Strong Growth in Jobs May Encourage Fed to Raise Rates (NOT!)




What’s wrong with that headline?


First, Labor Growth is not strong. Those who argue it is, use the data shown on the chart on your left. A well-known fact but just as often ignored by those who believe what they want to believe is that the unemployment rate is declining, not because of job growth but because people are dropping out of the labor force. The chart above right shows that the total number of people employed has fallen. In fact it has fallen to a 38-year low and as of the latest month, only 62.4% of the civilian non-institutional population were holding jobs or seeking to hold a job.

Defenders of the establishment like to suggest that this is a function of positive aspects such as aging demographics and new technologies that reduce the need for labor. No doubt there is some truth to those claims, but how positive is it that we have a surging baby-boomer retirement-age population and a rapidly declining number of people working and thus paying into our bankrupt Social Security and Medicare systems? And how positive is it to suggest that our government, which is running huge budget deficits, should start to provide free college education to millions of students, who may not be college material to start with? Or how sane is it to keep bankrupting college students with college loans and then force a dwindling middle class to bail out those bankrupt students in the future?

So the labor markets are a mess, and the more politicians get involved to try to solve such problems, the more problematic they get. The lies and propaganda just keep on coming from the government and from the privately owned Federal Reserve, which is serving the private shareholders of the Fed. But the mystique of an omniscient, omnipotent Fed must be maintained lest confidence is lost and the entire fraudulent dollar-based system collapses. I understand why the lies just keep on coming. But at least recognition that they are lies can help us prepare for the system that, when based on lies, will inevitably fail. It’s just a matter of time before Pinocchio’s nose can no longer be hidden.

Truth be told, the labor picture is a function of a very sick economic system, because our policymakers have endorsed the destruction of capitalism by disallowing price discovery of capital, thanks to the likes of Greenspan, Bernanke, and now Yellen. By bastardizing interest rates, how can anything but the destruction of capital take place? Not only is capital foolishly deployed when the cost of borrowed money is free, but what legitimate capital exists from savings is not placed into legitimate business that could provide cash flow from whence to finance debt.

And it’s a global phenomenon. The global economy is sick and getting sicker by the hour because every country on earth has taken the lead of the supposed country that knows best how to generate wealth—namely, the U.S. But that too is a lie. Our wealth has largely been stolen from the rest of the world through a dollar-based monetary system that has been enforced by wars, starting with the dropping of the very unnecessary nuclear bomb on Japan, just to let the world know who was in charge.

IDW-2015-11-06So the Fed “cares” about the labor market. It is politically necessary that they appear to do so. But their tears are, as they say, “crocodile tears,” which may be why they persist in the same policies over and over again and expect different results. Whatever the case may be, it doesn’t require you to be a genius to see the global financial situation is growing worse by the year. I start with my latest Inflation/ Deflation Watch, which demon-strates that the prices of basic commodities used when a global economy is growing are plummeting in price.

Ever since QE2 ended in 2011, here is what has happened to basic items like oil, copper, silver, and a broad array of commodities in the Rogers Raw Material Index.

The Rogers Raw Materials Index (energy, metals, food, cotton, and wool): down 48.33%
Copper: down 48.31%
Crude Oil: down 60.55%
Silver: down 69.66%

How could it be that trillions of dollars of money creation out of thin air since 2011 is effective in making things better if the number of people working in America is at a 38-year low and if the prices of the most basic commodities used when economies grow are not only down between 48.31% and 69.66% but are heading over the abyss, as you can see now by my IDW, which has pierced not only below the three-year moving average but also now beneath the five-year moving average! And to top it off, the only reason the IDW has not absolutely crashed to date is because a handful of monster equities are holding up the major stock indexes. If as I expect, stocks are about to crash when and if interest rates are allowed to rise, we will find ourselves in Crash City! Could this be why the U.S. is seeking a war with Russian and China now?

Here is more evidence that the U.S. economy is sick and what growth we are having is illegitimate. Car demand and college educations are possible to a very great extent by printing press money created by the Federal Reserve banking system and forced taxpayer guaranteed loans. Take away the artificial demand generated by government guarantees for student and auto loans, and the economic activity of this country would be far less, to say nothing about the artificial demand for housing created by illegitimate money creation.


Or, check out the Harper Petersen Shipping Index. Governments can lie about economic stats, but if nothing is being shipped, that is still more evidence that Pinocchio’s nose is getting longer and longer. As Mish Shedlock noted last week in his article, we are heading into a global recession: “Global Recession Alert: Containership Plunging into Worst Crisis Since 2009.”

Some other articles from Zero Hedge and David Stockman’s Corner that are far more truthful than the biased fascist tandem of government, banks, and Military Industrial Complex statistics are the following:

“Global Cooling Alert: Korean Exports Down 16%, Sharpest Since August 2009, 10th Straight Drop.”
“Ignore the Dead Cat Bounce: The Next Financial Crash Has Already Begun.”
“US Services Economy Tumbles To Weakest Since Weather-Crushed January.”
“Consumer Confidence Slides As Low Gas Prices No Longer Lift Sentiment.”
“Durable Goods Orders Tumble for 6th Consecutive Month as Core Capex Plunges Most Since 2009.”
“Global Commodity Deflation Strikes Due North—Canadian Slump Triggers Huge Capital Flight.”

But I think the most ominous headlines took place following the allegedly “stronger than expected” job numbers put out on Friday.

“Futures Markets Halted After ‘Violent’ Treasury Reaction to Jobs Beat.” (Zero Hedge)
“What Do They Know? Primary Dealers Are Liquidating Corporate Bonds At An Unprecedented Pace.” (Zero Hedge)
“Gundlach Says the S&P 500 Can’t Handle a December Rate Increase.” (Barbara Kollmeyer)

The reactions in the bond market and in particular by the primary dealers to the “strong numbers” are perhaps the most compelling reason to be very worried about what the big equity and debt markets may do next week.

Both Robert McHugh and Michael Oliver have steadfastly held to their views by way of different technical analytical approaches that we are nearing a very dramatic decline in the equity markets and a very strong bull market in the gold markets. Out of wishful thinking and a great deal of market rigging, the establishment arrogantly laughs at such predictions. But Pinocchio’s nose is indeed protruding further and further, to the point where his lies can no longer be believed, even by our incredibly bread-and-circus fed masses. When that day arrives, it will be game over for the status quo. No one in their right mind could wish for the awful day of reckoning that is drawing near, but it is better to recognize it and prepare than to ignore it, which of course is what the establishment is prepping us to do, which is why few people are buying gold and gold stocks these days. That may change very abruptly.

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.