A Very Unfinished Recession, For Most Americans

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The effectiveness of the Fed’s aggressive monetary policy can best be gauged by the stock market which has been soaring for five years, though it has gotten a little wobbly recently, up there at its dizzying heights. The hope is that it won’t lose balance altogether and topple, but that it might sit down a while and catch its breath before climbing into what mountaineers call the “death zone,” where oxygen is so sparse that human life, or hardly any life, can be sustained for longer than a brief period. It’s where hopes go to die. 

The effectiveness of the Fed can also be gauged by the credit markets, where yields plunged to historic and ridiculous lows, and even crappy, high-risk junk bonds yielded less than an FDIC insured 5-year CD did before the Fed started applying its magic. Beat-up and blinded investors, desperate and out of other options, were no longer demanding compensation for taking on risks, even when the smell of putrefaction was already wafting by. And bond prices reached new highs, though those glory days ended last May when taper palaver started mucking up the thin mountain air.

By these measures, the Fed has done exceedingly well. Surveys of the American people confirm that. A far-ranging Fox News poll with 44 questions across the jungle of American hot-button topics, from immigration to New Jersey Governor Chris Christie’s plight – including Congressional approval ratings, which were abysmal, and Presidential approval ratings, which were ugly – established just how well the Fed has done.

A stunning 3% of Americans were “very satisfied” with “the way things are going in the country today.” Not 1%, but a whopping 3%! So the effects of the Fed’s policies were broad-based. Another 34% were “somewhat satisfied.” So maybe their 401(k) had doubled over the years, after having fallen by 50%, and now they had illusions of being able to retire on it. And maybe they had a decent job, and their pay hadn’t been cut, and things were going alright. But 31% were “not very satisfied,” and another 31% were “not at all satisfied” – 62% in total who thought that things were going the wrong way.

Then the poll dug into the issue of the recession. Statistically speaking, the Fed’s heroic actions conquered the Great Recession years ago, and while the economy hasn’t been exactly booming, it has been growing nevertheless at a measurable clip, statistically speaking, with the unemployment rate inching ever lower over the years, though again, that’s just statistically speaking.

Americans struggling to make ends meet in the real economy, far from the hoopla and the hype and the buzz of Wall Street or Silicon Valley, have a more accurate answer: they’re split.

For you and your family, does it feel like the recession is over, or does it feel like the country is still in a recession?” the survey asked. The answer was broad-based. Instead of only the 1% claiming sheepishly that the recession was over for them, a whopping 22% thought so. That was up from 10% in September 2010, by which time the Great Recession had officially been over for a year. That’s what Fed-generated asset bubbles do: there are quite a few beneficiaries – not just the 1%, though the 1%, or more specifically the 0.001%, really cleaned up.

But for 74%, for nearly three quarters of the population, the recession was still not over (and 3% didn’t know).

For them, the recession is still dragging on to this day, jobs are hard or impossible to find, and when they finally find one, it’s for a lower wage, and wages in general are down, and even those who have maintained their wages over the years saw inflation eat into them. If they didn’t participate in one of the asset bubbles somewhere, if they didn’t own stocks for the last five years, or if they didn’t buy a house at the trough of their local housing market, they’re screwed.

OK, that’s somewhat better than September 2010, when 86% didn’t believe the official proclamations that green shoots were all over the place, that lush things were growing in the verdant economy. It took over three years and another $2 trillion of Fed money printing, and all kinds of distortions of the markets, assets bubbles, and what not, to lure another 12% from the non-believers into the camp of the believers.

How many more trillions will it take to get all Americans to finally see that the recession ended for them too? The law of diminishing returns makes sure that this would be a pipedream. Printing money to inflate asset prices to where housing gets too expensive to live in, and repressing interest rates to where savers lose their income streams and instead surrender their money for free to the banks – none of that will ever improve the real economy, drive up wages, and create decent jobs. And Americans stuck in the real economy have figured this out.

But the most astounding element of the poll, among those 44 questions about the President and Congress, about the economy and jobs and all the social and economic issues that America is struggling with, was the question that wasn’t there. The single most powerful player, nay manipulator, in the economy that has made a small percentage of people immensely wealthy, while real wages have dropped for the majority of the Americans, was never even mentioned, not even tangentially: the Fed.

It just didn’t come up. It was as if strung-out Americans should be kept in the dark about the Fed and its role in all this, and as if they shouldn’t be grilled about the Fed as they were grilled about the President, and they certainly shouldn’t be given a platform to vent about it. A form of media-imposed omertà.

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