Fed announced rates will be low until unemployment is 6.5%

The fall in unemployment rates has been more due to people dropping out of the work force than job creation. People are A. running out of unemployment benefits or B. giving up all together.

 

Except the unemployment rate that accounts for this has also been dropping for the last few years.

http://portalseven.com/employment/unemployment_rate_u6.jsp

I actually think this is a logical move by the Fed. Tying interest rates to a specific date is silly when we all know the objective is inflation/employment goals. 2015 was a meaningless date - if unemployment magically drops next year, they would raise rates earlier; if unemployment drags out longer, they would keep rates low longer. All they really did was tie the rates to the metric they were already using.

 

<iframe width="560" height="315" src="http://www.youtube.com/embed/7uKnd6IEiO0" frameborder="0" allowfullscreen></iframe>

 

This guy perfectly explains how the unemployment numbers are manipulated.
http://danielamerman.com/articles/2012/WorkC.html

Labor force participation rate is a much better metric.
http://www.washingtonpost.com/busin...ef5ac6-4265-11e2-8c8f-fbebf7ccab4e_story.html

 

I don't think he's right on this, given that we've gone from 9.8% to 7.7% in 2 years, without averaging anywhere close to 200k jobs per month over that time.

 

Given a lot of people will be retiring soon our unemployment could start to go down faster.

 

Pretty shrewed move by Obi-Wan Ben. I am consistently impressed by his leadership at the Fed. Given all the disfunctional elements of our government, it is good to see a shining example of competence.

Rates cannot go any lower and thus many pundits assume he is out of moves to further stimulate the economy. But moves such as Operation Twist, the two-year interest rate guarantee, and this new unemployment benchmark guarantee prove that he is one of the most resourceful Fed chairmen in our lifetimes.

 

Population is not going to grow over the next few years any faster than it has the last few years. Participation rate will certainly be a drag - but U6 has been dropping at a pace similar to U3 over the last few years, so it's not clear how many of these workers are "discouraged" vs voluntarily leaving the labor force (retiring, etc).

He certainly knows more than me. But in arguing for a massive new mortgage refi program funded by taxpayers, he also predicted in the fall of 2010 that without major fiscal stimulus, the unemployment rate would be in double digits for the foreseeable future - and there was no fiscal stimulus after that, given the tea party election a few months later.

 

Exactly. I love this move because I think it will encourage investment. There's a lot of money sitting on the sidelines due to uncertainty about the economy. This removes at least some of the uncertainty.

 

Good news for Mr. Obama's legacy.

 

No surprise. The man is committed towards clear, simple communication and targeted ranges for effective monetary policy transmission. For a bit of insight, his own article on Japanese monetary policy paralysis might be key to explaining why he's pursuing this.

http://www.sistematikrisk.com/wp-content/uploads/Japanese-Monetary-Policy.pdf

An interesting insight into the man himself---

 

I never did get an answer on why private market agents are all-knowing and all-powerful, until government policy and simple accounting inflation tricks come into play.

Austrian economics both simultaneously worships the market agent as the ideal distributor of credit, while seemingly faulting many with the apparent inability to track government policy tools and their effect. That seems to me to be a pretty big folly.

 

To say this is a caricature would be quite an understatement.

Sounds like this is the Rational Expectations argument. If I'm wrong on that, let me know. I'm at work so you'll have excuse me for copying and pasting from the Mises wiki and a couple other sources after a Google search:

Spoiler

And this: http://mises.org/daily/2673

Page 422 of Jesus Heurta de Soto's Money, Bank Credit, and Economic Cycles:

Spoiler

And a little something from Robert Murphy:

Spoiler

I don't expect to change your mind on anything, NS. But maybe a token acknowledgement in some of your posts that there are counter-arguments and rebuttals to the theories and studies you so often link to?

This might be an unreasonable request, but you are the only one of your kind who frequents the D&D. I certainly don't have the time and patience (or the on-hand knowledge) to dispute you on every economic issue you speak about. I also get no enjoyment from it. Plus, last time I attempted to argue with you on here one of my 1,000,000 superiors at work walked by while I had 5-6 tabs open about economics and asked, "Travis, what the hell are you doing?" Did not look good, but I'm just glad I didn't have the Best Ass thread open.