PROTECTION AND WEALTH BUILDING STRATEGIES 199Nobody’s closer to Bernanke and Yellen than this individual I
spoke to.
He’s a PhD economist, a very well regarded scholar but
not a very well known name because he’s not actually on the
FOMC. Yet he’s been invited into the room to help them figure
these things out. And what he said was that we’re not really
going to know if the Fed’s policies worked as intended for
another fifty years. He said fifty years from now, there will be
another young scholar like Ben Bernanke was in the 1980s
who comes along and figures all this stuff out.
In other words, they’re admitting that they don’t know
what they’re doing. They’re admitting this is kind of a big sci-
ence experiment. What does that mean for us as investors,
portfolio managers and people trying to make smart decisions?
It means that we have to be nimble, and we have to watch
the data. We can’t put a stake in the ground around one par-
ticular outcome because the chance of getting blindsided by
something coming up from behind is pretty high.
At this writing, monthly jobs creation has ticked up a bit,
with upward revisions for prior months. Even more jobs were
created in November and December of 2014 than we knew at
the time.
Importantly, real wages went up a little bit. Not a lot, but
the fact that that time series even had a pulse is interesting.
I’ve said before that that’s one of the things Janet Yellen watch-
es most closely because the Fed has this crazy dual mandate of
creating jobs and maintaining price stability at the same time.
They’re not really consistent goals; sometimes they run to-
gether, but sometimes they pull in opposite directions. Yellen’s
been putting the emphasis on job creation, but she wants
some early warning about inflation. Seeing real wages going
up is one indicator where the two wings of the plane, if you
will, work together.
Because if real wages are going up, that’s a sign that slack