a crooked system that has off-shored American jobs to least labor cost countries, maybe some resource being spend on looking after the American worker might be in order.
Fair Trade which collects a leveling import duty and funds unemployed American workers who have lost incomes due to globalist job-jacking offshore.
Fair Money which was being diluted at a 3.25% rate until recently, but is now at about 4% per year purchasing power theft. Oh boy, something is increasing!!!
Don’t hold your breath for either Dudley or the rest of the Fed to ask the harder questions, like the ones Neel Kashkari of the Minneapolis Fed has been asking: “Why do we need Too Big To Fail?”
(So banksters stay rich and we remain stuck in the middle/lower…)
Against this background – the reality of the MSM patronizing of Fed speakers – we see the evolving crack getting wider by the day.
“What crack?” WTFU!!!
The one that in Sapiens which millions of Americans will be falling into over the next 10-20 years as the future we’re not ready for shows up and kills us.
Meantime, we expect to be in a period of “slugflation” for a good while longer. The Bank of England says a rate hike may be needed by late 2019…yeah, two years plus from now.
Slugflation, get it?
(I exercised YUGE restraint by not using the phrase “Dudley Do-Wrong” in this commentary. Also, No Canadians were injured in the filming of this morning… — and yes, Elaine looks like Nell Fenwick sometimes.)
Present Day: Theatrics and Data.
Where was Comey on Hillary? Especially when we just read how “Bangladesh Prime minister says Clinton personally pressured her to help (Clinton) foundation donor…”
Ah, the kabuki of it all. We notice the NY Times running large with “Days Before Firing, Comey Asked for More Resources for Russia Inquiry” but as explained previously (in a series of comments for readers), we didn’t see any funding for Hillary’s “server-in-the-barn” nor did we see any funding sought for “the foundation and uranium” probe.
Absent a sense of equality, why should anyone send an Obama appointee (Comey) on a further fishing trip?
Looks to us like Comey was going fishing on Trump and had some kind of a get-out-of-jail card for Hil.
For the slower members of the class:
“In September 2013, Comey was appointed Director of the FBI by President Barack Obama. In that capacity, he was responsible for overseeing the FBI’s investigation of the Hillary Clinton email controversy.
And we all know how that ended, huh? I want to hear the Clinton-Lynch discussion on the plane at PHX…anyone got the tape?
Vocativ seems to be telling us how “Twitter blows up with ‘Impeach’ mentions after Comey firing…” Of course…good little sheep.,..on your mark, get set…repeat the Catcher-in-the-Rye programming now….Impeach!
This shit is unbelievable. Anyone supporting either of America’s crooked parties oughta book some couch time because you’re missing this stuff called reality.
Meantime, when we read how the “Russian found guilty of inciting religious hatred — for playing ‘Pokémon Go’ in church,” rolled and we have to wonder which country (the US or Russia) is really one nation, under God, anymore.
Uh…what, no “Impeach Schumer” talk?
Toss Me a Press Release?
“The Producer Price Index for final demand advanced 0.5 percent in April, seasonally adjusted,
the U.S. Bureau of Labor Statistics reported today. Final demand prices edged down 0.1 percent
in March and climbed 0.3 percent in February. (See table A.) On an unadjusted basis, the final
demand index rose 2.5 percent for the 12 months ended April 2017, the largest increase since
moving up 2.8 percent for the 12 months ended February 2012.
In April, almost two-thirds of the advance in the final demand index is attributable to prices for
final demand services, which moved up 0.4 percent. The index for final demand goods climbed
Prices for final demand less foods, energy, and trade services increased 0.7 percent in April. For
the 12 months ended in April, the index for final demand less foods, energy, and trade services
climbed 2.1 percent.
Final demand services: The index for final demand services moved up 0.4 percent in April after
edging down 0.1 percent in March. Most of the increase can be traced to prices for final demand
services less trade, transportation, and warehousing, which advanced 0.8 percent. The index for final
demand transportation and warehousing services increased 0.7 percent. Conversely, margins for final
demand trade services moved down 0.3 percent. (Trade indexes measure changes in margins received
by wholesalers and retailers.)
Pass the NoDoz?
I could give you a three-day channeling of how this really isn’t bad if I had a big enough white board (and enough markers to huff).
But instead, we will note Dow futures are down 35-40 because OMG “The sky is falling, the sky is falling, and I must tell the King…”
The sky won’t fall till late summer, or fall, in reality…and then only over North Korea.
Snap’s Crackle has Popped
Big payday fizzle as we ponder “5 things we learned from Snap’s first earnings report.”
Perhaps they could make straws (with all that sucks… if the bean hasn’t hit yet).
Open Border Benefits
While the left and libs keeps whining about sanctuary cities and such, did you happen to see where a “DUI suspect accused of hitting family returning from Disneyland had been deported 15 times?”
Grand Irony Dept. I: Chula Vista became a Sanctuary City April 5th, if I am following this right.
Grand Irony Dept. II: We see how illegal immigration across Mexico’s southern border is causing problems now, too. Gangstahs and no counts… Hmmm…where have I heard that before?
But hey, don’t let facts load down your “thinking” involved in parroting and forwarding SMS. Remember SMS means “Seriously Missing Substance.”