While they won’t, the period of free money should end now

By Peter Boockvar - December 14th, 2009, 11:37AM

Ahead of the 2 day FOMC meeting, in order to help guide them in their decisions I want them to digest the following stats so as to compare the conditions of Dec ’09 with that of Dec ’08 when they cut rates to a range of 0 to .25% from 1%. Since Dec ’08, the US$ index is down 7%, gold is up 33%, oil is up 57%, the CRB index is up 21%, the S&P 500 is up 28%, the 10 yr note yield has gone from 2.51% to 3.54%, the 30 yr to 4.48% from 2.96%, the implied inflation rate 10 yrs out has gone from .15% to 2.22%, the implied rate 5 yrs out has gone from -.23% (yes deflation) to 1.92%, Nov ’09 job loss was 11k, Nov ’08 was 597k, the ISM services index has gone from 37.4 to 48.7, the ISM manufacturing index went from 36.6 to 53.6, y/o/y CPI for Nov ’09 is expected to be 1.8% vs 1.1% in Nov ’08. The main stat that has continued to worsen is the employment rate which has gone to 10% from 6.8%. While times are still very uncertain, the period of free money should end now.

PERMALINK
Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “While they won’t, the period of free money should end now”

franklin411 Says:
December 15th, 2009 at 12:49 am
Silliness.
WaltFrench Says:
December 16th, 2009 at 1:30 am
“The main stat that has continued to worsen is the employment rate which has gone to 10% from 6.8%.”

Pesky one, that. Especially since the Fed is obliged under that quaint, 30-year-old Humphrey-Hawkins law to undertake efforts at full employment. The “Twin Mandate,” insiders say.

One may argue that “free money” doesn’t actually help employment, but that seems not to be the concern expressed above, nor one that I can recall from any student of the economy, Nobel laureate or otherwise. Rather, PB worries about gold, a cheaper dollar that might facilitate exports and other measures quite tangential to citizens‘ ability to earn income.

Still: is the concern about an implied rate of less than 2% inflation a match for the human and economic cost of having somewhere around ten million Americans not contributing to our national wealth? What kind of dismal science is that?