Tag Archives: unemployment

FOMCGPT Is Better Than FEDERAL RESERVE

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Federal Open Market Committee (FOMC) sets policy for the Federal Reserve.

Data to Monitor Once A Month \\ 50 Plus Year Average \\ Acceptable Range

  1. Consumer Price Index YOY (CPY) Avg 3.8% Range 3%-5%
  2. Case Shiller Home Price Index YOY (HPY) Avg 5.29% Range 3.5%-7%
  3. Unemployment Rate (UR) Avg 5.73% Range 4.5%-7%

Tools Available

  1. Raise/lower Federal Funds Rate if CPY is too high/too low
  2. Raise/lower Federal Mortgage Rates if HPY is too high/too low
  3. Raise/lower Quantitative Easing if UR is too low/too high
  4. Auction Off Troubled Financial Institutions

Financial Institution Tests

  1. Uninsured deposits / domestic deposits < 50%
  2. Loans and held-to-maturity securities / total deposits  < 50%
  3. Financial Institutions that fail both tests for two consecutive quarters are auctioned off.

RESULT: No peer pressure, no human error, no recessions!

FOMCGPT(tm) To The Rescue!

A ChatGPT bot (FOMCGPT) has been designed to generate Federal Reserve policy once a month incorporating the algorithm above using easily modifiable configuration files. It is being tested using Federal Reserve FRED data from April 2021 to April 2023.

#FederalReserve aka #Fed Discovers Gold – Fools Gold

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No.  I am NOT talking about the movie, Fool’s Gold.

foolsgold

I am talking about the Fed finding wealth and a strong economy where there is none.

Like the little boy who cried “Wolf!”,  the Fed keeps saying “The Economy is good!”

Here is the fool’s gold the Fed uses to keep saying :The Economy is good!”

1. Auto sales are up.  Well they were up until the recently released May report showed a drop of 6%.  The recent auto sales were propped up by easy credit but now they have run out of buyers.  Here are details.

http://www.reuters.com/article/us-usa-autos-idUSKCN0YN4K0

2. Home sales are up.  Well they were up until the June 1, 2016 report.  Again home sales have been boosted by easy credit and low interest rates until now. Here are details.

http://www.cnbc.com/2016/06/01/mortgage-applications-drop-because-of-rate-uncertainty.html

3. Unemployment is down.  Well unemployment has dropped to 4.7% but the recent jobs report announced June 3, 2016 showed a shocking one fifth the average number of jobs created.  Unemployment went down because more people have given up or are retired. Here are details.

http://money.cnn.com/2016/06/03/news/economy/us-economy-may-jobs-report/

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Here are the real concerns the Fed should be looking at.

1. Freddie Mac and Fannie Mae.  These firms have been using derivatives to hedge against interest rate changes and lost $475 million last year. Here are details.

http://www.marketwatch.com/story/freddie-mac-may-need-another-taxpayer-bailout-next-week-2016-04-29

2. US Productivity.  The statistics show it went down 1% in the first quarter and now one of the Fed members says it may go down again this month. Here are details.

http://www.reuters.com/article/usa-fed-evans-productivity-idUSU8N16O051

3. Corporate Bond Sales.  These are still high and may match last year’s record in order to finance other mergers. Here are details.

http://www.bloomberg.com/news/articles/2016-04-28/get-ready-for-a-big-wave-of-u-s-corporate-bond-sales-in-may

In summary, the 2008 bailout involved lower interest rates.  But the Fed should have raised interest rates in 2011 instead of maintaining the ridiculous 2% inflation target.  Here is how:

https://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/

Or if you want more information on whether a recession is coming or not, read this.

https://michaelekelley.com/2015/03/02/why-another-recession-is-coming/

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The Fed is chartered with controlling inflation and encouraging job growth.  One Fed member recently said they are too busy to add a third task aka improving the economy.  Well they have dropped the ball on job growth which would have improved the economy.  Here is what the Fed could have and still can do for job growth.

https://michaelekelley.com/2014/03/28/federal-reserve-can-create-jobs/

Good luck out there.

Federal Reserve Can Create Jobs

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THE FED has increasing employment as part of its charter. Yes, inflation is not the only goal in the charter.

underinvestment As this chart shows,US businesses are NOT INVESTING in capital for the future and consequently few new jobs are being created.

The Center for American Progress (americanprogress.org) has recommended creating a NATIONAL INFRASTRUCTURE BANK to fix our crumbling national infrastructure.

THE FED can use the LENDER OF LAST RESORT powers which allow lending to any institution including states and cities not just the financial institutions which are only using the loans to pump up the stock market.  THE FED could loan to the NATIONAL INFRASTRUCTURE BANK.

States and cities could use the loans for infrastructure which would CREATE JOBS similar to the Civilian Conservation Corps.  For example the Fed could have used these powers to bail out Detroit.

Read about it on wikipedia:

http://en.wikipedia.org/wiki/Federal_Reserve_System#Lender_of_last_resort

Thanks