The Emperor's New Clothes or Econometric Misperception?

Summary

• The media narrative indicates we suffer from "secular stagnation".
• Central bank econometrics and media narrative indicate inflation is "tame".
• We examine two other potential contributing factors to secular stagnation, the firmly anchored expectations of the public, as achieved through econometrics and media narrative.
• And the advertised vs. potentially unadvertised decline in real median household income since 1999.

"Our stagflation, esp. since the Great-Recession, is no happenstance. " - Salmo Trutta

Recently, we had mused regarding monetary "Velocities" and the effects of rampant speculation and financialism. Despite the rantings of certain individuals, a quantum of solace was found here in the "proof" of our assertions. Vindication, how sweet it is.

These transactional effects in a QE ZIRP environment are one of the many contributing factors towards what the media narrative has dubbed "secular stagnation." Today, we examine two other potential contributing factors, the firmly anchored expectations of the public, as achieved through econometrics and media narrative, and the advertised vs. potentially unadvertised decline in real median household income since 1999.

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