The transmission mechanisms that distribute liquidity to consumer demand labor are broken. More QE just feeds the supply-side of the economy making it more and more top-heavy. There is evidence of a bubble forming from Tim Duy. The Fed is making the economy more and more unstable as time goes by.
The imbalance between capital and labor is made more dangerous with QE. Capital needs to be restrained. They have too much power to control production and profits. Whatever liquidity is gained by labor is instantly gobbled up by business like piranhas. As labor’s liquidity has been whittled away over the years through wage stagnation, labor saves less and less.
A recession will come within 2 years. Unemployment will not reach 6.5% before that happens. And if the Fed is still providing QE, I have to ask, what is the point of QE? With labor’s liquidity so low and the transmission mechanisms to labor broken, what really is the Fed thinking it will accomplish?
And when economists say that tapering may cause a recession, I don’t buy it. My research shows that real GDP must reach the effective demand limit before a recession will happen. It may slow down a bit, but a recession will not happen with tapering. And slowing-down the economy in order to restrain the dangerous imbalance that is once again growing between capital and labor has more social benefits than social costs.
So Fed, please taper, I beg you on behalf of labor whose power is weak and getting weaker as capital gets what they “whine” and dine for more and more. The standard of discipline upon capital has been lowered so far down, that capital has acquired a state of immaturity. People want money for themselves and don’t want to give back to society.
Fed, start disciplining capital. Restrain their power and their freedom. Make capital raise their standards of socially productive investment. They are destroying good society. And it is time to bring balance back to our economy which is being overly dominated by capital who has the freedom to move money anywhere in the world. Labor does not have the freedom to move their wares like that.
Don’t worry about causing a recession or even a slow-down. The future recession is already established in relation to the effective demand limit. You can’t make one happen now.
Please, just taper. Start raising the social standards of monetary policy toward a better society and away from the private interests of those with a greed to wring out labor’s liquidity with a seeming unfeeling cruelty.
Fed, taper… now.