Tuesday, June 23, 2015

The Utility of Racism


 Power is not an institution, and not a structure; neither is it a certain strength we are endowed with; it is the name that one attributes to a complex strategical situation in a particular society.

Foucault


There was no doubt that racism was a method of governance, a “method of power”,  how the minority white slave owners kept control and maintained power not only over the black, but also over the non-slave owning white, usually of lower class, who had to be imbued with racism so as to permission the slave owner to carry on in a most loathsome repugnant institution.  The slave owner and those involved with the slave owning economy, applied techniques to not only outline the “other” aspect of the black to further align the non-slave owning and their economy with the power argument the slave-owner used to justify slavery.  This was the utility or function of racism.  Furthermore, the slave owner were often the societal elite in the Antebellum south, the most educated, the most refined and the most cultivated.  While a primogeniture society helped in securing the capital required for slaves, they were very expensive so the slave owner was adept at domestic and international business.  They were a very sophisticated leadership.  These were no brutes but alert and “open minded” educated, yet who maintained and furthered the slave society.  Therefore the “myth” that explained racism had to be well thought out so that the collective authorship was fooled itself into a “veritable good”.  At the core of this terrible thesis was the presence of slavery, the driver for economic gain that kept the flames of this lie alive.  It was a terrible system, but because the lie became truth among both elite and the lower class, it became ingrained in the consciousness.  To do otherwise would drive one mad.  The illogics of slavery, its sheer immoral perversity strapped tot he backs of those who used or supported slavery ( it must remember that even to this day the USA is one of the most “religious” dedicated areas of the world and was even more so during the time of slavery), required the gain and return of slavery, the evil “logic” of slavery, to be able to continue the myth.  Racism had to have utility or the sheer weight of its evil could not prevail and survive. 


With the end of slavery and then with the  end of the KKK to Jim Crow “neo-slavery” of tenant farming and the like, the economic returns of slavery and neo-slavery cease and the logic of racism tumbles – it cannot be sustained in the collective or individual conscious but for the truly evil perverted and back eddies where it still has utility in generating economic gain and power – for example “Aryan Brotherhood” in the prison system . 

Certainly aspects of racism continues, but an economic driver, a logic for racism is required  for racism to be maintained in general.  People, only a few,  can be dumb, perverse, insane and harsh, but it is impossible to maintain an evil fallacy year after year without some truth backing the action, or some economic gain, for racism to survive in general.  

One such economic gain was to hold back the competition of the often cheaper labor of the black, as the Great Migration of the Twentieth Century took place from the rural South to the North industrial or urban locations.  Certain ethnic groups of America, for example the Irish diaspora,  having a “taste” of racism as  Irish faced great hardships and acquired racist thought to delineate  themselves,  and when the Great Migration occurred the laborer Irish tendency to be racist flared in the North as a way to limit the flood of black workers coming on stream.  This became part of society and might explain JFK’s notorious deep and ugly racist streak. 

But in the USA, there must be a gain from maintaining racism, beyond shallow cultural tags, for it to be maintained.   A true “Son of the South”,  LBJ, is an example of how racism is shed once it no longer has utility, as he  moved the Democrats from their deep slave-owning racist roots to being the progressive party for all Americans.  (It is a strange quirk of popular imagination how JFK is held as the example of the champion of civil rights when he was a habitual racist, while   LBJ was the real champion of civil rights but always presented a racist.)  LBJ perceived the USA was long past any need for racism, that there was no gain to being racist, and correctly perceived the power of the then 20% black make-up of the USA.  LBJ represents how the South in wholesale shed racism since the economic and political gains from racism were no more.   This has created the strange swap where if there is racism it is usually in North parts, and often in industrial and urban areas, in the USA.  But even then as union leaders and politicians court support, racism is quickly or has lost all utility, at least in general.

There is one group that still sees great gain in maintaining racism as it brings power or economic gain.  The liberal press, community activist, tort lawyer now has much of their power and economic base from the popular perception that racism exists when in fact as it has lost utility; it has for the most part expired.   Over the decades past, there was racism to be fought as Jim Crow was dismantled,  or to use the results of racism opportunistically as lawyers sued cities for assault or harm of their clients.  Sharpton is an excellent example, a man who was self-admittedly built not only a very large political power base almost completely from “fighting” racism, but also a sizable fortune.  Jesses Jackson was a hero, at the start during the time of MLK, but now he is an expert at shakedowns, usually of large corporations.  There are many other “activists” like this, all who must have racism to make a living, to keep a power base to stay alive.  They are partnered with press like the New York Times who with severely declining readership and revenue as their prior readers move wholesale to the digital world, require great “stories” to keep the readership they have, to survive as they are now.  The New York Times  greatly needs “racism” to be an economic success, just as the slave owner required it centuries ago.  Given that utility is what presents or invents racism and makes the racists – an argument can be made that the NY Times is one of the most racists institutions in the USA as they benefit greatly from its existence.  Thousands of tort lawyers, often cloaking themselves as “community activists” are eager for community outrage or individual outrage which deny potential clients their civil rights or can be labeled as “hate crimes”, especially when  deep pocket insured policemen commit crime and assault or kill. 

The blend of the three, “community activists”, media (mostly legacy printed press), and tort lawyers, makes a very powerful partnership, each with their own specific powers  to defend the partnership and to end with significant gains, usually economic gain, as long as racism is maintained.  This is a classic Foucaultian “conspiracy of omission”. 

But racism is not singular outrage – a rogue cop, a criminal cop, a lunatic trying to put a narrative to lunatic acts, or – rare now - swaths of labor groups trying to keep legacy jobs – racism has to be a societal construct that must be shown to be part of society to allow the three partners to prosper, it must be “a complex strategical situation”.   Or if it does not exist, it must be fabricated as a meme or myth.  If racism were in fact not to exist wholesale, then all members of the partnership are severely hurt economically or lose power.

Perversely,  the largest and most powerful group who are eager to maintain racism, or at least the illusion of its existence, are the very folks who bang the table that they are most  keen and apply  great effort to the “elimination of racism”.    Granted many members of this group sincerely believe that is in fact the truth.  But, the reality is that the current wave of racism that has now gone to the level of POTUS, is almost completely a fabrication, a myth generated by the three partners so they can prosper or at least survive a bit longer. 

The “opera” is always the same.  An outrage, then a community activist fly (more often literally) to the scene, the most able tort lawyer is found or that lawyer finds the possible recipient of the lawsuit to step onto the stage – the mother or family, grave appeals are made for calm when in fact what is hoped and prompted is civil unrest, with these appeals often late at night with great drama, then the “community activists”  try to find some local capable activists to make a crowd but often  bus in those that are part of their group.  Social media provides great leverage that before was limited to the brave resolute “progressive” reporter.  Now the presses are “certifiers” of certain social media folks, the lawyer, and the leading activists.  Grim heroic marches are made with nuns and the local community activist, carefully scripted.  It is a well-orchestrated and very effective street drama with incredible deft production capabilities that is as polished as any Broadway play.

And more often than not it is a lie, a fabrication, propaganda to convince people that racism exists, that it is with us now, that you yourself are a racist. “Institutional racism if one cannot find the red-neck racist.    It is  a Goebbels “Big Lie”.

Then the real  racists, loathsome lunatics almost always acting as loners because of the rarity of racism in reality, take actions.  It is highly likely Roof took action as he felt he must as an act of courage, as no one was doing anything, and as wave after wave of the racists losing inspired him.  It is my belief the NY Times and others like this share in small or large degree the actions of a Roof, but likely only in terms of timing in acting  now –a lunatic like Roof usually acts sooner or later, now as a racist then later as anarchists like Holmes or later as just banal dramatic evil of a Klebold.  So one cannot go too far blaming the NY Times.

As the NY Times and the other partners carried on, building momentum from Fergus to NYC to Cleveland to Statin Island to Baltimore, always seeing racism as the cause, even if the bad actors who no doubt were criminal like those how seemed to have murdered Graves, and seeing it as a chronic part of all police – institutional racism -   this day and age’s police “original sin”, then terrible things happen.  Even more terrible than what was occurring to date, or the racist act itself.  Police have now evacuated the areas of large urban areas that needed them the most.  The protection all citizens deserve has plummeted as cops come to a reasonable conclusion that they are not wanted, that the deck is stacked against them no matter how dedicated they are to public service.  The real heroes now are those police, say in Baltimore, who despite this damning and trial by press, still go out to the mean streets and serve.

Ever since Sharpton took on the liar Tawana Brawley with her accusation of rape, an accusation that was so obviously false it took the expert ability of Sharpton to make hay out of the case and in so doing destroyed the cops and prosecutor Tawana accused.  The prosecutor of the case Pagones just started to receive justice with Brawley forced to pay him installments that should total in time $460,000 – a total he likely will not see, and this is in 2013, 26 years later.  Sharpton learned from that case, and has bettered his act from outlandish hairdo to one that would work within Morgan Stanley, and his corpulence slimmed to svelte and his ornament chains and rings gone.   But even at the time of Brawley, near thirty years ago,  true outrages of racism were occurring less and less.   The pressures of the mean streets around the drug trade have been a God send to Sharpton and the other partners as they allow easy twisting of fact to demonstrate significant racism is back.

Brown was a thug – he no doubt suffered incredible pressure to make him so deranged (the meth helped) so as to rush an armed cop so as to do harm – but he did.  Garner was a criminal who’s “broken window” criminal acts enraged the neighborhood and it was they who called the cops.  Over and over he says “cant breath” which means he can and means it wasn't a choke hold – but I  am not an expert and look to the Grand Jury to provide justice.  Graves seemed to be premeditated murder, second degree as that wasn't the plan, just to smash his face in a careening van – a cop friend said this was the common practice (circa 1980) to use the wire grid separating the front from the back seat to “waffle” the suspect over and over with the cops in the front strapped in well and the handcuffed “perp” with no seat belt tossed around and smashed into the wire grid.   It seems this friend was reciting history as this is now one of the first acts the new tort lawyers seeks, and in fact money via one of these lawyers was awarded to a Baltimore citizen from taking the same trip that Graves was given.  Graves is murder.  A crime.  Half  of the Baltimore cops indicted are black, and one of the black’s, the watch supervisor is a woman.   But in none of these cases, and I am rather certain this will be the case in future analysis, just as no one now defends Brawley, is there any presence of “institutional racism”.

The racism that the United States is now seemingly awash with is a sophisticated power construct, and is in fact the true racism that is involved, the only racism that has utility. Follow the money, follow the power.

But there is a crisis shared, a  terrible problem,  in the communities Graves, Brown, Garner, Rice, and even Roof are members.   All of them suffered a terrible “ accident of birth”,  being born and raised in the areas  they were damned to likely short brutal lives.  Areas where it is almost impossible to leave and in fact are de facto concentration camps.  They were born in areas that are ghettos, incarcerated by society from birth.  These areas have nothing to do with race, though there is great correlation between these areas and where blacks (and Latinos) are a minority majority.  There are areas similar where whites are the majority - 10 miles inland from a Florida beach or certain areas of Appalachia or certain suburbs of Oklahoma where the identical odds and outcome are mandated from birth.  They are damned.  And perhaps the greatest evil the group of three above, the misery cartel,  hell-bound to maintain the fiction of racism,  is that they effectively cover-up the true nature and realities of poverty.

Saturday, June 20, 2015

The True Nature of the Greek Crisis - and the USA Role Ongoing

“But Europe is solid with herself. France, Germany, Italy, Austria and Holland, Russia and Roumania and Poland, throb together, and their structure and civilization are essentially one. They flourished together, they have rocked together in a war, which we, in spite of our enormous contributions and sacrifices (like though in a less degree than America), economically stood outside and they may fall together. In this lies the destructive significance of the Peace of Paris. If the European Civil War is to end with France and Italy abusing their momentary victorious power to destroy Germany and Austria-Hungary now prostrate, they invite their own destruction also, being so deeply and inextricably intertwined with their victims by hidden psychic and economic bonds.”
                                                         Lord Keynes  Economic Consequences of the Peace
                                                                                                                                                1919

Over the last 95 years since Lord Keynes wrote these words, perhaps the most prophetic analysis every provided in world history, and where after the carnage of World War I of approximately 22 million which almost brought world communism into power and did so in Russia, the European area went on to suffer another 25 million to 35 million dead out of world death of 70 million to 85 million from World War II.  Keynes was Biblical in his prophesy.  And all this took place for one reason which Keynes also nailed, a reason that is still putting Europe at great risk and which for what can only be mendacious, desire for personal gain, trite power and obscene national “gloire” reasons, that continues to rot and fester in Europe.  This is the framing for what Keynes called the “European Civil War”.  To Keynes Europe had already long become one country, one sovereignty – a Europe that is “solid with herself”.  That is still the reality and the main issue underlying the current Greek crisis and the entire chronic sovereign debt crisis of Europe.  Whether Germany wishes to recognize it or not, they are “solid” with Greece, with Spain, with all of Europe.  They are one country.  And now the shoe is on the other foot and Germany with fellow political moralist countries like Finland and the Netherlands “invite their own destruction also, being so deeply and inextricably intertwined with their victims by hidden psychic and economic bonds.” What fate that awaits Greece, then no doubt Spain and then Italy, and then the next victim of the ”spoils of trade” predatory Maastricht Treaty with the financial Ebola transmission device called the Euro, will be in the end Germany and their claque’s fate.

The Greek crisis is not financial, it has nothing to do with Greek spendthrift and scofflaw ways, nor does it have anything to do with low savings rate or tax avoidance, the crisis is only about how the answer to Keynes’s observation, the cure to the ongoing European Civil War was waylaid and sidelined by only a few.  There is no doubt that there are many tax criminals, scofflaws and corruption, but it all has little is anything to do with the current crisis.  The Greek crisis is a European wide crisis and will always be so whether or not the flippantly named “Grexit” takes place or not.  The Greek crisis has always been a constitutional crisis and the conditions that are behind it have been so ever since Bismarck left Paris with Alsace Lorraine for Germany, ignoring the Keynes reality that the nation state in Europe had already an anachronism given economic binding long in place. It has been so ever since that terrible error made by Beethoven in his 3rd , dedicated to Napoleon.

Constantly frustrated with the ego and singular French centric view of aptly names De Gaulle in the midst of World War II, the USA started to rely upon another Frenchman, Jean Monnet.  It was clear that De Gaulle was to strive to move Europe back to the ways of old, ignoring the realities of Keynes’s “Europe solid with herself.”  He meant every word when he would cite: “France cannot be France without greatness.”   Jean Monnet was very much French, but he was a person of deep international experience, took great lessons from WW I and noted how WW II was a repeat again of all that brought WW I.  That the disease of Europe was the fanatical delusion of promoting and organizing the people under the Westphalian nation state which had long died, drowned in tidal waves of gore and blood and misery.   He was a pragmatist, having conducted business with as a mundane role in the Canadian Hudson Bay Company to massively important role in effectively joining the FDR war cabinet and creating the concept of the USA  ‘arsenal for democracy”.  But unlike  others, Monnet was a realist, a pragmatist and who had  lost all interest in the French concept of “greatness”.  He was attached to the French government in exile in Algiers, no doubt to contain and impede De Gaulle as being FDR and Churchill’s “man”.  De Gaulle grew to detest him. In Algiers before the war end Monnet started to lay down his philosophy for the “United States of Europe”:

"There will be no peace in Europe, if the states are reconstituted on the basis of national sovereignty... The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development. The European states must constitute themselves into a federation..."    1943

Monnet had had enough of the European Civil War and began to frame the solution, a solution as valid and necessary now as it has been since 1870. After the war he went  to France and quickly found himself with no job in the new French government, though he stayed close to Robert Schuman, the French Foreign Minister.  Monnet often used Schuman as the front for many of his schemes and devices below.  But he did find much to do with the occupying Americans and quickly became one of the authors of the Marshal Plan, and then more importantly one of those who decided how the American money  from the plan was applied.  This gave him great power, especially in Germany.  He continued to write  his plan for Europe, making what was one of the world’s first “think tanks” building a staff who dealt almost exclusively with the concept of a “United States of Europe”.  And since he had great power with his placement with the Americans he had great clout, and, in fact, his ideas started to make great sense to the neo-liberals and especially those salvaging Germany.

“Through the consolidation of basic production and the institution of a new High Authority, whose decisions will bind France, Germany and the other countries that join, this proposal represents the first concrete step towards a European federation, imperative for the preservation of peace.

                                                                                                Jean Monnet  (Speech Schuman gave)
                                                                                                                                                                                1950
“Continue, continue, there is no future for the people of Europe other than in union.”
                                                                                                Jean Monnet   (circa 1955)
The first step in the Monnet Plan  formed cross border authorities that weakened the nation state as they assumed “high authority” in critical areas.  Series of institutions were formed that answered large trans-Europe problems and challenges.  The European Coal and Steel Community, the European Atomic Energy Community and many others were launched.  Monnet was crafty – he made certain those that ran these “communities” were European in focus, not nationalists, and their management and governance was over wrought and larger than mere industrial authorities, but were in every way the template for a government.  Germany was eager to be completely involved with these Monnet creations.   The great European Konrad Andenauer,  the founding father of modern day Germany, immediately partnered with Monnet for the ECSC and all the Euro projects as it would help redeem Germany, speed the rescue and rebuild of Germany.
This concept of a United States of Europe became central for all German leaders that followed Andenauer, especially Kohl (supposedly Merkel’s mentor but disowned by Kohl after she turned her back on the unification of Europe.) until Shroeder.  So when the Maastricht Treaty was signed, Kohl felt it was certain this was the birth of the United States of Europe:

“European Union marks a new, decisive step in the process of European integration that in a few years will lead to the creation of what the founding fathers of modern Europe dreamt of after the last war: a United States of Europe.”
                                                                                                                Helmut Kohl
1992
And the Maastricht Treaty carried on until it was certain the Euro Zone would be launched with the brave new Euro Dollar, with the creation of a European Parliament, and an executive, of sorts, Monnet’s “Higher Authority”,  the European Commission with a President, sitting to the side of the EP.  But the European Council, composed of the leaders of the nation states maintained supreme authority.  Still it was thought surely a sovereign Europe would emerge based on democracy and with the Treaty converted at a suitable time into a constitution.  A European Central Bank was created as well as a European Court of Justice, a supreme court for Europe. Even France was going along with Mitterrand adamantly pushing Maastricht through a French referendum and gaining a “Yes” vote. Mitterrand also freely used the term the “United States of Europe”.
But then, from 1992 onwards the entire idea of the risk of a “European Civil War” requiring a “United States of Europe” seemed to be erased, almost overnight, and rarely heard or discussed from 1992 onwards, after the passage of the Treaty, to this day.
And it is that this entire goal was scrubbed out, or attempted to be scrubbed out, the USE, why there is a Greece crisis now.  
Greece represents the fallacy and ruse that occurred post 1992 by a rather small group of actors for very narrow even mendacious reasons.  That if there had been the formation of the USE, if momentum had continued as all thought was towards an inevitable conclusion pre-1992, we would not now be having a Greek crisis.  Furthermore there would have been approximately 10% more GDP in Europe now, a 1.5 trillion dollars difference to today’s stagnation.
What happened?
German reunification. 
German reunification  with a massive subsidy to East Germans via that unification in the exchange rate of one for one for pensions salaries and two for one for loans, with a one for one cash conversions for small holdings and only a one for two discounting for large holdings.  The economic realities at the time suggest a ten to one reality, if not greater.  Then Germany went on an immediate austerity for all aspects of society so as to welcome back their long lost brothers and sisters.  Benefits were curtailed, hours of work via long extended summer vacations, salaries went down or had very low if non-existent increases and productivity while at first hit hard as the aged East German system came onboard, then soared.  Savings more than doubled and Germany suddenly flipped from being the sclerotic sick man of Europe to being the most vibrant and productive with the strongest balance sheet.  In short German supported with mass buy in and patriotic enthusiasm from all Germans did what the Troika is asking now of Greece.
Then Germany entered the Euro at the conversion rate of two DM to one Euro while it should have been one to one.  Given the above and now masked by the common currency, Germany immediately leaped to a dominant position for all of Europe.  The German machine once again ripped through Europe, only this time not with Panzer tanks, but with massively advantaged intra-Europe trade position.  The vestiges of the cost to unify Germany were quickly covered, and then Germany went on for German sake, able to accomplish in a only a few short years what Napoleon failed at and what Hitler succeeded at first but required a 50% spend of GDP on military forces to do so then of course failed. 
With the USA assuring Germany – and all of Europe – security, Germany was allowed to maintain only a token military force and spending only ¼ of the amount of GDP that the USA spent on defense.  The low saving rate countries with low efficiencies faced with availability of high quality German product at about 50% of the cost prior to the Euro, quickly bought all the could from Germany, all of it  financed from German banks or their own domestic banks who in turn borrowed effectively from Germany though with the German institutions enjoying the “ring fencing” of TARGET2 payments, moving their liabilities to the ECB facing the Central Bank of Greece.
From 1992 onwards, given the above, the mention of “United States of Europe” was no more, the referendums that tried to replace the Maastricht Treaty with a Constitution failed, and the German Constitutional Court, Karlsruhe, slammed the door on encroaching federalism that might impede this money machine Germany had become.  German went on to not only solidify their  unification, but now the “austerity” the good Germans imposed to allow for German unification – which by the way they asked and received help to finance from the world – now went on given their position of trade to create massive wealth for the German people which developed into a hypocritical smugness if not a sense of entitled superiority of the Volk over the rest of Europe.  And with the Karlsruhe “order” to prevent any transfer payments or direct assistance to those building massive trade imbalances with Germany, the Maastricht Treaty arrangement locked Europe into a confederacy.
With no transfer payments and limited internal mobility – for example a Greek cannot just move to Germany  to take advantages of the German advantages without giving up their pensions and not being able to easily take advantage of the German societal safety net or benefits, and with no drachma to change exchange values with a DM so as to eliminate trade advantages via currency, when the credit ran out Greece had to make remedy to those imbalances by seeking assistance  from the Troika and then by adjusting to massive unemployment.  While this limited trade to Germany, Germans given their power now in the EZ without pause flip the Euro down to 1.1 and replace the Southern Periphery with the USA and others as trade targets and continue to build predatory trade surpluses.  For Germany, life is great, but it is an insular thoughtless and selfish view which has always caused the European Civil War to carry on.  Only the long time USA occupation of Europe has prevented it all  to be at this point drowning in blood.
But the forge of misery and the danger of 30% to 50% now chronic youth unemployment in the Periphery is starting to shift some back to the pre-1992 thinking.

“If you really want sound budgetary policies over the long term, you need a European finance minister answerable to the European Parliament and with clear rights to intervene vis-à-vis the Member States. The vagaries of the ratings agencies cannot be a substitute!”
                                                Viviane Redding European Commission Vice President
                                                                                                                                                2012

While Greece is in the forefront, they are really not the main player in this crisis, though they are relevant.  By allowing the IMF into the house and using IMF funds to pay down German banks and institutions, Greece has lost their power as no German institution gives a fig as to what they now do – they can go hang and all Germany is doing is going through the act in expressing concern.  The amount of Greek youth unemployed is still a mind boggling 60%, the usual number required for revolutions in the past,  but the amount is small at about 1.8 Million.
Spain though is a completely different story.  Spain never did deal with the Troika and has adjusted not with IMF funds paying down German lenders, but with dropping economic activity a walloping 16% GDP per capita and has youth unemployment of 60%  that numbers 8.5 Million youth.  Debt outstanding is a very large 250 billion or so, most still to German institutions while Greece has external debt of about 150 billion, but almost all of that is now to the ECB and the IMF.  If the Spanish status is added to Italy status – Italy is almost identical to Spain in size of debt but has only 40% youth unemployment and has only adjusted via GDP per capita by 12% contraction,  but the populace is bigger, so youth unemployed in Italy is about 8 million.
The problem in Europe, the potential landmine, is not Greece but Spain followed by Italy.  If solidarity is found between Spanish and Italian youth, Europe will go to insurrection and blood as 16 million youth are justified to take action against what Germany is doing to them.  An aside is Germany has expanded, still, through the crisis by 2% GDP per capita, and youth unemployment has dropped from 11.5% in 2009 to 7.2% in 2015.

“It is a debate, ultimately, about two different visions of Spain. One side sees a country struggling with economic and political problems, but problems that are fixable within the system. Their opponents see a political and economic order so profoundly flawed that it requires not more reform, but a new beginning. It is a clash of visions that is likely to grow more intense in the run-up to a general election next year. Four decades after Spain’s seemingly smooth transition to democracy, the risk of political rupture is growing.”
                                                                                                                Tobias Buck,  FT Dec 2012                        
Greece is not being thoughtful.  Instead of appealing along financial and technical lines, they should drop all discussions with the corporatists IMF and the stumped ECB, and the silly overtures to Putin, and instead should organize solidarity and formal unity with Podemos and then USEUR in Italy.  Great effort should be expended upon this, and the axis should be youth.  If the youth in Spain and Italy can be radicalized, and then added to Greek youth, the current German confederacy harvester machine will fold.  At that same time Syriza and Podemos should stop ancient leftist clap-trap and reassume the mantle of Jean Monnet.  Unity should be sought to the edge of evoking civil strife and even occasional violence.  Greece, Spain and Italy – if those three countries’ youth have the good sense to see how they are being viciously exploited – have the ability and power to start back along the lines of the United States of Europe thesis.  I would organize, if I were Syriza, a well-financed and well provided, in terms of logistics,  “March on Berlin” and seek at least 250,000 Greek, Italian, and Spanish Youth marching to Berlin on foot.
There has to be an “edge” to this discussion for the Periphery – an aurora of violence and strife – for otherwise the real problem, the political backing to the European and Greek crisis being maintained cannot be ended until there are potentially large adverse consequences for this backer if they carry on as they are to date.
That backer is the USA.
The USA is following a strategy to deliberately maintain European weakness and to prevent their formation of the United States of Europe.  The 300 million plus USE would, if formed, be the complete equal to the USA and the current uni-polar hegemony of the USA would be lost and replaced with a bi-polar shared hegemony.  Russia and China are a tactical problem for the USA, a serious tactical problem, but compared to the USA they are small and weak.  A USE however would be a full equal.
A little less than 4 years ago I was asked to present to the nation’s intelligence agency for a full day.  Was an exciting and wonderful day and I was asked to bring the best and brightest minds on Wall St to come along, which I did.  The topic was the Euro crisis.  The staff we were talking to was seeking either confirmation or debate over the  one page memo they were to present to POTUS the next day.  They cheerfully stated that the entire organization had only one client and the main job of the group was to publish a two or three page memo every morning for the POTUS breakfast reading.  The group I brought had a career highlight day as we were grilled in turn by several groups of the smartest and most able minds I have ever met.  We went on and on, much of the conversation fixated on financial speak and details – TARGET2, borrowing capability, IMF path of action and so on.  But the reason my group was there was that I had previously made the case that Europe was not a financial problem with nothing to do with  credit rating agencies or debt or default, but was a constitutional crisis given the German led swing away from the creation of the United States of Europe.  This is why I was invited.  We found that there was great interest in financial and banking detail, but that the information presented was either to just confirm their own  information or to tweak it as they learned of some new detail or nuance. When I presented the constitutional and historical record to the crisis, that this was the complete nature of the crisis, I was presenting something “new” which almost all given their Georgetown or Harvard PHD in history or foreign affairs instantly started to model around my rather naïve (ie not classically trained) view.  I was well received and as the thesis was debated either there was immediate agreement or developed agreement that the reason for the crisis was only constitutional. There was agreement.
But then all focus went to a surprising thought, or question.  What was the potential for revolution, insurrection and civil strife in Spain?  I admitted I had not even begun to consider that, assuming the USA and Europe had no interest in the crisis becoming bloody.   All in their group kept coming  back to Spain.  Ireland was dismissed as the nature of their problem was not related to German aggression, but their own home brewed property bubble similar to the USA housing crisis.  Greece was considered a problem and the headline catalysts but too small to be a major problem for this group.  But Spain was the main focus.
I raised Mike Pettis’s excellent work on identities and adjustment - to a person,  they all knew his work well and agreed. 
So why has the USA not taken action, if the powers in DC agree completely with what I say above?
EU  military spend is  about $ 192 billion per annum, While the USA budget is about $ 500  billion per year.  The US can deploy 500,000 troops quickly and 100,000 immediately anywhere in the world.   Currently the USA has about 80,000 troops deployed of which 55,000 are in Europe.  The USA has 1.2 MM troops in reserve and active duty.  Europe can deploy 110,000 troops now but would be months before they take the field and has reportedly 1.5MM troops in reserve and active duty.  The USA Naval power is well in excess of 3 million tonnage  in ships while the combined EU naval tonnage is around 1 million tons, most of that service or coastal support ships and coastal defense.               Europe spends about 1.5% of aggregate  GDP on defense while the USA spends now about 4%, and more importantly can surge to 6% plus near immediate.  It is this low required military spend that is the source of all of Germany’s power in Europe.  Then when they frame Europe in a confederacy carefully avoiding the defensive needs of a federation with shared borders and shared defense, Germany is able to establish hegemony over all of Europe.      
The USA does not want a Europe that is spending 4% to 6% for defense, it wants a Europe kept feeble and dependent on  American NATO hard power contribution for their common defense.  They want Russian subs playing with the Danes, Norwegians and Swedish navies, mocking them.  They want the Russian excursion into Ukraine (to a point).   Why?   With the fall of the USSR and the unification of Germany they do not want to see a United States of Europe with a core capable Germany. The USA, while creating the Monnet plan, have done a 180 on that plan and are now dedicated to keeping Europe feeble, not united,  and not a hard power factor.
That is why I heard all those questions on the stability of Spain during that visit in DC.  Why the focus on Spain.  For only if insurrection starts in Spain and Italy does so as well will the USA have to rethink their strategy to maintain a Greek like crisis always on the back burner of Europe.
Tsipras opposition is not the IMF or Germany and he is foolish to see Russia as offering any solace.  Greece’s opposition is the USA and the only way he can return the dialogue to the constitutional defining crisis it truly is, has always been,  is to gain power via unity with Spain and Italy – likely via radicalized youth – and presenting the likelihood of great civil strife, of blood, to both Germany as well as – more importantly – the USA.
This focus on IMF and deals and negotiations along financial themes and lines is a ruse – Tsipras must take to the street, to the now disenfranchised 30 million disenfranchised Peripheral youth.  Now is the time for Syriza to start to hire 100 to 200 youth organizers from Italy and Spain, seek common front with Podemos, and strike - moving this discussion from the economic to the constitutional problem that it truly always was.

What is baffling is how the moderate right in Germany, France and other countries have not come to this realization.  The “European Civil War” is still very much with us now. 

Monday, February 9, 2015

MSF: J'accuse toi; en ce qui concerne le virus Ebola

While Ebola has pretty well vacated the news as cases wind down or folks become calloused to the terrors that came with this plague, it is crucial to find out why was this outbreak so terrible.
The governments of Liberia, Guinea, and Sierra Leone were fairly well non-existent and the civil society non-existent  with brutish chaotic lifestyle.  The governments were corrupt and ineffective to deliver even the most basic oversight and public health policy.

So this is used to explain why Ebola thrived here of all places.

But Ebola has always existed in such places, it almost seems to a prerequisite for the disease as the flint of winged bats or "bushmeat" strikes the steel of corruption and poverty.  Yet all other outbreaks in areas just as chaotic  did not reach such a terrible number as this Ebola outbreak.

This outbreak was so obviously different from all Marburg and Ebola outbreaks in the past that it is heard this was a terrible more dangerous (if that was possible) unique  strain of Ebola.

The civics in the three Ebola countries were basically nonexistent, and what did exist was chaotic and corrupt, but so too is Nigeria, or Mali or when Ebola broke out in the past in Uganda or Congo - yet those countries either swiftly ended the Ebola outbreak as in Nigeria or quickly responded and ended the disease as in the Congo and Uganda.  What is different about these three countries- what common factor of explanation is present among the three that was not at other near equally desperate and corrupt countries?

The CDC offers a good starting point to find this deadly difference. They reduce the disease to the standard epidemiology math - which is robust and effective in all outbreaks.  However 
the models were surprised with the outcome  and provide, now 9 months later, "corrections".  The corrections were that more people attended health facilities to begin with than "reported" and there were more contagion than the models estimate in general.

The model had to be corrected in terms of the cumulative cases that occurred by the summer:




And it seemed obvious this was the causative, that the number of hospital stays was way lower than the model predicted:


And what was to be changed so the model calibrates with these two charts is the virulence factor for those who were not quarantined nor in a hospital.  Otherwise the number of infected and the growth doesnt make sense.  But this doesnt jive with the the drop in cases to the recent lows.  The original model says that if 70% of those infected do find either quarantine or a hospital bed will end the outbreak, effectively speaking.  This is a link to the CDC 3 factor  model, easily made available since September of last year.  It is a straight forward but elegantly designed Excel 10 spread sheet and allows the three factors to be directly changed and "what ifs" applied.  Changes which are required to reach to the swift ramp up that did occur shown above.  But then a problem occurs, for by changing the factors,  the "70%" hospitalized rule is changed and the Ebola plague should still be ascending.  Instead the disease did decline in the number of cases to reach the current levels just as if the original assumptions of hospital stay and virulence always existed.

The predicted hospital beds and the corrected:



This also corresponds, the corrected, with the unexpected number of Ebola cases.

But the fact still remains, that when 70% of the infected were quarantined or hospitalized the disease cycle swings down and then effectively ended, and this did happen almost at exactly the day the model predicted it would - within 10 months of the outbreak start.  

This is very important because it means this Ebola outbreak was no more or no less virulent than past outbreaks.

 The model "worked", that it was robust and accurate as these "Susceptible Infectious Recovered" or SIR models. The CDC Ebola model has 3 states to the Infectious phase being hospitalized, quarantined and in the general public and uses an infection factor for the three states - low single digit transmission for hospital and quarantined and a high 30% for those infected in the public space.  This number is based on standard sanitation and procedures and the quarantined are left to die with only occasional morbidity from loved ones who are compelled to help.

The phases in the model for the three group break down:

 
So to match the model to the results, the CDC changed the numbers in the hospital but kept the infection rates of single digits for those being treated or isolated and kept the general public infection of 30% for those in the public unchanged.  And that is what occurred - the disease did have a general infection rate of 30%, that any person untreated and in the general public would infect 30% of those the person came into contact with.  So the model was "right".

That means one of the other transmission rates in the "safe" categories was wrong.

Those quarantined did have a infection rate of the  model's 3% as one's family broke the rules or those burying the person became infected - but it was occasional and folks were left alone to die die alone.

This means the model's "error" was the hospital infection rate.  To have the cases that did occur and the numbers in the hospital, the hospital infection rate has to be almost the same as those infected in the general public, 30% or slightly lower.

Later, as the hospital infection rate dropped to the model's 2%, the disease abated, right on cue.  If the three countries had provided guidance or regulation that required those treating Ebola in the first 6 months making those in health care follow normal sanitation rules - not even the moon suits all were seen walking around in at the end - this Ebola breakout would have been 1/20th the outcome.  This Ebola outbreak was not unique.

While  government must apply basic public health for their citizens - Mali and Nigeria did so - it is the hospitals that implement and provide the standards of that care.  The hospitals in the three countries were not only hapless, but they were aggressively risky in the initial treatment if Ebola.  Almost all of these hospitals were under the administration and control of Doctors Without Borders/ Medecins Sans Frontieres.  The hospital staff were following their directions and administering aid accordingly.  MSF seemed to callously and willfully allow their staff to provide dangerous and near suicidal care. Many of the healthcare workers died and become part of the 30% infection rate in the general public.   This catastrophic failure in following the most simple and basic rules of healthcare is the only way the numbers that resulted fit the model.  Epidemiology math is robust, simple and effective.  It is linear though obviously can be geometric in growth.  It is what it is.

If one tracks the MSF press releases on the disease, there is an obvious pattern.  First, in April,  "this is a tough job but we know Ebola and the people are lucky we are here and we will deal with it"; then by July the MSF goes quite and the meme that this is a most unusual Ebola with unique virulence.

Until more clarity is provided, the numbers suggest that MSF requires a thorough investigation in terms of what appears to be their callous indifference to their staff and patients and their general incompetency. The model provided by the CDC can provide "what ifs" that suggests that the difference in this Ebola outbreak was the MSF.  Chaos and lack of regulatory oversight did exist in Liberia, Sierra Leone and Guinea, but this allowed MSF to apply such near willfully shoddy care.  In the first few months it is obvious MSF facilities did more harm than good as they acted as central junction points and turbo charged the spread of the disease, more often than not via the initial health workers.  It appears to me the  lack of government oversight in those three countries was exactly the setting required for the MSF fund raising: highlighting romantic  disaster-medicine tourism for volunteers who bravely leave Toronto to save the poor savages in Africa, and yet they had to  provide the low standard health care that they do I guess to make ends meet - proof is in the numbers.  

The WHO is apparently going through a re-organization and one of their first tasks  is to force a general licensing  and oversight over such organizations like MSF.

'First, do no harm."

I offer the thesis - hopefully refuted quickly not with emotion rock star adulation emotion, but with simple robust math as per CDC model  - that suggests the MSF caused this Ebola outbreak.    


 

Thursday, January 8, 2015

"It's the Claims Data, Stupid" - why UER is about to plunge towards 5%

Claims data closes the year at astounding lows which can only reflect a white hot economy. This is not news as first "showed" when successively less and less workers were furloughed during the July auto shutdown for refits, starting in 2012.  This is apparent from a simple year over year of the non-seasonally adjusted data.


 Most get their ideas of claims data taking uncritically the seasonally adjusted data which shows a rather sedate changes that do not portray the jaw dropping drama that is occurring.  I don't think it is because of anything nefarious, it is that the worst of the crisis of 2009 and then a second wave in 2010 hit the seasonal surge from Christmas to the first few weeks of January.  CES/BLS is well aware of this problem and it seems to promote debate internally on the seasonal adjustment machine X-13 ARIMA-SEATS - which is just a fancy smoothing machine seeking auto-regression. This is typical of the tons of solid, bit dull, papers on the problems of the recession.  The bottom line is the memory in the 13A model is 5 years, and the lions share of the crisis hit in December and January 2009 so we are at the end of the out of the norm impact on seasonals.  I do not understand how very seasoned economists blithely carried on reporting claims uncritically accepting this major blemish.  To my read of the data it is impossible to make any sense of claims data unless you look at the nonseasonal data year over year.  The greatest insight is from observing the four key seasonal points.  The most important is the turn and the hit in the first week or two of January.  Above you can see how massive the crisis was with the spike towards almost 1 million claims in a one week hit.  Assuming 500,000 was the "norm", the hit beyond 500,000 was incorrectly being applied to data as a seasonal hit, so the seasonal data then was adjusted too low and did not reflect the severity of the crisis.  This was then carried on through the year and the seasonal applied to periods where employment was improving was reported as not all that good a time.  The error in seasonals was also applied to the next key period, the July auto refit, not reflecting how severe the hit was.  In July 2009 autos were not shutting down just for refit, they were closing down permanently, as the crisis of the July 2009 surge to excess of 600,000 shows.  In time the "miracle" Steve Rattner pulled off in almost single handed saving of the USA auto industry is obvious in the data given how swiftly the seasonal auto refit in July became just that - seasonal.  But the non seasonal data did not provide insight into how dire the environment was - there is no doubt given the non seasonal claims data that the nation was on the verge or had entered a crisis every bit as severe as the Great Depression.  To my read it is as if bathers at  a Miami South Shore beach for a year were frolicking not knowing hundreds of great white sharks were just past the surf line.  The country was a hairs breadth from ruin.  Which, if it had occurred would  have very likely led to world war as all those chronic imbalances from mercantilism currency or oil cartel pricing were settled in only a few months and given a context of a lot of pissed off Americans.

A view of initial claims that makes it easier - at least to me - for several intuitive "aha!" moments is to take the year over year and make them into a heat map. Years from 1992 are the x axis and weeks are the y axis.  Color scale is given on the right and has rich green as "good times" with low claims and white as "tough times".  Keep in mind this is not adjusted by population growth and is, again, non seasonally adjusted levels week by week and year by year.  By moving from left to right one can see an entire decade at a certain week go by, and if one reads up and down one can see the progression in any one year,

Week 28, reading across shows the move to light green to yellow of the rise in the claims from the July auto refit.  The year end turn surge in claims is obvious where the lone pure white spot showing on week 2 in 2009.  And of course the read from top to down on the 2009 column shows  how extraordinary the crisis was and when remedy started to become effective - the most significant was the Rattner auto rescue that was in place by the 2010 July period.  Further more, once the quick death of a severe solvency crisis was alleviated by the Fed via QE I - there is little sign QE ongoing, the majority of QE I and then QE II and QE III had any impact on employment.  Of course the immediate shock alleviation with QE I was critical, but thereafter - once solvency was restored to the system - there is no impact.  One can also see how a "normal" recession of 2007 on become a severe crisis as solvency became the problem starting with  Lehman and then during the surge in LIBOR to Treasury Bills in November and the "jump ball" from the election. 

Most seem to think that they can glibly dismiss claims data, either because they uncritically accept the seasonals, or as the obvious massive discrepancy - the "separate worlds" of claims data to the monthly reported employment data and the side cars that supposedly qualify unemployment like employment to population (EP) ratio or (does not seem chic now) the labor force participation rate.  I think there are several unique features to this crisis versus the only comparable comparison, the monetary tightening induced Reagan recession of trough of 1983 to 1986.  First the Reagan 1983 recession hit in the QI 1983 and was somewhat controlled as it came not by solvency cusp like hit, but was induced by Volcker doubling down in tightening Fed policy.  1983 was induced from monetary policy, not inexplicable exogenous shocks of the 2008 - 2009 crisis.  The hit of 2009 came screaming out of the blue, the recession of 1983 was induced.

This meant that seasonals were not a problem nor made a "looking through a glass darkly" problem in 1983.  The relationship between monthly sample data and the census weekly data was linear and reported honestly the volatility and swings that occurred.  This is not the case in 2009 as the strike was violent and as massive as 1983, the control panel was giving out such "noise" or such a dire status that I dont think the severity was believed, or appreciated, as it was in 1983.  This ended with the monthly data being smoothed and swiftly became out of synch with the weekly claims data.  Claims data relationship to monthly employment data peaked for both at the same time in the 1983 recession.  This is not the case in 2009 where claims data peaked in March 2009 and the monthly data slowly smoothed in and "bled" in how dire the situation was not peaking until June 2010.  At first I think this was an honest error in the fog of war of the crisis, that surely it just was not that bad, but then later I think the White House started to lean on BLS, and with perhaps complicit BLS economists deliberately misreported the monthly UER.  I think that UER peaked in March 2009 towards 11 1/2% and then both claims and monthly data paused, but in a coordinated fashion and then after the Fed assured liquidity and after Rattner's industrial rescue of America, the improvement and mending was swift and very large.  Instead the BLS was now use to smoothing and while it is hard to put the finger on when exactly occurred, BLS threw their lot in with the "Odyessian Fed" and from then on the monthly employment is contrived and is adjusted down only to the point it has  some connection to the accurate, impossible to manipulate, claims data.  Another point should be made in that the disconnect that occurred by March 2009 between claims data and monthly data was so large and so obvious with hindsight, and then maintained, that it clearly dismisses those who feel claims data is irrelevant as it is some sort of different world of  large corporate layoffs.  Clearly the data makes mince meat of that view.  Claims data and monthly data are one and the same as far as reflecting the economy in general.


Where does that leave us?  There is so few comparables to the 2009 crisis, not even the 1983 recession the only recession as "large" as the 2009  downturn, but is not of the same nature of 2009 being a monetary induced recession versus the 2009 solvency crisis.

There can be no debate that claims data is an accurate depiction of the current status of the USA economy.  The reasons that the monthly data is being presented  in such a doctored and strangely negative basis are over.  Perhaps part of the reason the Democrats took such a drubbing in the election and lost now both the House and Senate to the GOP is that the deception the BLS was maintaining had unintended consequences.  While it did cover up the manipulation of the coverup on how bad the situation was in 2009, and while it did become an important supportive factor for the Fed maintaining "forward guidance" and avoid returning to a data driven rules based policy  and thereby maintain the new Fed extraordinary powers, it also "worked" and convinced the American public that the Democrats were doing a terrible job in managing the crisis.  That is rich irony as the claims data - and also almost all other economic data (but for diffusion data of "pop pols" of ISM guys) - indicate the Democrats did a pretty good job and should have been doing a victory lap into the November election.

And that might be the important point.  Unless the Democrats wish to be eviscerated in the 2016 elections, and really those elections are starting, now is the time accurate and positive (if possible) reporting of employment data occurs.  Tomorrow may be the second month of this process, I suspect it started with the surge in payrolls last month, and we may see a 500,000 or so payroll number along with a large drop in UER to under 5 1/2%.  But perhaps the Fed is still leaning against this reporting and it will not happen.  But what is clear is that within 500,000 or so the monthly employment data will be whatever BLS, along with the clique they travel with or want to travel with, want it to be.  But I do think they are quickly losing freedom to do this and the day of reckoning is upon them.  The administration  will start to pressure the Fed, and they will no longer go along with the Fed with their dour "unemployment is really huge, huge I say!" and secret sauce indicators - that while that allowed the Fed to stay loose while Obama went on a 6 year campaign to centralize Democratic power with patronage and realpolitik austerity,  This strange partnership is no longer required and is now harmful to the administration, so Obama is likely or has already given notice that he is no longer supportive no more will abide by the Fed keeping this "arm waving" emergency status.

Claims data is the current status of the USA,  we are through NAIRU,  and we are now white hot - will we are "verdant" green.

Sunday, December 28, 2014

SP500,Fed and NGDP; War Narrative

With the current give and take on ZIRP and SP500 at record level and DOW breaching 18,000, and quasi-millennialist concepts like "Secular Stagnation" or "New Normal"  - thought it would be useful to look at the long term view.  The following shows not much has changed for the USA in terms of likely growth.  The impact of demographics on the USA may have certain immediate tactical importance - for example as the Great Recession led to early retirement for "Boomers" or for certain sub groups like Hispanic women. ( Hotchkiss, Atlanta Fed "Adjusted Employment to Population Ratio As An Indicator of Labor Market Strength" ) but in the end demographics is not a independent or causal variable but is dependent and acts as an identity in being a main attribute to growth.  So too with productivity, the other attribute to US growth, which  will wax and wane not because of any stagnation or boom, but in terms of the expected duration of the users/creators of the changed productivity.  Productivity in the long run is  a dependent and an identity, as is demographics/population.  Inflation is the third attribute to nominal growth, and it is also a dependent and also acts as an identity.  

The independent variable for US nominal growth, or NGDP, is the amount of profit that can be produced given the current US setting.  And if population, productivity and inflation are dependents, then the amount of profit that can be produced is a optimization problem given the current  legal and security setting of US corporates.  During some phases inflation is stressed and at other times population - and so on.  And that legal setting is the US Constitution and the US "rule of law"  applied to US corporations.  The USA, since it entered the globalized world in being the deciding force for WWI and thereby the lead at the peace conference, creates the mix of inflation, productivity and population required to maximize profit, given the main challenge to the US Constitution and thereby maintaining the capitalist liberal democracy system.
Therefore, it is the security of the USA which will define in the end profit realized and potential - or more simply put it is war which defines the USA profit attributes and growth.  And thereby it is war which define the NGDP of the USA and how the three main factors of  NGDP are weighted in terms of population, productivity and inflation.
Examining how these basic factors  to USA NGDP  have developed over the last century, 4 distinct long phases can be identified.  The story of US growth for the last century, and  subsequent SP500 levels, has been the common denominators  with each of  these 4 phases.  The business cycle, where most begin and end any analysis of growth and markets, is merely an overlay to these phases. Even a casual memory shows that the phases are based upon war.

1. The German War 1914 to 1946
2. Cold War I 1947 to 1967
3. Cold War II 1968 to 1988
4. US Ascendancy 1989 to 2014
Within these 4 phases the breakdown of contribution to NGDP from population, productivity and inflation is  somewhat consistent considering  the huge differences and challenges unique to each phase, but that uniqueness does effect the weights of each factor.  The ability to maximize profits through optimizing the three factors does vary on nominal terms, especially as large changes in inflation are required in a certain phase to maximize nominal profit - but real GDP is, over the long run, a very steady 3% plus growth.   It is this ability to maintain a consistent business setting which allows the US to optimize the three factors that has made the USA the behemoth power that it is today.
The factors weights of NGDP growth, the contribution weights,  are population adding about 20%, productivity about 36% and inflation the rest of about 48%. While the  business cycles overlaid onto these phases are complex and each cycle unique - from the super cycles of the Great Depression and the Great Recession to the minor business cycles that play out every 4 to 10 years - each phase can be  identified and framed by the national conflict or war that was central for that specific phase.  Even the latest  phase - US Ascendancy - is defined by the issue of insurgency to the US cultural and economic hegemony.
The USA economy is a war economy.


It is the nature of the war prevailing that will define the economy and the nature of the growth the USA experiences.
 When the phase war is not one of attrition but one of conquest and domination, US productivity surges as the duration of forward expectations can extend making investment to produce such productivity less risky, but when the phase war is one of attrition, as it was in phase  Cold War II,  from the worst of Viet Nam morass to the final caving of the USSR in 1989, productivity is almost halved as the duration for forward expectations is halved as risk increases.  Anyone born prior to 1960 can remember as a young child being woken at night by a siren and always wondering if this was the night the Russians attacked and nuclear war commenced.   When the USA entered the post USSR phase of hegemony, the Ascendancy phase - despite the popular generally gloomy economic and political narrative that has almost been constant in this phase - productivity and population doubled from the attrition of the Cold War II phase as risk to forward expectations dramatically declined. And despite the terror of 9/11 and the so called "failed" wars of Afghanistan and Iraq, few Americans than ever as a percent of the populace saw war, and the world became undeniably safer and safer as insurgency against the American hegemony was dealt with. 
While NGDP varies, real GDP is stable around 3.2% for the last century.  Inflation is the "buffer" , a sector identity such that the results are a  steady, or optimization of nominal corporate profits  so that real GDP is  kept steady. 
The above  is the basic axioms of  Minsky-Keynes depiction of the US economy.   All other powers that have been authoritarian based, or corporatists (fascism), socialist or communists, and that have come to depend upon a globalized economy  then have had no choice but to attack the USA for they are quickly put into a zero sum world where either the US system or their system prevails.  That results in war, and is why the USA has been defined by war, or the USA capitalist liberal democratic system with profit maximization at its core, is always being tested or challenged even to the point of possible destruction.  That in this warrior nation state,  the drive to maximize capitalist profit (which are more often than not the opposite to rentiers profits)  prevail and is our defining characteristic - not a "people" or religion or geographic area.
The USA is a capitalist liberal democracy,   and this defining characteristics has been the cause of all the wars for the last century, as state corporatism of the Germans, and  then the Marxist-Stalinist socialism of the USSR,  realized that they were in a struggle to the death with the USA  as their forms of government were mutually incompatible with the USA capitalist liberal democracy and they would cease to exist unless the  USA was eliminated or changed to a different system.  

The Table:

The current ratio of the growth of  SP500 to NGDP is at the highs for the last century.  That the average ratio has been where the SP500 growth is 1/3 of the NGDP.  Why this change?  When the war threatens the survival of the USA, SP500 lags terribly, and in addition to this risk if the war is one of attrition,  as it was in the dark second phase of the Cold War,  most of NGDP growth, and thereby to make the required nominal capitalistic profit, is provided by inflation. Now that has been reversed, matching the perhaps hubris of the USA immediately after Hiroshima and the smashing of the German corporatism model.
Yellen and company have it all wrong, as long as the USA is empowered for war, able to fight war such that it is reasonable to see the USA prevail,  inflation is not something that can be generated nor really curtailed,  but is rather an identity responding to the USA security policy.  The Fed can only be an administrator and make the best of the phase war for the period,and can only focus upon inflation in the end.  And by focusing on inflation the Fed can only seek to have the necessary changes inflation move discreetly.  This is the purpose and the theory behind the Taylor Rule, to allow feedback such the Fed can make the necessary identity moves in inflation as effective as possible.  In the end the Fed cannot curtail or encourage the inflation rate that will occur.   The Federal Reserve is always, in the end, an administrator and every attempt at "policy" will only delay or unnecessarily speed up the monetary status that will occur.  For in the end inflation is an identity, not a causal variable.

Population is also created or will be whatever is required, in the end, to maximize nominal capitalist profit.  Whoever unlike any other form of government, with the liberal democracy such population results can only in the end be a good.  The Malthusian concerns of "global warming" types or just about any demographic concern is something that will have nothing to do with any reasonable foreseeable economic time period.  Malthusian and Millennialistic concerns should be seen for what they are - religiosity that is no longer fulfilled with traditional religion.  If concepts like global warming - and I have no interest debating it here - are valid and are science, then they will simply be priced into profits as any cost and thereby be solved with the relentless pursuit of capitalist profit. Such is the power and beauty of a liberal democracy.  This also means that all consideration of NGDP based upon demographics - all the ad nauseum of late on Boomers and their spawn is trite.  What will be the demographics in the USA?  I can answer with confidence and total predictive capability - it will be whatever maximizes capitalist profits.  To me that means that there will be a relative resounding boom in immigration and perhaps the Mils will have more kids than one thinks at this point.
The other major attribute for growth, that contributes almost 1/2 of growth is productivity.  That seems to be on track at the usual .45 weight.
Going forward the table in context of the true nature of the warrior America economy  suggests that the current FOMC is assuming more power than it really has, that it will in the end only "shepherd" the inflation required and that all "extraordinary" measures will cease - likely not really required nor as important as all consider for a couple of years now.