The regulatory morass is rooted, for example, in administration reluctance to acknowledge Wall Street banks, like JP Morgan and Citigroup, are too big to manage or regulate effectively. A solution requires breaking up banks in the manner of Glass-Steagall, but that would disrupt the flow of political cash from bank executives to congressional coffers.
The Fed’s low interest rate policies and rosy assessments of the economy distract media and broader public attention from these follies and corruption, and permit politicians to demagogue the jobs crisis.
According to the Congressional Budget Office, the president’s proposal to raise the minimum wage to $10.10 an hour would kill 500,000 to 1 million jobs. Add in the jobs lost in jurisdictions like California and New York City, which have minimum wages above the federal standard, and the upper end estimate becomes more likely correct.
Former Fed Chairman Alan Greenspan was not shy to tell Congress the limits of monetary policy in the face of administration and congressional debauchery.
If Janet Yellen truly appreciated the reality of ordinary Americans—or simply acknowledged the federal data sitting on her desk—she would tell Congress that inflation is threatening, and enumerate the trade, energy and regulatory policies that constrain growth and make monetary policy impotent.
Sadly, that is not about to happen, and ordinary Americans’ living standards will continue to be punished by the Fed’s inflationary policies. Wages will continue depressed and jobs scarce thanks to the president’s drive to ensure a political realignment favoring Democrats by enabling an endless tide of Asian and Latin American immigrants.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a national columnist. He is the five time winner of the MarketWatch best forecaster award and tweets @PMorici1