Central Banks: Divergence of Rhetoric and Reality

U. S. Economy Still Missing: 3.9 Million Prime-Age Jobs … Today’s U. S. jobs report, which showed nonfarm payrolls increasing by a meager 142,000 jobs and the unemployment rate falling 0.1 percentage point to 6.1 percent in August, will undoubtedly rekindle a familiar debate: How much more should the Federal Reserve do to put people back to work? – Bloomberg
Dominant Social Theme: The Federal Reserve needs to step up and build as many jobs as necessary.
Free-Market Analysis: Imagine taking bits of colored paper, making more of them and then waiting for jobs to appear. One has little to do with the other, but according to a steady stream of articles in Bloomberg and the rest of the mainstream media, such an act leads to an inevitable result: additional employment.
This is a kind of mass delusion, isn’t it? The printing of fiat currency does not of itself stimulate the entrepreneur, create opportunities that can be leveraged or generate companies that have the wherewithal to do so. One is a mechanical function of the printing presses. The other is the result of considerable human action and the application of ingenuity, courage and concentration.
The printed money is not provided to entrepreneurs in any case. It is funneled to a distribution channel of commercial banks. It is these banks, often with distressed balance sheets, that are to provide the mechanisms for economic growth.

This post was published at The Daily Bell on September 09, 2014.