The last 15 years in the United States haven’t exactly been rosy, and it has left the country in a precarious situation. Due to the Federal Reserve and Congress’s reckless policies of the past decade and a half – $4 trillion of freshly printed money, $700 billion in TARP, $800 billion of fiscal stimulus and 165 consecutive months of zero percent interest rates – the U.S. is now left empty-handed.
These are the words from David Stockman, former budget director under the Reagan administration and bestselling author of the groundbreaking book “The Great Deformation,” who published a damning piece on his blog, Contra Corner.
The future of the country remains uncertain, says Stockman.
“You’d think with all that help from Washington that American capitalism would be booming with prosperity,” Stockman averred on his blog. “On the measures which count when it comes to sustainable growth and real wealth creation, the trends are slipping backwards — not leaping higher.”
When looking at the numbers, Stockman highlighted that the total number of so-called “breadwinner jobs” in the U.S. remains two million below the levels reached during the Clinton administration. Moreover, the non-financial business productivity has jumped only 1.1 percent per year in recent memory, half of the annual gains between 1953 and 2000.
In addition, Stockman alluded to the real median income, which was just $53,000 last year. Employment levels, despite the Fed’s soaring balance sheet, hasn’t improved as the labor force participation rate declined 10 percent.
“That means median living standards of US households have been falling at a 0.5 percent annual rate since the turn of the century,” he added. “There is no prior 15 year period that bad, including the 15 years after the 1929 crash.”
“The thing is these jobs have nothing to do with cheap interest rates and easy credit. They are a function of the entitlement state and the massive $200 billion per year of tax subsidies, which support employer-funded health benefits.”
The former Republican Congressman said there is a huge difference between now and the eras of Eisenhower and Kennedy, the earlier presidencies believed in the concept of balanced budgets.
In the end, says Stockman, the Fed simply cares about improving the gross domestic product instead of actually generating genuine economic growth. “So the Fed blunders forward, oblivious to the fact that it is now 2015, not 1965, maintaining the lunacy of zero or soon near-zero interest rates. The Fed has thus become little more than a serial bubble machine.”
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