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Home Publications Blogs Beat the Press Doesn't Bernanke Know That Temporary Employment Is Down?

Doesn't Bernanke Know That Temporary Employment Is Down?

Friday, 04 February 2011 06:00

That might have been an appropriate headline for an article reporting on a press conference by Federal Reserve Board Chairman Ben Bernanke in which he reportedly said that employers are hiring temporary workers because they are uncertain about the future strength of the economy. In fact, in spite of recent hiring temporary employment is still down almost 15 percent from its pre-recession level.

The article also includes the comment that "critics" of Bernanke's policy of quantitative easing say that it "devalues the dollar." This is what supporters of the policy would say too. The United States has a large trade deficit. In an economy with floating exchange rates the way in which a deficit is reversed is through a decline in the value of the currency. That is why people to see this imbalance corrected, and see the United States borrow less from abroad, want to see the value of the dollar fall.

The implication of the view attributed to "critics" is that they want to see the United States continue to run large trade deficits and to borrow large amounts of money from abroad.

Comments (3)Add Comment
written by Jim in Panama, February 04, 2011 7:57
"That is why people to see this imbalance corrected, and see the United States borrow less from abroad, want to see the value of the dollar fall." ..... Does the US have any choice as to where they borrow from? No, they put Treasuries out for sale and whoever buy them, buys them. As well, it would be fair to mention that a whopping 73% of all US debt is owned US individuals, institutions and the Social Security, Military and Civil Service retirement funds. Stop subtly furthering the utter BS meme that we are "owned" by foreigners.... oh, and while I'm on it, as of December 31, 2010 the dreaded Chinese who "own" us held a frightening 7.1% of our total debt. Oh dear me
written by izzatzo, February 04, 2011 7:59
Temporary hiring is up because it's still down due to the uncertainty of whether a devalued dollar will clear up the uncertainty of demand with more net export trade surplus or less net import trade deficit to result in a strong dollar.
written by skeptonomist, February 04, 2011 10:16
It's one thing to argue about the desirability of changing exchange rates and the theoretical effects thereof, but what actually happens as a result of Fed actions is something else entirely.

QE2 was supposed to reduce the value of the dollar and reduce medium and long-term interest rates. Changes in exchange rates over the last three months have generally been less than noise. Long-term Treasury rates have continued to go up, and medium-term rates jumped up sharply the day after the announcement of QE2.

Maybe the arguments should be in the world of reality insteady of the fantasy-land of monetary policy theory. Real tariff policy is messy, involving political influence and that of "union bosses", but it has immediate and fairly predictable effects. Relying on the likes of Alan Greenspan to solve economic problems is not a practicable alternative.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.