Yellen Says Weak Job Market Shows Economy Still Needs Stimulus

[Purveyor]

Source: Bloomberg

By Jeff Kearns and Matthew Boesler Jul 15, 2014 3:12 PM ET

July 15 (Bloomberg) -- Federal Reserve Chairman Janet Yellen discusses economic progress and employment gains in the United States. She speaks in testimony before the Senate Banking Committee.

Federal Reserve Chair Janet Yellen told lawmakers the central bank must press on with record monetary stimulus to combat persistent job-market weakness.

“There are mixed signals concerning the economy,” Yellen said in response to questions during testimony to the Senate Banking Committee today. “We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates.”

While her “overall view is more positive,” Yellen said low wages are one sign of “significant slack” in labor markets, even after the jobless rate fell to an almost six-year low. In unusually emotive language for a central banker, she talked about the “psychological trauma” suffered by the unemployed and their families.


Read more: http://www.bloomberg.com/news/2014-07-15/yellen-says-high-degree-of-easing-needed-amid-job-market-slack.html

[1StrongBlackMan]

2. Well ...

That is part of what she said ... along with the "low wages represents significant slack" in the positive trajectory.

[rtracey]

3. but...

But 230,000 jobs last month?

[yourout]

4. Until we put a knife in NAFTA, CAFTA, GATT, and the TPP this will be the new normal.

I fear for my kids future.

[BeyondGeography]

5. Significant slack in labor markets...couldn't she just say owners are cheap and greedy?

Because they are.

"America needs a raise," would be good, too.

At least her instincts are sound.

[AdHocSolver]

6. Low interest rates will NOT stimulate the economy.

That is the same fraudulent claim that reducing taxes will stimulate the economy.

Both claims are based on trickle-down economics.

The economy will be stimulated only by increasing demand, that is, by increasing spending on goods and services.

The way to increase demand is to put money in the hands of those who will spend it.

This requires distributing spending so as to give income to the working and middle classes who will spend it, NOT the banks and NOT Wall Street, which suck the money out of the spending loop, and essentially are hoarders of money.

So, how should monetary assets be distributed to improve the economy?

Government should spend money on products and services that improve economic development such as infrastructure, education, health care, and research and development.

Another way to increase demand is to bring off-shored jobs back to the U.S. That means getting rid of one-sided, corporate-written trade agreements like NAFTA, CAFTA, the WTO, the IMF, and scuttle trade agreements such as the TPP.

Bringing outsourced jobs back to America will automatically increase wages as demand for workers increases.

However, to help the middle and working classes and increase demand in the near term, the minimum wage should be raised now to stimulate the economy.

The interest rates being kept low by the Fed are the interest rates on depositors' accounts, while the banks keep interest rates on credit card balances at 14 percent and higher.

This policy is the absolute reverse of what the banks should be doing to stimulate the economy. Middle class consumers are getting nothing for keeping money in a bank account, while the banks take a huge chunk out of middle class assets via high interest rates on loans (especially credit card balances) that the middle class could use to spend on goods and services.

The Fed is working for Wall Street, not main street. The Fed is not the solution. The Fed is part, a big part, of the problem.

[Psephos]

7. accurate and insightful

but not destined for the Greatest Threads anytime soon, alas

someday, though, your observation that the Fed is a big part of the problem will be more widely realized...it's already obvious who gets richer and who gets poorer from the Fed's ZIRP policies, and getting harder and harder to pretend not to notice

meanwhile, keep holding that lantern