Jobs Report Miss

This week the big news was the massive miss in the jobs numbers.  Nonfarm payrolls increased just 235,000 after an upwardly revised 1.05 million gain in July. The median estimate in a Bloomberg survey of economists was for 733,000. According to one source I read ~200,000 of the shortfall resulted from a delay in back-to-school jobs. But however you cut it, it was a shock to the markets. If anything, it has tapered taper talk as the Fed tries to convince people that it actually has some credibility left. It certainly does not with me, but there are still a lot of people out in the markets who enjoy this party enough to believe the unbelievable. 

Last week after the disastrous disengagement from Afghanistan, pundits talked about how politicians of both parties have been lying to the American people for the past 20 years by telling us that things were going well in Afghanistan. The Military Industrial Complex has simply taken a page from the Federal Reserve propaganda playbook. The lies regarding Afghanistan told by politicians having their reelection campaigns paid for in exchange for passing along taxpayer dollars were exposed this past week by the horrendous videos seen of desperate Americans and Afghan citizens being left behind in an effort by the Administration to earn some political points. And for those who care to look at history, the Fed’s lies are just as obvious as Pinocchio’s nose when you gaze at the interest rate chart shown above. There is no return to normal because the Fed has dug America into such a debtors prison that a return to price recognition of capital cannot take place until the entire system is wiped out and replaced with a new system, hopefully one that allows the collective wisdom of millions of Americans in free markets to set prices, most significant of which is the price of money, and even more important to select what is used for money.

In other words, the debate regarding whether or not the Fed will taper is a farce. We learned after the 2008 financial crisis that Bernanke was unable to allow rates to rise much above 2% before the equity market crapped out. And now the bar is set even lower with trillions more of Federal and corporate debt. Cleary the entire free market system is broken, which is why socialist fiscal policies are being used, which is stirring up inflation. Sure, there may be a limp-wristed attempt to reduce monthly purchases of Treasuries by $10 billion out of the current $60 billion of Treasuries. That might qualify as a taper. And yes, we could see some whiffs of deflation if, as Michael Oliver predicts, the equity market is about the start a significant decline and if, as Chen Lin will say on my show next week, China may be entering a significant slowdown. But what do you think the Fed will do if the equity market falls 10%? It will print, print, print. And as long as the Democrats have control of the government they will continue to send checks to citizens in what is actual helicopter money. With that you limit the supply side by encouraging people to stay home while goosing the demand side by sending them printed money.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.