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How the Fed Bluffs the Financial System

Labor force participation back to levels last seen over three decades ago. Fed policy aims at pushing US dollar lower.

from My Budget 360

The US is facing a long trend of aging Americans entering into retirement or what can be viewed as life post-work. The vision of sitting on the sand in some resort villa is largely a dream. Nearly half of American when they leave this world go out broke like a country western song. Today as the stock market is nearing peak levels, one out of three Americans has no savings. Yet the headline unemployment figures have moved lower giving the impression that things are better but a large part of this is happening because we have less Americans in the labor force. In fact, our labor force participation rate is as low as it was over 30 years ago. So of course if you shrink the labor pool you have more room to play with the headline figures. It is crucial to understand this because the economy is operating under a false sense of success. The housing market is now being propped up via the Fed and QE3 but this is at a cost of a multi-trillion dollar Fed balance sheet. Plus, why do you want to increase home values when Americans are facing falling income? The unemployment rate is a poor proxy of what is really going on in the overall economy.

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