When you are reading the short column from David Stockman below, just think about what will happen after next fed meeting when the taper takes the monthly average QE below the smoothed treasury issuance levels.
via David Stockman's Contra Corner
via David Stockman's Contra Corner
The Fed’s so-called DSGE (dynamic stochastic general equilibrium)
model should be smashed into bits and dumped into the dustbin of
history. In today’s release everything is the same—–above trend economic
growth for years into the future accompanied by below target inflation,
full-employment and sub-normal real interest rates as far as the eye
can see.
Except…except for 2014 real GDP, which is already
-2% in the hole after the impending further markdown of Q1 results.
Accordingly, economic growth for 2014—-the year that “escape velocity”
was a sure thing—has been marked down by nearly 25% since last quarters
outlook, and at downwards of 2.5% is a pale comparison to the upwards of
4% projected as recently as Q4 2011.
The Fed is a dictatorship of dangerous Cool-Aid
drinkers. To every question about obvious structural failures in the US
economy such as the drastic rise long-term unemployment and labor force
dropouts and the anemic level of business investment in future
productivity and growth—which has been at deeply sub-historical levels
since 2000—-Yellen had a ritualistic response: All the bad stuff is due
to the fact that the cyclical path of the US economy has fallen short of
the DSGE prediction for 5 years running, but all those failures will
automatically fix themselves once the economy gets back on the Fed’s
perpetually limp hockey stick!
Never has one person talked in so many circles in such a
short period of time. In truth, the Fed’s new chair is an appallingly
naïve and simple-minded paint-by-the-numbers Keynesian. She will lead
the Fed right into the jaws of the next bubble smash-up, and as one wag
put it, no one will even bother to leave the room.
In any event, the following chart posted on Zero Hedge says it all.
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