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Gov. data dubious this year

March 13, 2012

Federal data always rosy senarioed in election year. Leftie bureaucrats and administration and media and academic experts, and crypto-leftie financial fat cats more interested in maintaining leftie power than in truth.

As made clear in Who Killed the Money Printer, U.S. economic data that is subjected to official pressures from the administration will not be allowed to materially disappoint before elections. We see that confirmed once again in Friday’s jobs report, in which an alleged 227,000 private sector jobs were created. Needless to say, most analysts who have scratched just a little bit beneath the report’s surface have found it to be completely inflated and misleading. Bank of America and TrimTrabs’ sobering assessment can be found here.

The illusion that America has decoupled from the rest of the world and entered a self-sustaining economic recovery, however thinly veiled it may be, will weaken the Fed’s ability to justify more QE. In Political Theater Will Kill the Status Quo, it was also noted that a new QE program would provide a lot of cannon fodder for Republicans taking aim at Obama in the run-up to elections in November, especially when prices at the pump are relatively high. Critics may argue that the administration and Fed can avoid these issues by marketing the QE as a “sterilized” operation, as per the recent rumor. That, however, raises an additional question for me – what’s the point?

Perhaps the most important factor weighing against a new easing program right now is the perception held by major corporations, financial institutions and the Fed that it won’t really benefit the economy or their bottom lines, and may even prove to be counter-productive. That issue was explored in terms of the ECB’s dual LTROs in Why Liquidity is No Longer Enough, but the logic applies just as well to QE by the Fed, especially when the easing is being sold to everyone as an operation that will be “sterilized”. Sure, that may help you avoid some of the internal and external criticism of those who are against “money printing”, but at what cost does that pacification come?

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