- 20-64yr/old annual growth in the US population (including all legal and illegal permanent residents)
- The Federal Funds Rate (FFR %)...this is the rate at which the Fed loans money to the largest banks and is the underlying basis for all interest rates paid from a mortgage, a credit card, etc.
- US Federal deficit...the annual dollar amount spent above and beyond US tax collections (the corresponding US Treasury bonds are issued to pay for this deficit spending).
- US GDP...the total dollar amount of all business transactions made within the nation annually.
The chart below outlines the annual change in the adult population (20-64yr/olds) but this time in % terms. The correlation of the Fed's interest rate policy to the rise and fall in adult population should be fairly obvious. It was the interest rate policy which allowed massive federal deficit spending in '08 absent the rising interest service costs on that debt. But an intrepid chart reader would note the continued upcoming deceleration in population growth over the next decade and wonder how decelerating demand coupled with the already rising rates (rising personal, corporate, and federal debt service costs) would merit further higher rates? Historically and logically this is quite contrary if the goal is to maintain employment, jobs, and resultant GDP growth?
The implications of their interest rate mismanagement and the resultant unmanageable debt loads are now upon us...and the "workout" is truly a Gordian knot beyond comprehension.
- Do we believe in and will we ever allow a free market to work out the issues we face (painful as this will be...particularly absent further central bank interference...aka, interest rate morphine)?
- Can a central bank which has already shown itself to be a great contributor to the problem now be part of the solution...or will the Fed only continue to retard any eventual restricting and recovery?