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Shoving It in America
Will the Federal Reserve be pumping more fairy dust, or rather, money, into the banks’ coffers—ahem—I mean the economy when it meets again in September?
That is, in the main, a rhetorical question. Of course the Fed will throw more money at the recession. And even though the bang for the buck is minimally positive on the economy—at least it is for a moment or two—more easing will help keep stock prices up…
And that’s something.
Why, I’m sure you’re wondering, would the Fed be entertaining another round of quantitative easing? Hasn’t it proven to be ineffective? Where, you might be wondering, and rightly so, has stimulus ever been stimulating for the economy for longer than a month or two?
The answer, of course, is nowhere in the world…except in the reality-challenged minds of our good and dear leaders.
And why would they even begin to think that more of what hasn’t worked yet, would certainly work the next time?
Well gee, lots of good reasons…
The “Shove It” Index
Such as, “We’re the Federal Reserve, and creating cheap dollars is what we do best”, or “unemployment rates are up, so we need to spend more money to create jobs,” and of course, the very basic but so far ineffective “zero interest rate policy” for generating demand. And let’s not forget the much-heralded but never tried Bernanke scheme of “dropping money from helicopters” policy…although we have yet to see that one, it is probably the only good idea among them all. At least it would put the money where it’s needed, in the hands of consumers rather than bankers.
But one of the more entertaining reasons that I’ve heard lately for the need for more Fed stimulus money is the “Take This Job and Shove It” Index (TTJASI Index).
“What in the world is that?” You say?
Thought you’d never ask.
“Take This Job And Shove It” was a country hit from the 1970’s sung by Johnny Paycheck that struck a nerve back in the Carter years of recession, stagflation, and OPEC oil shortages. The song speaks of the common man’s frustration and humiliation at struggling to earn a living in tough times. It’s the classic labor versus management riff, with labor telling management just where to get off.
Okay, I get that part of it. A working stiff hates his job and tells his boss to put it where the sun don’t shine; a very mainstream slice of American defiance and self-dignity.
But it does seem just a bit unnerving, doesn’t it, that some of us would be referencing the era of the misery index and a failed presidency and applying it to our situation today? But hey, if the cowboy boot fits…
So what’s an old country song have to do with where we are today? Well, the TTJASI Index looks at why people leave their jobs. That is, it looks at whether they left their jobs voluntarily, i.e. quit, or if they were fired.
Apparently, the TTJASI Index threshold for a recovering economy is when it rises above 50%. When 50% or more workers quit their jobs on their own, it has been found that consumer confidence returns to the economy about 6 months later. Got that?
Index may show no good news
If enough people quit their jobs, then it means that Americans must have more confidence in their ability to get a better job than the one they just quit. That makes sense…not perfect sense…but some sense. Suppose, for example, that your job is 15 miles away. With gas prices rising and wear and tear on your car, it may not make any sense to keep the job. You may “earn” more on unemployment.
Or, if your wages fell, the same result may well apply. But just for the sheer depression-era fun of it, let’s say that the TTJASI Index is accurate.
That would mean that if the TTJASI Index is less than 50%, then it tells a different story. More people are getting fired or laid off than those who are quitting. Basically, it means that the economy is contracting because firms are letting people go. That makes more sense.
My point is that the index could be above 50% and still not mean what some people think it means.
But back to the Fed’s reasoning for blowing billions and billions more money…
Apparently, the TTJASI Index popped up just over 50% for a brief moment or two, before submerging below the 50% threshold once again. That is believable, since unemployment rose from 8.2% to 8.3%. More Americans are out of work today than were, say, 60 days ago.
All in all, I’d say that the TTJASI Index is just one more very strong reason for the Fed to do what it does best. It’s right up there with saving Bernanke’s job, up for renewal—or not--next January, and saving Obama’s job this November. If those cats think bankrupting the country is gonna keep their butts in power, then that’s exactly what they’ll do
Of course, there’s always the off chance that Americans will stand up in November and tell Ben the Bankster and Barack the Bankrupter-in Chief, neither of whom are country music fans, to “take your stimulus and deficit spending and shove it.”
And those are…The Gorrie Details.