The Entire World Is Collapsing Around Her

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Today one of the top economists in the world sent King World News an incredibly powerful piece that takes a trip down the rabbit hole of an intensifying global collapse. Below is the fantastic piece from Michael Pento.

The Entire World Is Collapsing Around Her

According to the Bureau of Labor Statistics (BLS), there were 151,000 net new jobs created in January and the unemployment rate fell to 4.9%. The continuing increase in job creation and removal of slack in the labor market are causing the Phillips curve-obsessed Fed to maintain a tightening stance on monetary policy…

However, not only are Federal Reserve Chairwoman Janet Yellen and Co. wrong about the progenitor of inflation, but the Fed is also obsessing about job growth that isn’t real. According to that same BLS, in December 2015 through January 2016 the economy actually lost 2,999,000 jobs, or 2.08% of the workforce. The Labor Department arrived at a positive employment number because the BLS seasonally adjusts the data.

On a seasonally adjusted basis the U.S. economy created 413,000 jobs during that timeframe. Of course it makes sense to adjust the jobs data for hiring and firing around the Christmas season. But it makes much more sense to look at the data year over year for a more accurate assessment of the labor market. From December 2014 through January 2015 the economy shed 2,820,000 jobs, or 1.99%.

Therefore, the economy not only lost 179,000 more jobs this year during the post-holiday layoff season than it did in the year prior, but it also suffered a greater percentage of job losses than it did during the comparative time frame.

The Collapse Is Intensifying And Something Terrifying Is On The Horizon More Store Closings And Layoffs

What makes this layoff picture even worse is the number of retail corporations that are closing their brick-and-mortar presence. For example, Walmart is closing 154 stores in the United States and is laying off 10,000 employees. There are also about 6,000 other major retailers shuttering stores. This means that the part-time, retail-job growth economy, which has been the staple of hiring since the recovery began, will be shedding more jobs at an increased rate,

And please don’t believe today’s 4.9% U-3 unemployment is comparable with times past. The last time the unemployment rate was 4.9% was February 2008. At that time the Labor Force Participation Rate (LPR) was 66 and the Employment to Population Ratio (EPR) was 62.8. Today’s low unemployment rate comes with a LPR of only 62.7 and an EPR of just 59.6.

But the major point here is that a low unemployment rate can never lead to inflation. And this is especially true when all that job growth is the seasonally adjusted phantom variety. The Keynesian squatters who inhabit the Federal Open Market Committee believe dogmatically that inflation is the result of too many people being employed. What they fail to understand is that inflation is all about a loss of confidence in the purchasing power of a currency. That can never be the result of a low unemployment rate.

Nevertheless, Yellen and her Philips curve junkies indicated clearly in the Semiannual Monetary Policy Report to Congress on Feb. 10 that the FOMC will lean toward hiking interest rates until the U-3 unemployment rate begins to rise. This means the Fed will be threatening to continue tightening monetary policy into an incipient global deflationary depression.

The Entire World Is Collapsing Around Her

But Yellen will not be able to increase the Fed funds rate above the 75 basis points level before the bottom completely falls out of the global economy. Perhaps Yellen will pretend for a little while longer that the world isn’t collapsing around her. But we all know better and it won’t be long before the Fed joins the rest of the developed world’s central bankers in perpetual QE and NIRP.

By Michael Pento of Pento Portfolio Strategies
February 13 – (King World News)