Ignorance or Deceit?

When you encounter rational expectations theory you cannot help but see its totalitarian potential. The most basic premise is that policy expectations influence the behavior of agents, and thus changes in policy expectations influence changes in current behavior. If the Fed makes you think it will take an “inflationary” stance, then theory proponents expect that .. read more

Back Over The Rainbow

The Wizard: I AM OZ…the Great and Powerful! Who are you? The Wizard: Pay no attention to that man behind the curtain! The Great Oz has spoken! Dorothy: How can you talk if you haven’t got a brain? Scarecrow: I don’t know. But some people without brains do an awful lot of talking, don’t they? .. read more

Wholesale Revisions

The economic theme of the 2013 was inventory as it accumulated in the retail apex of the supply chain. Wholesalers have been far more cautious about expanding inventory, coming far short of even 2012 levels after the dramatic experience after the 2012 holiday season. Despite this conscious desire to not overextend, they may not have .. read more

Dollar and Trade Delinked Globally; It’s All Finance Now

The news from China this morning was unexpected only to those who still cling to the idea that the PBOC control is omnipresent. Exports were down 6.6% Y/Y in March (after dropping 18.1% Y/Y in February), while imports simply collapsed 11.3% Y/Y. Since China has been operating as the global trade pivot, the results on .. read more

Homage to Steinism

Herb Stein was an economist that drew the unenviable task (though I don’t think he saw it as such) of being chair of the Council of Economic Advisors under Presidents Nixon and Ford. He was a man who knew imbalance up close and personal. To that end, he once quipped, “Economists are very good at .. read more

Wither Weather

Gallup’s survey of consumer spending in February conformed largely to the orthodox script of weather-beaten households forgoing January purchases. The large drop in January was thus assumed a temporary condition that would simply spillover into February. And that was the sense gained by Gallup’s results, with a large increase in February over January. Americans’ daily .. read more

Downstream of Labor – Trend

For the sake of readability, this part of the labor analysis will forgo discussion of, or even any reference to, multi-fractal equations. Instead, it is a look at the employment “market” as it relates to the trend component of the economic system. It is here that there is the most contention, as clearly there has .. read more

Lack of Productive Income Dooms Lack of Demand

In anticipation of tomorrow’s jobs frenzy, with all attention fixed to a statistic that was never meant to convey meaning in the current predicament (the unemployment rate is not supposed to be driven by the denominator), a review of context is in order. That is particularly true as I have detailed recent indications of a .. read more