Forget It, Bernanke

Friday’s jobs report was taken as a disappointment even though the private sector continued to add jobs and extend hours-worked. Nevertheless, everybody seems to think that the Fed has no choice but to announce more “quantitative easing” at its meeting on Tuesday.

Is that not hilarious? The government sector is losing jobs, so now the government needs to stimulate itself? Explain that Keynesians!

In any case, Bernanke has no control over jobs here in this fabulous Age of Outsourcing. Let’s take a look at those 1,100 Whirlpool jobs that went to Mexico from a monetary-policy perspective:

Imagine that Bernanke had gone to Evansville with the intent of saving those refrigerator-making jobs: there he is buying-up all of the mortgages in town, bailing out the local banks, and offering 0% interest loans.

Would that have helped? Not at all. Maybe Whirlpool could have taken a cheap loan to modernize the plant and increase productivity, but they did not. Obviously, replacing Americans with Mexicans yields profits that dwarf anything that the Fed has to offer.

In the “dark” protectionist days of the 1980′s, that plant would have gone south to a right-to-work state like Texas. But here in our free-trade utopia, they keep right on going until they are clean out of the country.

And maybe Bernanke’s 0% interest rates are actually harming the economy. After all, if companies can borrow money cheaply, doesn’t that reduce the costs of building new plants in places like Mexico thus accelerating the process of outsourcing?

Bernanke has little, if any, control over job-creation, even though that is one of the Fed’s mandates. Trade policy calls the shots, and the current policy is to export as many jobs as possible. The only question that remains is: can small and midsized companies create new jobs faster than multi-nationals like Whirlpool send them out of the country?

Bernanke also has no control over the unemployment rate as millions of immigrants continue to pour into the country. Isn’t it time that people stopped looking to the Fed as an entity that can do something about jobs?

This entry was posted on Saturday, August 7th, 2010 at 3:53 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.