July 8, 2013

According to some, last week’s jobs report demonstrates we have achieved a Goldilocks economy: Growth is not too hot to cause a rapid deceleration in the Federal Reserve’s credit easing and not too slow to signal a double dip. This conclusion demonstrates a disturbing acceptance of two new realities: Our financial markets have become completely addicted to cheap money, so much so that any sign of the Fed’s withdrawal triggers market shakes, and we seem to have accepted chronically high unemployment not just as inevitable but as welcome.

We have outsourced economic policymaking to the Federal Reserve, and while its actions have been heroic in stabilizing the economy, they have not righted it. The Fed reminds one of an anthologist who knows the patient must eventually wake up and stand on his own but fears that he will be too weak to do so and could collapse, causing a reinjury. So the ameliorating gas of cheap money keeps coming. This strategy has resulted in a market boom but only an uptick in new jobs.

There are few voices who are willing to call our present economic state
unacceptable and untenable, and even fewer who are willing to prescribe
any solutions. One would think that the current employment numbers and
income disparity would prompt a meaningful challenge from the populist
left.  We’ll see if any Democrats are willing or able to take up that
mantle in 2016, but the opening is getting wider all the time.