The output gap increasing.
The economists at the Federal Reserve Bank say the output gap has closed and that is why they can increase interest rates now. The output gap didn’t close, they only over the last five years have been calculating it closing as all their efforts have failed to actually close it.
Here is a picture of the output gap that was created from the great recession. Can you see what is wrong here?
Here is a close up of it. Not only has it not closed, the gap is getting wider.
This is really sick. The Fed actually publishes their calculation of the output gap and they have closed it. They needed to do that so they could raise rates. What they are saying to us in reality is this is as good as it gets. They are out of ideas what to do. In fact, they have been blaming others for the problem. For instance, they blame drug addicted white people who are too lazy to work. They blame secular stagnation. Meaning it isn’t their fault. It is natural that the economy hasn’t done better. They blame skills mismatch.
This has social consequences.