Fed not buying novel Developer's financial proposal

On Aug. 21, right here, James M. Meyer, who invests $1.2 billion at Tower Bridge Advisors, West Conshohocken, made a novel proposal:

As long as interest rates are still low, why doesn't Congress get the Fed to sell some premium-priced Treasury and mortgage securities, from the $4 trillion the Federal Reserve accumulated in its "quantitative easing" experiment, and use the profit to upgrade roads, bridges, rails, ports, and airports, which Hillary Clinton and Donald Trump have each pledged to do with unknown funds?

The Fed objects:

The Open Market Committee promised it wasn't going to dump these bonds back onto the market. Central bankers have enough trouble convincing people they know what they're doing without breaking their word.

When former Fed chief Ben Bernanke hinted at unwinding the Fed's balance sheet three years ago, bond yields soared. Some are starting to go up again. If we spook the markets again, the government and other big borrowers lose.

One-time tricks won't fix U.S. finances. Congress and the next president need to get together and match taxes to spending. Or keep borrowing money - while it's still cheap.

I ran all that by Meyer. He's sticking to his guns:

"Spending is stimulative. . . . So whatever harm might be done by selling assets could be offset if the profits were reinvested in productive infrastructure."

"Nothing the Fed does is carved in stone. They promised four rate hikes this year," but there have been none since the lone 0.25 percent hike last December, "and we might get one more before the end of the year. . . . They set the table for Dinner at 8, but it's really the script for Waiting for Godot."

"Classic economic and monetary policies aren't working because they have been overused for too long a period. . . . Too much money is sloshing around, yet consumers and corporations are hesitant to spend and to borrow. If they don't raise interest rates and the economy turns [bad] again, they are going to have to further load up the balance sheet."

Seeking workers

Import labor? A lot of the people who want improved infrastructure stand to benefit personally - contractors, trade unionists, bond salespeople.

But I wonder: With unemployment under 5 percent - as security and customer-service employers are telling me they can't find workers - as dozens of cranes dot Philadelphia's skyline, keeping crews busy - who's going to take all these government jobs?

Will "discouraged workers" arise from their cousins' basements to hang iron and pour concrete? Will we need to import more Latin Americans and Africans?

"We are going to have to train some new folks," says Rick Bloomingdale, president of the Pennsylvania AFL-CIO.

"We still have people in places where they are chronically unemployed," he said. Contractors "may have to open up recruiting and encourage more people to move where the work is."

Long term, he's not so sure there will be a labor shortage. Private construction moves in cycles, and public project design "takes time," Bloomingdale said. The building trades "will open their apprenticeship classes if they know there will be work."

Also, "people are going to have to pay higher wages," the labor leader said. "If you can't find people at $10, maybe you can find them at $18. And that's a good thing."

Source: Philly.com