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this this is a chart of the cumulative fiscal justice from the start of the recession of all the recessions uh that i mentioned earlier since 1980 and you'll see the top four lines um are the four recessions that preceded this one i'm sorry the five recessions that proceeded this one and the black line is if you added up all those together um remarkably the red line is what we're doing in 2020 and 21.
um again the boldness of what they did in the beginning of that chart when you say the first five or six or seven months makes a lot of sense but what's very surprising is we're continuing to double down on these policies he's even after it's quite apparent you've had a very strong recovery in the economy the fed's easy money will also top a similar amount almost two times two times all previous fed incursions into money printing now what we have observed in recent months is the sharpest recovery from any downturn in recent history despite losing 11 million net jobs during 2020 personal income grew at the fastest rate it has grown in 20 years think about that while we were while we were 11 million people were losing their jobs inner year we ended the year with the strongest growth in personal income in 20 years the unemployment rate has recovered 70 percent of the initial hit in just six months it typically takes 25 months for this to happen even after the sharp fall again five times the average recession we're already back in terms of gdp to pre-covered levels in just five quarters the average recession takes seven quarters but don't forget we're coming back from a much deeper hole that was five times as deep as that observed in the average respect recession um it is unnecessary and frankly reckless that 575 billion of the 850 billion in direct transfers of of two trillion two and a half trillion of expected qe are being provided after retail sales were above pre-covered trends and after vaccine confirmation so if you look at the red line on the chart i have up that is 2020.
i think we can all agree it doesn't look anything like the other recessions which are more traditional in nature's much more violent increase in unemployment and then a huge snapback in a much shorter period of time i think even moderate voices will agree that the level of support has been excessive let me show you how excessive it actually has been this is a chart of retail sales the last 20 years they are currently above pre-covert trend by 15 look at the period from 2008 to 2014.
it took six years to get retail sales back on trend um and after the great financial crisis but if you look at the current period we had a sharp v bottom out and i mentioned the cares act that's check one then we had more fiscal stimulus last fall after vaccines were apparent and after it was apparent that we were in a very unusual recovery and now as you know we've just passed another trillion and a half of stimulus when retail sales are 15 above trend what does that mean exactly if you took the increase in retail sales from 2016 to 2020 on this chart that's three percent a year in recovery we've just done that in six months we are absolutely booming we are above um trend by frankly five years in six months okay um now we have let's talk about the fed's excessive support the fed has constantly reminded us that monetary policy acts with long and variable lags why then is the fed still providing emergency financial conditions when the recovery as i've shown is in full acceleration why are we buying 40 billion dollars of mortgages a month when we are clearly running out of housing supply not only is the fed still providing record amounts of accommodation it is promising not to raise rates until after 2023 even when the recession is already over if the fed raised rates in the first quarter of 2024 as indicated it will be 41 months after recovering 70 percent of the drawdown on unemployment that was the chart i showed with the red line earlier what do you think the average number of months before the fed's first hike after a 70 percent employment recovery is in the post-war period so it's 41 months that chairman pal is predicting what do you think the average after that kind of recovery has been since world war ii four months four and according to the chair they are not even thinking about thinking about ending 120 billion a month of bond purchases simply put the fastest and strongest recovery from any post-war recession is being met with the fed's easiest response on record by a mile policy makers say we need to go big to avoid downside risks and avoid the stagnation experienced after the great financial crisis but as i have shown comparisons with a great financial crisis are completely inappropriate what about the risks of financial stability the worst economic periods of the last century have followed the bursting of asset bubbles take the 30s after the 29 bubble bursts and think about the great financial crisis after the housing bubble burst with dogecoin which was started as a joke with a 60 billion dollar market cap and nfts on everything you can spell out there is there any doubt in anybody's mind that we're in a bubble not to mention stock market to gdp is well above any level that we've seen in the past century more honestly what about the risk of fiscal dominance and loss of our reserve currency status our
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