Former Federal Reserve Chair Alan Greenspan spoke with the Fox Business Network on Monday to discuss the United States economy. In the interview, he noted that the long-term outlook for the U.S. economy is “not good.”
The former head of the U.S. central bank explained the nation’s productivity has been slowing down significantly, which has also led to slugged increases in wages. Both variables spell problems for the long-term outlook of the U.S. economy.
“What concerns me most is that unless and until we can rectify that problem, our economy’s long-term outlook is not good,” averred Greenspan.
Although many on Wall Street and in Washington are celebrating because the unemployment rate dipped below six percent, Greenspan noted that last month’s jobs report is a “mixed” bag because there are other negatives as well. For instance, the labor force participation rate dropped to a 36-year low of 62.7 percent, while wages have only gone up 0.8 percent since Dec. 2007.
Greenspan cited the paucity of productivity to account for the lack of growth in wages. “When you get significant decline in productivity growth, which we’ve had, that immediately spills over into the wage levels,” he added. “And that’s one of the reasons why real earnings are not moving very fast at all.”
He failed to discuss how his monetary policy contributed to the destruction of the U.S. dollar.
Fed’s Interest Rates
The author of “The Map and The Territory” was asked when he believed the central bank would start raising rates. He responded that it would be difficult to say exactly when the Fed would hike interest rates, but purported that rate hikes may incite volatility.
“Remember, central banks do not and cannot control longer-term rates, which are fundamentally based on discount factors of expected earnings,” Greenspan stated.
Most economists think the Fed will start raising interest rates in the middle of next year. However, it should be noted that economists and Fed analysts have been talking rate hikes for years now.
Here is an excerpt from a CNNMoney article:
“Only seven out of 25 participants are forecasting a rate hike in the next twelve months, and most of those expect it to come in the final three months of 2011. Another nine expect the next rate increase to come in the first quarter of 2012, while eight more are expecting a hike later that year.”
Forbes’ Gold Fix for the U.S.
Economy
http://www.foxbusiness.com/economy-policy/2014/06/06/forbes-gold-fix-for-us-economy/
The chairman of one of the country’s top financial magazines and former presidential candidate Steve Forbes’ new warning that the Federal Reserve’s elephant gun of a loose dollar policy could trigger an economic meltdown shouldn’t be ignored.
Just take a look at the warning signs already in the headlines around the globe below.
Forbes advises a return to a “gold standard” as the only way to avoid disaster
The U.S. central bank’s “vastly misguided monetary policies are now setting the stage for a new economic and social catastrophe — one that could rival the financial crisis and horrors of the 1930s,” Forbes wrote, adding that U.S. economic success and prosperity will come only if the dollar is fixed to gold and not subject to the Fed’s arbitrary liquidity hydrants.
A gold standard would “lower interest rates,” provide for “cheaper capital” and lead to “gangbuster growth,” Forbes says, adding: “If the American economy had the growth rates it once achieved under a gold standard, it would be three times — instead of two times — the size of the Chinese economy today.”
And it would make government spenders more accountable, instead of today’s Fed which is now abetting the reckless spendthrifts in government by buying and monetizing U.S.
debt.
Could the U.S.keep prices from spinning out of control if the Fed stopped printing money and instead returned to the gold standard? Are central bankers more secretive and powerful than ever before?
Recent headlines sound the warning: