What mental dungeon do they dig these people out of?
We are referring to the latest barking mad idiocy from the Federal Reserve—this time the declaration of Richmond Fed President Thomas Barkin that he wants to keep on printing until the employment-to-population ratio is back to where it stood in February 2020:
Federal Reserve Bank of Richmond President Thomas Barkin isn’t ready to call for an end to the U.S. central bank’s $120 billion a month in bond-buying stimulus given where the labor market stands today.
The policy maker said the employment-to-population ratio is important to him in determining when the central bank can dial back on the stimulus it is providing the economy. This ratio stood at 61.1% in February 2020, before the coronavirus pandemic took hold in the U.S. and economic activity cratered. It bottomed out in April of that year at 51.3% and has risen since, hitting 58% this June. Mr. Barkin said he would like to see something just north of 59% before he believes it would be time to start reducing bond buying.
Talk about mindless numerology. What in the hell is so special about 61.1%, which is just one big round house data point on the dark green line shown below?
That is, the total employment-to-population ratio is an arbitrary average of that ratio for men and women workers separately; and within these huge categories, there are numerous variant ratios for subcategories based on age, demographics and geographic locals, among many others.
Indeed, why not at least aim for the high point of the employment-population ratio for men (brown line) and women (purple line) separately—since they self-evidently have had dramatically different trajectories over the past 70 years. That would set the Fed’s money-printing compass at March 1953 for men, when the ratio topped out at 84.7% compared to Harkin’s implicit target of 66.8% (February 2020), and at May 2000 for female workers, when the ratio topped out at 57.5% compared to Harkin’s implicit target of 55.8% (February 2020).
We are just saying unless you want an excuse for an endless money-printing bacchanalia, why pick a single utterly meaningless date and data point (61.1% for all workers, February 2020) from a chart that screams out loud that the employment-population ratio has no historical equilibrium point whatsoever, and certainly has nothing to do with the rate at which the Fed snatches fraudulent credit out of thin digital air.
Employment-Population Ratio, Men, Women and All, 1948-2021
Moreover, when we say no observable, sustainable equilibrium point, that’s exactly what we mean. If you take the employment-population ratio for white males over 20 years because that category has not been heavily influenced by civil rights changes (black employment) or changing equal opportunity laws and cultural norms (female employment), you get the picture below. What, pray tell, did monetary policy have to do with this 70-year march straight down the hill, unless you think a plunge in the ratio of people working for a living is a swell thing.