Economy

After nearly two years of pointing out how the Birth-Death model by the Bureau of Labor Statistics (BLS) has been badly overstating job creation, I want to publicly recognize and commend the BLS for publishing the massive benchmark revision showing that more than 800,000 jobs that had been modeled into existence never really existed.

I’ll bet that revelation would have been swept under the rug in more than one country.

Over time, my main complaint about the model was that it didn’t make sense.  It added jobs when times were good and even more when times were bad.  It seemed completely disconnected from the world around it, and therefore the main source of my ire was that it simply didn’t make any sense.

In particular, I railed against continued increases in construction jobs being modeled in, even as retail construction investment was falling off a cliff.  I wondered at the continual creation of financial services jobs, even as mass layoffs were being announced across the industry.

Recently the Fed reiterated that their $300 billion program of buying long-dated Treasury Bonds would end on schedule, meaning as soon as it hit $300 billion.  Well, that’s been achieved, so according to recent Fed statements, the program is over.

This is a critical development, because the ability of the US government to continue to fund its massive deficits (at favorable rates) requires that each Treasury Auction be “well bid.”  The Fed has been a major participant, and so we might reasonably wonder who will fill the Fed’s shoes.

This is critical, because the US government continues to float weekly auctions of Treasuries in quantities that just a few short years ago would have been unthinkable.

Exhibit A:  Next week’s schedule:

Some pretty big news came out on Thursday (9/24/09) regarding a seemingly obscure program to end what were called “currency infusions.”

In fact, these are “currency swaps,” and you might want to pay attention to them, because of their high degree of correlation with the rise and fall of the dollar.  Currency swaps also offer the perfect vehicle for central banks to engage in currency intervention and manipulation, especially if one of the parties (*cough*US*cough) has a massive trade imbalance and lacks sufficient FOREX reserves to use in daily market intervention activities.

Here’s the news:

A new Martenson Report is ready for enrolled members.