Bernanke and Creating American Jobs
Via Matthew Ygelsias here’s a great post on the Fed abdicating it’s role in encouraging employment.
“Since December 2007, the U.S. economy has lost, on net, about 8 million private-sector jobs, and the unemployment rate has risen from less than 5 percent to more than 10 percent…
Besides cutting jobs, many employers have reduced hours for the workers they have retained…These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone.
With the job market so weak, businesses have been able to find or retain all the workers they need with minimal wage increases, or even with wage cuts…”
THE ECONOMIST FREE EXCHANGE:
“The best thing we can say about the labor market right now is that it may be getting worse more slowly…
Clearly something here is badly amiss. The Fed has given up on easing further despite the fact that unemployment is approaching its highest level in 80 years, and despite the fact that prices are not stable but are declining.
Mr Bernanke owes America a better explanation. Either he believes that his mission is not actually his mission, or he thinks he is powerless to do anything about it but is unwilling to own up to that fact. In either case, it’s not clear that Mr Bernanke deserves to keep his job.”
As the Free Exchange points out the Fed’s mission is “[C]onducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.” This is both very important and troubling. The best scenario is that Bernanke thinks he’s powerless. The alternative is varying degrees of refusal to fight unemployment. If he’s seriously worried about inflation, he’s either got totally different numbers then the rest of the world or is responding a distant future threat.
The whole thing is like refusing to extinguish a house on fire because you don’t have insurance for water damage. If Bernanke doesn’t get unemployment is goal 1, goal 2, and goal 3 right now, I’ll second the notion his continued employment shouldn’t be among our goals at all.