David Stockman calls out Bernanke incompetence and the ‘born again jobs’ scam

The economy has recovered and now the Federal Reserve can roll back its quantitative easing program. At least this is what public officials, the leadership at the nation’s central bank and Wall Street wants you to believe, but anyone who understands government numbers it’s rather prevalent that the recovery has been a failure.

Earlier this month, the Labor Department published the June jobs report that found the country added 195,000 jobs, more than the initial projection of 165,000. The unemployment rate remains steady at 7.6 percent – this does not consist of part-time and temporary jobs or those who have left the workforce.

When the numbers came out, stocks soared: the NASDAQ jumped 17.5 points, the S&P 500 increased 7.4 points and the Dow Jones Industrial Average got a boost of 52.6 points. However, the unemployment rate will most likely not fall to below seven percent sometime the next year, as the Fed believes it will.

David Stockman, the former budget director under President Reagan, called the figures another “born again jobs scam” that has been adding fuel to the fire of an illusory recovery following the burst of the “post-crisis Bernanke Bubble.”

Stockman published an op-ed piece on Zero Hedge called “The born again jobs scam and the Fed’s terminal incoherence.” In the article, Stockman wrote that nearly two-thirds (62 percent) of the payroll gain in June consisted of part-time jobs in the service sector; bars, hotels, restaurants, retail and temp agencies – he noted that these jobs pay on average $20,000 per year.

Approximately 2.8 million part-time jobs have been created since the Great Recession officially ended in June 2009 (did it really?) and accounts for close to half (47 percent) of all total jobs. Stockman explained that the concept of “one-job-one-vote” cannot be included in the realm of economics, but rather earnings are what are important.

“Measured on an income equivalent basis, then, a majority of the big rebound in the BLS headline number has consisted of ‘40 percent jobs,”’ stated Stockman in the opinion piece. “Granted, these fractional jobs do provide a monthly feed to headline stalking HFT algos and the gist for the moronic jobs number guessing game conducted by unemployable Wall Street executives otherwise known as ‘street economists.’ But not by a long shot do they prove that the Fed’s money printing spree is beginning to bear fruit, as claimed by the cheerleading section of the Wall Street Journal shortly after the BLS release.”

He also took a swipe at financial journalists, who, according to Stockman, refrain from digging up facts or even reporting them. Instead, these reports simply regurgitate figures given by the government – he cited the fact that the 2.8 million part-time jobs “generated” are the same 2.8 million jobs produced between 2000 and 2007.

“That this obvious fact has been completely ignored is not surprising,” added Stockman. “After all,  the reigning doctrine in the Keynesian puzzle palace inhabited by officialdom and financial journalists alike, calls for digging and refilling economic holes as the national policy of first resort.”

In the year 2000, there were 34.7 million part-time jobs. After the dotcom crash, the Fed, led by Chairman Alan Greenspan, ignited the housing and credit bubbles to grow the economy. By 2007, the part-time jobs number climbed by 2.8 million with a peak of 37.2 million, which Stockman notes was “pure bubble economics.” Throughout the 18-month bubble liquidation, those new jobs disappeared.

As the recession officially ended, there were 34.5 million part-time jobs, a small fraction under where it was in 2000.

“No jobs have been “created” at all. These part-time jobs have simply been born again, courtesy of the Fed’s delusional belief that its frenzied bond-buying is causing the labor market to heal,” explained Stockman. “Some kind of faith healing, that!”

During the past 13 some years, the Fed’s balance sheet has dramatically expanded from half a trillion dollars to as much as $3.4 trillion – projected to hit the $4 trillion mark by the end of the year. The reason for this increase was that the Fed believed it had to save the financial system and stimulate the economy to create jobs.

In the end, the U.S. economy is suffering and the welfare safety net is beginning to reach its demise. This will lead to a fiscal crisis of higher taxes, a decrease in spending and austerity. “And for that reason, the Fed’s strategy of printing money until the jobs market has returned to effective ‘full employment’ is completely lunatic.”

“So what is happening at bottom is that Bernanke is printing money so that Uncle Sam can keep massively borrowing, and thereby fund a simulacrum of job growth in the HES Complex.  Call it the Bed Pan Economy,” concluded Stockman.

“When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.”

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