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Former Dallas Fed chief economist Michael Cox weighs in on the Fed, fiscal policy and his outlook for GDP growth.
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The employment situation.
Our next guest says there's nothing the Fed can due to make things better joining us now is former Dallas fed chief economist Michael Cox and Michael I'll tell you after two rounds of QE plus the initial Operation Twist things seem to be getting worse not better.
To your outlook how would you rate the job -- he's done thus far.
Not only does not very good it's not all his fault of course those monetary policy has done about all -- -- get this economy on track real problem now.
And has been all along.
This fiscal policy would have a huge terribly is set -- -- incentives coming out of this administration they don't seem to understand.
That firms create jobs when they have a profit incentive to do so they don't have that.
When they're going to impose all kinds of government mandated health care -- -- up a whole bunch of new rules and regulations on them.
And also tax them to the to the -- 40% now -- United States has the world's highest corporate income tax rate.
So what is it about good government policy which could cause anybody to expect anything other than bad numbers out of this economy.
It's a good point so you raise the issue that fiscal policy it's likely to come up at a press conference here.
This afternoon do you think the administration will be listening can Bernanke send a strong enough message that we need to sort this out.
Well if they can but monetary policy right now is done it it got interest rates down -- historic lows interest rates are lower than they have been on.
Since the Great Depression.
And so we're in -- liquidity trap as far as monetary policies goes and there's no way to go but up for interest rates of people don't wanna invest -- have a capital loss.
They're just hope -- huge masses.
Above -- into money some demand is growing faster than -- supply so now.
And that's as people the money comes in from Greece and it's just that looking for a safe haven with all this default risk and stuff.
So essentially the Fed has got us and you know classic liquidity trap.
But again I -- -- the fact that you don't it would there's much we can do it's just you can't -- keep using the Fed as a whipping boy forever things going wrong you gotta put that point the finger look in the mirror.
And point the finger it's yourself it's your fiscal policy.
Yeah -- -- it Obama needs to meet with himself.
It when we look at these numbers that I mean you look at at the projection for GDP.
For all of 2012 -- to -- down from two point 7% growth to 2.2 percent growth.
That's a big decline a half a percentage point at this point though.
Isn't it isn't even that still ambitious.
-- it is populations growing at one and a half percent a year.
Labor force is growing -- so if you look at the you know the growth in the economy relative to the growth in the number of people you basically have a -- Per capita GDP economy so is it you know we can be entering some -- -- mildly negative numbers in terms of growth and per capita personal income yeah.
Alright Michael hang with us Michael Cox.
Press conference you're gonna chat with you mourn the other.
