Over the last year, central bank manipulation of markets has reached ludicrous levels, far beyond the “quantitative easing” used to mitigate the early stages of the crisis. Through long use, “unconventional monetary policy” of the original sort has become ineffective, and, well, simply conventional in nature.
To get pushback, central banks have been straying ever further onto the wild-west frontiers of monetary policy. Today it’s not just government bonds which are being bought up by the lorry load, but corporate debt, and in the case of the Bank of Japan and the Swiss National Bank (SNB), even high risk equities.
OECD Warns Fed, BOJ, ECB of Asset Bubbles, “Risks to Financial Stability,” Pinpoints US Stocks & Real Estate
The OECD estimates in its Interim Economic Outlook that for member nations as a whole, GDP-per-capita will grow only 1% in 2016, “which is half the average in the two decades preceding the crisis.”
Per-capita is what counts. It’s what people experience. It’s their slice of the economic pie. Population growth papers over a lot of ills for economists: for example, in the US, 14 million jobs were created since the Financial Crisis, which has been touted endlessly. But the US population grew by 15 million people. Now there are fewer jobs “per capita” than there were at the depth of the Financial Crisis. That’s why per-capita matters.
Yet its outlook, bad as it is, is “subject to significant risks.” The economy might further deteriorate, it says, because: “Financial instability risks are rising, including from exceptionally low interest rates and their effects on financial assets and real estate prices.”
Bubbles in stocks and real estate! The Fed, however, as always, is steadfastly blind to bubbles.
This is Why the Job Market Stinks, but No One is Talking about it
E-mail is a great example. Almost everyone uses e-mail. Before e-mail, there was “snail mail.”
Every month, people sent you bills, magazines, catalogs, fliers, etc., and a guy in a truck came around once a day and stuffed your mail box full. You wrote checks, put them in envelopes, added stamps, and put them back in the USPS system to go back to your vendors.
Today, I get an average of two pieces of mail a month, mostly fliers that go to everyone in the neighborhood. I can’t remember the last piece of first class mail that I received. The USPS has half the employees it had a few years ago, and its business is basically a package delivery service and a deliverer of junk mail.However, it is not just the loss of direct jobs. The USPS uses a lot less gas, trucks, tires, equipment, power, etc. All that reduction filters down to other vendors that supply the USPS.
The USPS has lost about 200,000 nicely paid employees since its peak. Since the losses were scattered over the total US, and over time, it wasn’t really all that noticeable. If some US company laid off 200,000 people at once, the uproar would be tremendous.
4,100,000 people make their living driving. Driverless cars, trucks, and buses are not coming; they are already hitting the streets today. Within a decade probably 50% of the driving jobs will disappear. That’s a lot of good paying jobs gone.
People say all the time, “I’m not worried, they will never automate my job.” But that is not the point. Everyone with a job depends on customers with money to make their paycheck. If the customers don’t have money, eventually, you will be out of a job also. The people that had bookstores didn’t do anything wrong. But the Kindle and Amazon ran them out of business.
DYI
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