06/27/2017 - Yra Harris: Maybe The Yield Curves Are Sending A Warning To The Federal Reserve
“Bernanke spoke to in his speech Monday in Sintra, Portugal. Titled, ‘When Growth Is Not Enough,’ Bernanke talked about the rise of antipathy to the existing political elites: ‘If the populist surge we are seeing today has an upside, it is to refocus attention on both the moral necessity and practical benefits of helping people cope with the economic disruptions that accompany growth .. Since 1979, real output per capita in the United States has expanded by a cumulative 80 percent, and yet during that time, median weekly earnings of full-time workers have grown by only 7 percent in real terms. Moreover, what gains have occurred are attributable to higher wages and working hours for women. For male workers, real median weekly earnings have actually declined since 1979. In short, despite economic growth, the middle class is struggling to maintain its standard of living.’ .. Yellen has used her position as Fed chair to discuss stagnant wages but now she is concerned about the sudden desire to squash an incipient rise in wages? Maybe American workers are realizing that too much debt without an increase in wages portends trouble in the near future. The recent flattening may in reality be the market warning the FOMC about raising rates in an effort to halt a beneficial rise in wages, which would help reduce what Bernanke refers to as the ‘SOUR MOOD’ of the developed economies’ electorates. Bernanke’s speech creates a major dilemma for the FED, which has backed itself into a corner by adhering to the antiquated model of NAIRU .. Capital has been absorbing the bounty of Bernanke’s portfolio balance channel powered by QE2 and QE3 in which asset prices have soared while stagnant wages have persisted .. I wonder if the former Fed Chair is warning against raising rates too early. Maybe the YIELD CURVES are sending a similar warning. Maybe the GOLD and DOLLAR are sending a similar signal to the FOMC.”
