Courtesy of Jr. Deputy Accountant
The first most spectacular is none of your business.
Anyway, file this under things guys like Ben Bernanke both actually say and actually believe (via Reuters):
Bernanke said that a $60 billion cut along the lines being pursued by Republicans in the House of Representatives would likely trim growth by around two-tenths of a percentage point in the first year and one-tenth in the next year.
"That would translate into a couple of hundred thousand jobs. So it’s not trivial," he said in response to questions from members of the House Financial Services Committee.
Pressed on how such job losses would affect the recovery, Bernanke said that in spite of concerns about the longer-term budget deficit, the Fed’s focus is on reducing unemployment.
"I would like to see job creation," he said. "What I have been trying to focus on is, we have got to keep our eye on deficit reduction, but we need to think about it in a long-term framework."
Here’s where I am confused by the math and please, if someone knows how to add up big ass numbers better than I do, I invite you to correct me if I have this wrong.
In January, Fed vice chair Janet Yellen said both rounds of Fed securities purchases of $300 billion and $600 billion (lovingly, if mistakenly, dubbed QE and QE2, respectively) could, according to the Fed’s painstaking research and/or never wrong , create 3 million jobs by 2012. Well… $900,000,000,000 divided by 3 million = $300,000, so for each $300,000 the Fed creates, supposedly 1 job comes out of it as a result.
Ignore the fact that even if this assumption is correct, all those new workers will actually be paid less than they think they’re getting paid as the Fed has to get the value for the new money from somewhere and where do you think that comes from? The old money, right! Is that in the painstaking research? Oh well.
So let’s puzzle it out the other way. If the federal government cuts $60,000,000 in spending it cannot afford, Bernanke estimates that 200,000 jobs will be lost. What’s $60,000,000,000 divided by 200,000? $300,000 a job.
Maybe Janet is right, perhaps we should just eliminate the middleman completely and let the Fed issue its own debt and no, I’m not referring to FRNs, different sort of self-issued debt. The government is obviously mismanaging its finances and the Fed has it all figured out and it evens out in the end.
I mean they do have an unlimited supply of this sh*t so long as the rest of the world (we’re talking about you, China and oil-producing nations) hasn’t called their bluff, right?
