Former Federal Reserve Chairman Ben Bernanke’s editorial in The Wall Street Journal on October 5, 2015 had headlines: “How the Fed Saved the Economy” and “Full employment without inflation is in sight. The central bank did its job”. Bernanke emphasized that “The 5.1% headline unemployment rate would suggest that the labor market is close to normal.”
It is important to know that “Unemployed persons: All persons who had no employment during the reference week, were available for work, … and had made specific efforts to find employment some time during the 4 week-period ending with the reference week.”
One month after the economy began to collapse in September 2008, the Bernanke Fed started paying private banks for their excess reserves that they are not required to hold. As of the second week in October 2015, the Bernanke and Janet Yellen Feds have pumped in enough money (the monetary base) to reach over $4 trillion. Sixty-three percent of the $4 trillion is now held idle by the private banking system in excess reserves. This policy reduces loans to consumers and businesses, causing unemployment.
On October 26, 2015 Theo Francis and Kate Linebaugh of the Wall Street Journal wrote:
“From railroads to manufacturing to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year.”
The BLS reported on October 6, 2015 that “The civilian labor force participation rate declined to 62.4 percent in September; the rate had been 62.6 percent for the prior 3 months,” a 38 year low.
The BLS reported that 94.718 million U.S. civilians, 16 years and older, were “Not in the labor force”. The increase in the labor force of (2,175 thousand persons) minus the increase of those “Not in the labor force” (2,175 thousand) over a year (September 2014 to September 2015) was only 136 thousand people. Although there are many reasons for increases of persons “Not in the labor force” there was little change, a sign of stagnation in employment.
BLS also reported on October 6, 2015:
“The change in total nonfarm payroll employment for July was revised from +245,000 to +223,000, and the change for August was revised from +173,000 to +136,000. With these revisions, employment gains in July and August combined were 59,000 less than previously reported. Over the past 3 months, job gains have averaged 167,000 per month.”
The BLS uses monthly household employment surveys that do not include those without an address and phone. Why don’t poor people buy a phone and a residence so they can get in the 60,000 household survey? Since this question is ridiculous, there is an inaccurate measure of the unemployed in that survey. The excellent Washington D.C. columnist, Jim McTague, found from experts that approximately eight percent of workers did not send an account of their earnings to the Internal Revenue Service.
I assisted House of Representatives Chairmen Henry Reuss and Henry B. Gonzalez who were very interested in the levels of unemployment. An example of massive unemployment was on the south side of Chicago that the BLS did not display:
The greatest shock for unemployment began decades ago:
“During the 1970s and 1980s, the U.S. steel industry suffered a sudden collapse that threw thousands out of work. (…) The sudden decline of American steel stunned the employees of mills across the Chicago area. Between 1979 and 1986, about 16,000 Chicago-area steelworkers lost their jobs. Wisconsin Steel closed abruptly in 1980 after attempts at a financial bailout failed. South Works endured a prolonged shutdown before closing its doors in 1992.”
The present increase in federal tax and capital gains tax, and the older high corporate tax (compared to other countries) may well reduce investments in businesses that would have provided many more jobs. Higher taxes in a period of high unemployment wrecks free enterprise so the government must redistribute more income to the unemployed.
When Governor Mitt Romney ran for president he advocated lowering tax rates and raising deductions on higher income people so that their taxes would not would not fall. This policy would give investors incentive to invest in businesses, reducing unemployment . The deductions in taxes for the wealthy are described in the August 11, 2011 Bloomberg Business Week: “How To Pay No Taxes” and in my Huffington Post blog.
Also, read “The U. S. Government’s Largest Means-Tested Anti-Poverty Program Has Severe Problems” and how it should be changed to produce an efficient safety net for the poor.
— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.