These are at least two conceivable methods of compelling the government to stop, or limit, its abuse of the monetary printing press.
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The Daily Bell - Richard Ebeling on Libertarianism, Anarchism and the Truth of Austrian... - 0 views
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Ebeling proposes two methods of reining in out of control government printing of paper money. There is a third method; one used by Lincoln and Kennedy. This is the issuance of gold/silver/oil backed reserve notes. The notes represent gold or silver being held on deposit, and are fully redeemable. The value of the gold/silver or another commodity represented floats in the marketplace against goods and services. Nor is there a fixed exchange rate for converting fiat (paper) dollars. The market will figure those things out if left free to do so. And that's one big big "if".
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So the normal market pressures of downward price and wage adjustments in the recession are partly counter-acted by a new monetary expansion that is delaying the necessary re-coordination of market activities. Thus, given these two pressures, prices do not fall as much as a post-recession adjustment may require and they do not rise as much or as fast as might otherwise occur due to the renewed monetary expansion.
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At the same time, as you correctly ask, the Federal Reserve has been paying banks a relatively low rate of interest to keep large excessive reserves in their accounts at the Federal Reserve, rather than to fully lend those excessive reserves to private borrowers. And given the low market rates of interest that Federal Reserve policy has generated, even the low rate of interest on unlent excess reserves offered to banks by the Federal Reserve appears the relatively more profitable way to use their available funds.
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Why has the Federal Reserve done this? They infused these two trillion dollars into the financial markets back in 2008-2010 because they feared that an economy-wide bank collapse was possible. They are afraid to reverse this monetary expansion because to do so would reduce potential bank-lending capacity and put upward pressure on interest rates at a time when the Federal Reserve wants to prevent the sluggish recovery from slowing down even more and also raise the cost of the US government's financing of its trillion dollar a year deficits. So, instead, they leave this excess bank lending power sloshing around in the system, while keeping it off the market and from causing significant new price inflationary pressures, by paying banks not to lend those vast sums.
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Austrians argue that economics is fundamentally a science and study of "human action." It attempts to trace out the logic and implications of man's intentional conduct in selecting among ends desired and applying perceived means to try to attain them. Austrians emphasize that all human action and the social and market interactions among men occur in a setting of imperfect knowledge, inescapable degrees of uncertainty and always through the passage of time.
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They emphasize that the networks of social institutions in which and through which men discover ways to coordinate their interdependent actions in complex systems of division of labor are not the creations of government edict or command; but are most often among those unintended consequences of multitudes of self-interested individual actions and interactions.
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They have developed theories of market competition and the role of the entrepreneur as the individuals always alert to market opportunities, and whose actions tend to bring about coordination between market supplies and demands.
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The Austrian analysis of markets, competition and prices, led them to devastating critiques of the unworkability of all forms of socialist central planning, the inherent contradictions and inconsistencies in virtually all forms of government intervention and regulation, and a theory of money and the business cycle that points the finger of responsibility for inflations and recessions at the doorstep of government monetary and fiscal policies.
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The philosophy of liberty proclaims that each individual is unique and possessing inherent rights to his life, liberty and honestly acquired property.
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It is not surprising that classical liberal and libertarian ideas are often attacked. After all they are the ideas that consistently oppose the current political systems of plunder, privilege and power lusting.
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That government, if it is to exist, is to serve as the protector and guardian of our distinct individual rights, and not the master of men who are obligated to sacrifice themselves for some asserted "national interest," "general welfare," or "common good."
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The only reasonable meaning to the "common good" or the "general welfare" is when each individual is free to peacefully live his life as he chooses and is at liberty to voluntarily associate and interact with his fellow men for mutually beneficial improvements to their lives.
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It is virtually inevitable that those who use political power for their own gain at their neighbor's expense will vehemently resist and oppose any attempt to stop them from feeding at the government trough.
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there is everywhere a class of plundering peoples – politicians, bureaucrats, special interest groups – receiving tax-based income redistributions and subsidies and benefiting from anti-competitive regulations and protections against and at the expense of their fellow human beings.
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Austrian Economics, not surprisingly, has been attacked precisely because of its insightful and cogent analysis of how it was government intervention and central bank monetary manipulation that generated the unsustainable boom in the last decade that set the stage for the inescapable bust, which the world is still suffering from.
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Because libertarians have not agreed about this among themselves, nor have they been able to persuade enough others in society to move the world further away from the collectivist premises and the interventionist-welfare state policies that guide so much that goes on in the world.
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I happen to have been most strongly influenced by the "natural rights" defense of liberty, and especially as formulated by Ayn Rand in her philosophy of Objectivism.
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First, it is argued that if one believes that the use of any and all forms of coercion are morally unacceptable in human relationships, then this should also imply that any compulsory taxation, even when for the funding of defense and legal justice, is unjustifiable. And, second, it is argued that the private sector could provide such admittedly essential services far more efficiently and cost-effectively than the monopoly agency of government. Murray Rothbard and David Friedman probably have been among the most well-known and articulate proponents of the anarcho-capitalist position over the last 50 years.
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Others like the Ayn Rand, Robert Nozick and Ludwig von Mises have made the case for constitutionally limited government. Their counter arguments have centered on the ideas that conflicts over jurisdiction, disputes among private defense agencies contracted by different individuals who have disagreements, and the likelihood that "defense" would turn out to be a "natural monopoly" anyway – that is, a tendency for one agency to end up being the single provider of defense and judicial services over a wide geographical area – raise questions about the long-run workability and sustainability of competing defense companies in society.
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From a moral perspective, I am in sympathy with the anarcho-capitalist position, in that I find the compulsory taking of people's income and wealth without their consent for whatever reason to be ethically repugnant.
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This means that the Supreme Court has said that you are the slave of "society" and the government that represents "the people," since, in principle, anything that you do or not do can be argued to have some affect, positive or negative, on others.
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Think about this Court decision. It is saying that if you do not buy health insurance the government will tax you to pay for it. If you refuse to pay the tax, the government will end up attempting to seize financial assets or real property you own in lieu of failure to pay. If you try to prevent this taking of your property, you are subject to arrest and imprisonment. If you resist arrest or imprisonment, the police have the authority to force you to comply – up to and including lethal force to subdue you into obedience.
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the freedom and dignity of the individual human being; and the attempt whenever and wherever on our part to reduce, repeal and abolish all forms of regulation, control, restriction, prohibition on the peaceful and honest affairs of our fellow men.
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Once you accept this premise, there is no end to the minutest detail and content of your life and actions the government cannot claim jurisdiction over to regulate, control or prohibit.
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Here is that end-of-the-road of the notion of unlimited democratic rule by "the people" and those who claim to speak for "the people" and rule on their behalf.
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Ayn Rand, of course, rejected any connection or compatibility with libertarianism. She argued this on two grounds. First, she felt that too frequently libertarians spoke of individual freedom, free markets and limited government, but failed to explicitly and clearly ground their political-economic ideas in a demonstrable philosophy of man, nature and society.
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Government control of money is the potentially most dangerous and damaging form of government power short of outright socialism.
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Rand's political philosophy arises out of the "natural rights" tradition, that rights are inherent in the nature of man and precede government.
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Mises believed that rights were, in a sense, "social conventions" that had evolved out of the discovery that certain social institutional arrangements were more conducive to the mutual betterment of all members of society for achieving their individual goals and values
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What they did agree upon was that, given their respective conceptions of the basis of individual rights, there was no social and economic system more consistent with the protection of those rights and more likely to generate the material and cultural achievements that are potentially possible than laissez-faire capitalism.
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And in the twentieth century, Rand and Mises were two of the most principled and uncompromising advocates for the completely free market society
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Second, she rejected the anarchist elements in the libertarian movement, believing that any reasonable analysis of the reality of man and the human condition strongly suggested the inescapable need for a single legal standard for defining and enforcing individual rights and a single authority to as impartially and "objectively" as possible enforce laws defending each individual's rights to his life, liberty and honestly acquired property.
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"Hardly ever do the advocates of free capitalism realize how utterly their ideal was frustrated at the moment the state assumed control of the monetary system . . .
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From that point on it is no longer a matter of principle but one of expediency how far one wishes or permits government interference to go.
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Money control is the supreme and most comprehensive of all governmental controls short of expropriation."
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Government basically has three ways to acquire the income and wealth of its citizens: taxation, borrowing and printing money
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So, governments throughout history have turned to the monetary printing press to fund the expenditures not covered by taxes or borrowed money
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This "non-neutral," or uneven, impact on prices and wages in the economy during the inflationary process brings in its wake distorted profit margins, misallocations of resources and labor and various mal-investments of capital. Here are the seeds for the artificial and unsustainable "booms" that invariably come crashing down in the "bust" once the monetary expansion that has set it all in motion is stopped or slowed down.
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I believe that the choice and use of money should be left to the market, that is, to the free and voluntary interactive decisions of those buying and selling in the market.
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I consider a private, competitive free banking system to be the only one consistent with a truly free market society.
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Trump Prepares to Takeover Fed - 0 views
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In Donald Trump’s first four years as president, he will not only choose three judges for the Supreme Court, he’ll also pick five of the seven members on the Fed Board of Governors. It would be impossible to overstate the effect this is going to have on the nation’s economic future. With both houses of Congress firmly in the GOP’s grip, we could see the most powerful central bank in the world transformed into a purely political institution that follows the diktats of one man. Critics may think that is a vast improvement over the present situation in which the Fed conceals its allegiance to the giant Wall Street investment banks behind a public relations cloud of “independence”, but the idea of one man controlling the price of the world’s reserve currency and, thus, the price of financial assets and commodities across the globe, is equally disturbing. Already we have seen how the Fed’s determination to enrich its constituents has resulted in one titanic asset-price bubble after the other. Imagine if that power was entrusted to just one individual who could be tempted to use that authority to shape economic events in a way that enhanced and perpetuated his own political power. Even so, after seven years of a policy-induced Depression that has increased inequality to levels not seen since the Gilded Age, we think it is high-time that the president use his power to choose the members who will bring the bank back under government control.
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So, how will Trump’s populism shape his views on who should or should not be a member of the Fed? We don’t know, but we do know that monetary policy is going to change dramatically from the last eight years of unproductive experimentation because Trump has surrounded himself with industry leaders who ascribe to an entirely different philosophy than the one currently in practice. Check this out from monetary analyst Tommy Behnke: “Some of today’s most reasonable mainstream economic voices are included in (Trump’s) inner circle. These names include David Malpass of Encima Global, who co-signed a letter with Jim Grant opposing the Fed’s “inflationary” and “distortive” quantitative easing program; John Paulson of Paulson & Co., who made billions from shorting the housing market before the Great Recession; Andy Beal, a self-described “libertarian kind of guy” who blames the Fed for the credit crisis; and the Heritage Foundation’s Stephen Moore, who told CSIN in 2012 that he is a “very severe critic” of the Fed’s “incredibly easy-money policies of the past decade.” While none of Trump’s economic advisers are by any means Austrians, they are far more hawkish than most of Presidents Bush and Obama’s past economic advisers.” (Why President Trump Will Fumigate the Fed, Mises Institute)
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Trump, who is no fan of the Fed’s bond buying program called QE, has admitted he thinks stocks are in a bubble suggesting that he will probably take a more conservative approach to monetary policy. Even so, that doesn’t change the fact he’s going to have to opportunity to personally select the FOMC’s ruling majority, which means that he’ll be in a position to demand their loyalty as a condition of their hiring. Does anyone seriously doubt that Trump would rather control the Fed himself than keep it in the clutches of the cutthroat Wall Street banks? There’s no doubt that the distributional effects of the Fed’s policies helped catapult Trump into the White House. Millions of working class Americans who are sick of the monetary “trickle down” policies and the job-eviscerating trade agreements found a way to express their frustration in the candidacy of Donald Trump. Their collective rage suddenly exploded at the ballotbox on November 8 pushing the real estate tycoon to a victory over opponent Clinton in what many are calling the political upset of the century. Trump tapped into that wellspring of anger and frustration by denouncing the “failed and corrupt political establishment” in which both Hillary Clinton and the Fed feature prominently. Now he’s going to take it to the next level by launching a surprise attack on the Fed which will leave Wall Street stripped of its power-agency and left to fend for itself. This is a blurb from the New York Times: “A core view of many Trump advisers is that the extended period of emergency policy settings has promoted a bubble in the stock market, depressed the incomes of savers, scared the public and encouraged capital misallocation,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Right now, these are minority views on the F.O.M.C., but Trump appointees are likely to shift the needle.” (With Trump in Power, the Fed Gets Ready for a Reckoning, New York Times)
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They’re going to “shift the needle” alright, then they’re going to drive it through the serpent’s heart. The Fed has had every opportunity to show where its loyalties lie and it has sided with Wall Street every single time. There’s a reason why 95 percent of all income gains in the last eight years have gone to the one percent, while working people have struggled just to put food on the table. Just like there’s a reason why stocks have tripled in value in the last eight years while wages and incomes have stagnated and the economy has slowed to a crawl. It’s the policy, stupid. The Fed has created the conditions for a permanent Depression so it can provide infinite cheap money to its crooked reprobate friends on Wall Street. Now their little party is coming to an end. Boo fucking hoo.
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Review & Outlook: Palin's Dollar, Zoellick's Gold - WSJ.com - 0 views
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a new global monetary regime to reduce currency turmoil and spur growth: "This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves toward internalization and then an open capital account," he wrote, in an echo of what we've been saying for some time. And here's Mr. Zoellick's sound-money kicker: "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today." Mr. Zoellick's last observation will not be news to investors, who have traded gold up to $1,400 an ounce, its highest level in real terms since the 1970s, as a hedge against the risk of future inflation. However, his point will shock many of the world's financial policy makers, who still think of gold as a barbarous relic rather than as an important price signal. Lest they faint in the halls of the International Monetary Fund, we don't think Mr. Zoellick is calling for a return to a full-fledged gold standard. His nonetheless useful point is that a system of global monetary cooperation needs a North Star to judge when it is running off course. The Bretton Woods accord used gold as such a reference until the U.S. failed to heed its discipline in the late 1960s and in 1971 revoked the pledge to sell other central banks gold at $35 an ounce.
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The Business Offensive: A Symmetrical Ruling Class - 0 views
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Since the close of World War II, America has sought an integrated policy as the militarization of capitalism
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In the intervening years, this was not always easy to achieve, as, depending on circumstances, one or the other, the corporate-financial order, and the military itself, asserted itself and made strong demands on government.
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the Cold War itself providing a cover for the US globalization of power via market penetration, international financial and monetary architecture under US supervision, and the steady build-up of an Armaments State.
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Yet, the dynamism of early modern capitalism, realized in part through grinding methods of labor suppression, notably, the privatization of force, helped on by a compliant government, meant that within capitalism itself there was tremendous jockeying for power requiring the imposition of Order if major railroads and industrial firms were to enjoy their secure monopoly status.
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Here government was crucial to harmonious internal structural arrangements, anticompetitive in its policies for the promotion of monopolism sector-by-sector including banking (the House of Morgan, whose offshoots firmed up the organization of railroads and manufacturing) as the means to systemic consolidation—an end to internecine competition—which was achieved in the early 20th century under Theodore Roosevelt and Woodrow Wilson (themselves the Janus-faced construct of the Battleship Navy and supposed liberal internationalism) setting the stage for the present era.
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In practice, we see the interpenetration of business and government as the integration of monopoly capitalism in its own right.
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By the late 1940s one can say that the military remained a junior partner of a synthesized ruling group or class, given the overwhelming thrust of business and its ascendant banking wing in defining American capitalism.
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American capitalism could no longer go it alone, the military increasingly supplying the muscle for continued expansion and profitability. Korea and Vietnam were important chapters in the reshaping of a capitalist polity, with numerous interventions beyond mention the underpinning for a coalescent framework of elites, all making for a structural process of shaking down to the bare essentials the capitalist and military components in search of equilibrium. For otherwise, America feared its decline and would do anything to prevent.
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Granted, it is hard to conceive of capitalism as a perpetual war machine, especially in America, which labors under the fiction of being, or if it ever was, then remaining, a democracy.
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But there it is, an arms budget dwarfing all else, military bases strategically gathered worldwide, death squads euphemistically termed Special Ops, presidential-directed drone assassinations, the list goes on—so much so that one almost forgets capitalism is centrally about business and profits, not murder and mayhem.
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an accomplice to the more successful militarization of capitalism by holding its own as an integral part in the relationship. In sum, the desideratum of business as usual, as in fleecing the consumer and jeopardizing his/her safety, destroying the environment, and best of all, removing itself from the constitutional foundations of the rule of law.
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Corporations and banks have become a law unto themselves, with all the organs of government stretching from the Executive, Congress, the Supreme Court, to myriad regulatory agencies some unbeknownst to the public, sitting as a chorus of admiring voices egging them on.
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Class-action law suits, frequently the only feasible action of the poor for seeking redress of grievances against the giant corporations, are all but prohibited, replaced in contracts by compulsory-arbitration clauses, intended in the first place to kill class actions, which compel the individual standing alone to face insurmountable odds in a process by which the corporation names the arbitrator, keeps the proceedings secret, and determines the rules of procedure.
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It is as though capitalism, in this one seemingly minor area touching primarily the normalization of everyday relationships, has gone on the offensive, not of course to re-establish its relation to the military, but specifically and directly to exercise its domination over the people.
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The now-and-future business polity is the fulfillment of the fascist dream, an authoritarian power structure of corporate consolidation supported through governmental suppression of dissent at home and an aggressively waged foreign policy to capture world markets.
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The small print of the contracts one signs, whether for car rentals or nursing homes, and thousands of transactions in between, emboldens capitalism to go its solipsistic way, to the destruction of freedom, the planet, and human dignity.
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"Since the close of World War II, America has sought an integrated policy as the militarization of capitalism. In the intervening years, this was not always easy to achieve, as, depending on circumstances, one or the other, the corporate-financial order, and the military itself, asserted itself and made strong demands on government. The result was never an intracompetitive mold because each needed and recognized the value of the other, but still there were periods of imbalance in their respective surges of governmental policy-emphasis. American capitalism had become a functional duopoly (C. Wright Mills' Power Elite was a good popular discussion of this general structure at an earlier point in our capitalist-development trajectory after the war), the Cold War itself providing a cover for the US globalization of power via market penetration, international financial and monetary architecture under US supervision, and the steady build-up of an Armaments State. There is nothing actually new here about the American historical pattern, except of course the more explicit and pronounced role to be assigned the military in the stabilization and expansion of American capitalism. The military was never at any point following the Civil War a negligible input in synthesizing the materials for an operational ruling class, but essentially, as in the late-19th century policy of the Open Door, business was sufficiently confident of its own power (the "imperialism of free trade") to carry forward the process of expansion largely on its own. Yet, the dynamism of early modern capitalism, realized in part through grinding methods of labor suppression, notably, the privatization of force, helped on by a compliant government, meant that within capitalism itself there was tremendous jockeying for power requiring the imposition of Order if major railroads and industrial firms were to enjoy their secure monopoly status."
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The Daily Bell - Richard Ebeling on Higher Interest Rates, Collectivism and the Coming ... - 0 views
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The "larger dysfunction," as you express it, arises out of a number of factors. The primary one, in my view, is a philosophical and psychological schizophrenia among the American people.
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While many on "the left" ridicule the idea, there is a strong case for the idea of "American exceptionalism," meaning that the United States stands out as something unique, different and special among the nations of the world.
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the American Founding Fathers constructed a political system in the United States based on a concept on which no other country was consciously founded:
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But the American Revolution and the US Constitution hailed a different conception of man, society and government.
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n the rest of the world, and for all of human history, the presumption has been that the individual was a slave or a subject to a higher authority. It might be the tribal chief; or the "divinely ordained" monarch who presumed to rule over and control people in the name of God; or, especially after the French Revolution and the rise of modern socialism, "the nation" or "the people" who laid claim to the life and work of the individual.
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That is, as long as the individual did not violate the equal rights of others to their life, liberty and property, each person was free to shape and guide his own future, and give meaning and value to his own life as he considered best in the pursuit of that happiness that was considered the purpose and goal of each man during his sojourn on this Earth.
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Governments were to secure and protect each individual's rights, which he possessed by "the nature of things."
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The real and fundamental notion of "self-government" referred to the right of each individual to rule over himself.
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Each individual, by his nature and his reason, had a right to his life, his liberty and his honestly acquired property.
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during the first 150 years of America's history there was virtually no Welfare State and relatively few government regulations, controls and restrictions on the choices and actions of the free citizen.
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But for more than a century, now, an opposing conception of man, society and government has increasingly gained a hold over the ideas and attitudes of people in the US.
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The individual was expected to see himself as belonging to something "greater" than himself. He was to sacrifice for "great national causes."
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He was told that if life had not provided all that he desired or hoped for, it was because others had "exploited" him in some economic or social manner, and that government would redress the "injustice" through redistribution of wealth or regulation of the marketplace.
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If he had had financial and material success, the individual should feel guilty and embarrassed by it, because, surely, if some had noticeably more, it could only be because others had been forced to live with noticeably less.
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left on its own, free competition tends to evolve into harmful monopolies and oligopolies, with the wealthy "few" benefiting at the expense of the "many."
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They are the crises of the Interventionist-Welfare State: the attempt to impose reactionary collectivist policies of political paternalism and redistributive plunder on a society still possessing parts of its original individualist and rights-based roots.
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Unregulated capitalism leads to "unearned" and "excessive" profits; unbridled markets generate the business cycle and the hardships of recessions and depressions;
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These two conflicting conceptions of man, society and government have been and are at war here in the United States.
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And if it cannot be gotten and guaranteed through the redistributive mechanisms of the European Union and the euro, well, maybe we should return power to our own nation-states to provide the jobs, the social "safety nets" and the financial means to pay for it through, once again, printing our own national paper currencies.
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This is the political-philosophical bankruptcy of the West and the dead ends of the collectivist promises of the last 100 years.
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Ludwig von Mises's book, Socialism: An Economic and Sociological Analysis, originally published in 1922, demonstrated how and why a socialist, centrally planned system was inherently unworkable.
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The nationalization of productive property, the abolition of markets and the prohibition of all competitive exchange among the members of society would prevent the emergence and operation of a price system, without which it is impossible to know people's demands for desired goods and the relative value they place on them.
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It also prevents the emergence of prices for the factors of production (land, labor, capital) and makes it impossible to know their opportunity costs – the value of those factors of production in alternative competing uses among entrepreneurs desiring to employ them.
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Without such a price system the central planners are flying blind, unable to rationally know or decide how best to utilize labor, capital and resources in productively efficient ways to make the goods and services most highly valued by the consuming public.
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And, therefore, there is no guarantee that the amount of investments undertaken and their time horizons are compatible with the available resources not also being demanded and used for more immediate consumer goods production in the society.
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Thus, the interventionist state leads to waste, inefficiency and misuses of resources that lower the standards of living that we all, otherwise, could have enjoyed.
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We cannot be sure what the amount of real savings may be in the society to support real and sustainable investment and capital formation.
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Government intervention prevents prices from "telling the truth" about the real supply and demand conditions thus leading to imbalances and distortions in the market.
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We cannot know what the "real cost" of borrowing should be, since interest rates are not determined by actual, private sector savings and investment decisions.
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Government production regulations, controls, restrictions and prohibitions prevent entrepreneurs from using their knowledge, ability and capital in ways that most effectively produce the goods consumers actually want and at the most cost-competitive prices possible.
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This is why countries around the world periodically experience booms and busts, inflations and recessions − not because of some inherent instabilities or "irrationalities" in financial markets, but because of monetary central planning through central banking that does not allow market-based financial intermediation to develop and work as it could and would in a real free-market setting.
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But in the United States and especially in Europe, government "austerity" means merely temporarily reducing the rate of increase in government spending, slowing down the rate at which new debt is accumulating and significantly raising taxes in an attempt to close the deficit gap.
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The fundamental problem is that over the decades, the size and scope of governments in the Western world have been growing far more than the rates at which their economies have been expanding, so that the "slice" of the national economic "pie" eaten by government has been growing larger and larger, even when the "pie" in absolute terms is bigger than it was, say, 30 or 40 years ago.
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European governments, in general, take the view that "austerity" means squeezing the private sector more through taxes and other revenue sources to avoid any noticeable and significant cuts in what government does and spends.
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So there is "austerity" for the private sector and a mad rush for financial "safety nets" for the government and those who live off the State.
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In reality, of course, it is the burdens of government regulation, taxation and impediments to more flexible labor and related markets that have generated the high unemployment rates and the retarded recovery from the recession.
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Instead, the "common market" ideal has been transformed into the goal of a European Union "Super-State" to which the individual countries and their citizens would be subservient and obedient.
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Keynesian policies offer people and politicians what they want to hear. Claiming that any sluggish business or lost jobs are due to a lack of "aggregate demand," Keynes argued that full employment and profitable business could only be reestablished and maintained through "activist" government monetary and fiscal policy – print money and run budget deficits.
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What Britain and Europe should have as its goal is the ideal of the classical liberal free traders of the 19th century – non-intervention by governments in people's lives, at home and abroad. That is, a de-politicization of society, so people may freely work, trade and travel as they peacefully wish, with government merely the protector of people's individual rights.
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Take the benefits away and tell people they are free to come and work to support themselves and their families. Restore more flexibility and competitiveness to labor markets and reduce taxes and business regulations.
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Then those who come to Britain's shores will be those wanting freedom and opportunity without being a burden upon others.
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What was needed was a change in ideas from the statist mentality to one of individual freedom and unhampered free markets.
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In an epoch of collectivist ideas, don't be surprised if governments regulate, control, intervene and redistribute wealth.
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The tentacle of regulations, restrictions and politically-correct social controls are spreading out in every direction from Brussels and its European-wide manipulating and mismanaging bureaucracy.
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In the name of assuring "national prosperity," politicians could spend money to buy the votes that get them elected and reelected to government offices.
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And every special interest group could make the case that government-spending programs that benefitted them were all reasonable and necessary to assure a fully employed and growing economy.
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Furthermore, the Keynesian rationale for government deficit spending enabled politicians to seem to be able to offer something for nothing. They could offer, say, $100 of government spending to voters and special interest groups but the tax burden imposed in the present might only be $75, since the remainder of the money to pay for that government spending was borrowed. And that borrowed money would not have to be repaid until some indefinite time in the future by unspecific taxpayers when that "tomorrow" finally arrived.
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Mises argued that there was nothing inherent in the market economy to bring about these swings of economic booms followed by periods of depression and unemployment.
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If markets got out of balance with the necessity of an eventual correction in the economy to, once again, set things right, the source of this instability was government monetary policy.
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Central banks too often followed a policy of trying to create "good times" in the economy by expanding the money supply through the banking system.
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With new, excess funds created by the central bank available for lending, banks lower rates of interest to attract borrowers.
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But this throws savings and investment out of balance, since the rate of interest no longer serves as a reliable indicator and signal concerning the availability of real savings in the economy in relation to those wanting to borrow funds for various investment purposes.
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The economic crisis comes when it is discovered that all the claims on resources, capital and labor for all the attempted consumption and investment activities in the economy are greater than the actual and available amounts of such scarce resources.
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The recession period, in Mises's view, is the necessary "correction" period when in the post-boom era, people must adapt and adjust to the newly discovered "real" supply and demand conditions in the market.
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Any interference with the "rebalancing" of the economy by government raising taxes, imposing more regulations, or new artificial government "stimulus" activities merely makes it more difficult and time-consuming for people in the private sector to get the economy back on an even keel.
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Friedrich A. Hayek, once observed, unemployment is not "caused" by stopping an inflation, but rather inflation induces the artificial employments that cannot be sustained and which inevitably disappear once the inflation is reined in.
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Awash in cash, banks extended loans to virtually anyone, with no serious and usual concern about the borrower's credit-worthiness.
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This was most notably true in the housing market, where government agencies like Fannie May and Freddie Mac were pressuring banks to make mortgage loans by promising a guarantee that they would make good on any bad home loans.
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Since 2008-2009, the Federal Reserve has, again, turned on the monetary spigot, increasing its own portfolio by almost $3 trillion, by buying US Treasuries, US mortgages and other assets.
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In some areas there has been, most clearly in the stock market and the bond market, But the reason why all that newly created money has not brought about a higher price inflation is due to the fact that a large part of all newly created money is sitting as unlent reserves in banks.
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This is because the Federal Reserve has been paying banks a rate of interest slightly above the market interest rates to induce banks not to lend.
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(a) general "regime uncertainty," that is, no one knows what government policy will be tomorrow; will ObamaCare be fully implemented after January 2014?;
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(c) what will the regulatory environment be like for the next three years – in 2012, the government implemented around 80,000 pages of regulations as printed in the Federal Registry;
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(d) how will the deficit and debt problems play out between Congress and the White House and will it threaten the general financial situation in the country; an
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is still a controlled and commanded society, with a government that works hard to try to determine what people read, see and think.
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All these building projects have been brought into existence by a government that not only controls the money supply and manipulates interest rates but also heavy-handedly tells banks whom to specifically loan to and for what investment activities.
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Central planning is alive and well in China, with the motives being both power and profits for those inside and outside the Communist Party having the most influence and connections in "high" places.
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In my opinion, China is heading for a great economic crisis, resulting from a highly imbalanced and distorted economic system still guided far more by politics than sound market decision-making.
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global financial markets in any foreseeable future. It is a money that still primarily exists to serve the political purposes of those who sit in the "inner circles" of power in Beijing.
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One hundred years ago, in 1913, how many could have predicted that a year later a European-wide war would break out that would lead to the destruction of great European empires and set the stage for the rise of totalitarian collectivism that resulted in an even worse global war two decades later?
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Thus, whether, at the end of the day, freedom triumphs and the future is one of liberty and prosperity is partly on each one of us.
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"Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore, everyone, in his own interest, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us . . . Whether society shall continue to evolve or where it shall decay lies . . . in the hands of man."
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In my view, the idea of a "soft landing" is an illusion based on the idea held by central bankers, themselves, that they have the wisdom and ability to know how to "micro-manage" the all the changes and adjustments resulting from their own manipulations of the monetary aggregates. They do not have this wisdom and ability. So hold on for what is most likely to be another rocky road.
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It was Mises's clear vision that once society has broken the relationship between value and payment, sooner or later people would not know the price of anything.
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Incredible. A simple explanation that explains everything. Rchard Ebeling's "Unified Theory of Everything" is something every American can understand. If only they would take a break from "Dancing with the Stars" and pay attention to the future of their country and the world. It's a future where either "individual freedom", as defined by our Constitution and Declaration of Independence, will win out; or, the forces of fascist socialism / marxism will continue to roll and rule. Incredible read!!!!
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Iceland looks at ending boom and bust with radical money plan - Telegraph - 0 views
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Iceland's government is considering a revolutionary monetary proposal - removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for Iceland". "The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy," Prime Minister Sigmundur David Gunnlaugsson said. The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.
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He argued the central bank was unable to contain the credit boom, allowing inflation to rise and sparking exaggerated risk-taking and speculation, the threat of bank collapse and costly state interventions. In Iceland, as in other modern market economies, the central bank controls the creation of banknotes and coins but not the creation of all money, which occurs as soon as a commercial bank offers a line of credit. The central bank can only try to influence the money supply with its monetary policy tools. Under the so-called Sovereign Money proposal, the country's central bank would become the only creator of money. "Crucially, the power to create money is kept separate from the power to decide how that new money is used," Mr Sigurjonsson wrote in the proposal.
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Banks would continue to manage accounts and payments, and would serve as intermediaries between savers and lenders. Mr Sigurjonsson, a businessman and economist, was one of the masterminds behind Iceland's household debt relief programme launched in May 2014 and aimed at helping the many Icelanders whose finances were strangled by inflation-indexed mortgages signed before the 2008 financial crisis. The small Nordic country was hit hard as the crash of US investment bank Lehman Brothers caused the collapse of its three largest banks. Iceland then became the first western European nation in 25 years to appeal to the International Monetary Fund to save its battered economy. Its GDP fell by 5.1pc in 2009 and 3.1pc in 2010 before it started rising again.
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shared by Paul Merrell on 02 Feb 15
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| The Archived Columns of Conn M. Hallinan - 0 views
dispatchesfromtheedgeblog.wordpress.com
economies EU Greece anti-austerity oligarchs banksters privatization
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Almost before the votes were counted in the recent Greek elections, battle lines were being drawn all over Europe. While Alexis Tsipras, the newly elected Prime Minister from Greece’s victorious Syriza Party, was telling voters, “Greece is leaving behind catastrophic austerity, fear and autocratic government,” Jens Weidmann, president of the German Bundesbank, was warning the new government not to “make promises it cannot keep and the country cannot afford.” On Feb. 12 those two points of view will collide when European Union (EU) heads of state gather in Brussels. Whether the storm blowing out of Southern Europe proves an irresistible force, or the European Council an immovable object, is not clear, but whatever the outcome, the continent is not likely to be the same after that meeting. The Jan 25 victory of Greece’s leftwing Syriza Party was, on one hand, a beacon for indebted countries like Spain, Portugal, Italy and Ireland. On the other, it is a gauntlet for Germany, the Netherlands, Finland, and the “troika”—the European Central bank, the European Commission, and the International Monetary Fund (IMF)—the designers and enforcers of loans and austerity policies that have inflicted a catastrophic economic and social crisis on tens of millions of Europeans.
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The troika’s policies were billed as “bailouts” for countries mired in debt—one largely caused by the 2008 financial speculation bubble over which indebted countries had little control—and as a way to restart economic growth. In return for the loans, the EU and the troika demanded massive cutbacks in social services, huge layoffs, privatization of pubic resources, and higher taxes. However, the “bailouts” did not go toward stimulating economies, but rather to repay creditors, mostly large European banks. Out of the $266 billion loaned to Greece, 89 percent went to investors. After five years under the troika formula, Greece was the most indebted country in Europe. Gross national product dropped 26 percent, unemployment topped 27 percent (and over 50 percent for young people), and one-third of the population lost their health care coverage. Given a chance to finally vote on the austerity strategy, Greeks overwhelmingly rejected the parties that went along with the troika and elected Syriza.
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Gerry Adams of Sinn Fein—now the third largest party in the Irish Republic—hailed the vote as opening “up the real prospect of democratic change, not just for the people of Greece, but for citizens right across the EU.” Unemployment in Ireland is 10.7 percent, and tens of thousands of jobless young people have been forced to emigrate. The German Social Democrats are generally supportive of the troika, but the Green Party hailed the Syriza victory and Die Linke Party members marched with signs reading, “We start with Greece. We change Europe.” Italian Prime Minister Matteo Renzi—who has his own issues with the EU’s rigid approach to debt—hailed the Greek elections, and top aide Sandro Gozi said that Rome was ready to work with Syriza. The jobless rate in Italy is 13.4 percent, but 40 percent among youth.
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In short, there are a number of currents in the EU and a growing recognition even among supporters of the troika that prevailing approach to debt is not sustainable. One should have no illusions that Syriza will easily sweep the policies of austerity aside, but there is a palpable feeling on the continent that a tide is turning. It did not start with the Greek elections, but with last May’s European Parliament elections, where anti-austerity parties made solid gains. While some right-wing parties that opportunistically donned a populist mantle also increased their vote, they could not do so where they were challenged by left anti-austerity parties. For instance, the right did well in Denmark, France, and Britain, but largely because there were no anti-austerity voices on the left in those races. Elsewhere the left generally defeated their rightist opponents. If Syriza is to survive, however, it must deliver, and that will be a tall order given the power of its opponents.
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As convoluted as Greek politics are, the main obstacle for Syriza will come from other EU members and the Troika. Finnish Prime Minister Alex Stubb made it clear “that we would say a resounding ‘no’ to forgive loans.” Merkel’s chief of staff, Peter Altmaier, says, “We have pursued a policy which works in many European countries, and we will stick to in the future.” IMF head Christine Lagarde chimed in that “there are rules that must be met in the euro zone,” and that “we cannot make special exceptions for specific countries.” But Tsipras will, to paraphrase the poet Swinburne, not go entirely naked into Brussels, but “trailing clouds of glory.” Besides the solid support in Greece, a number of other countries and movements will be in the Belgian capital as well. Syriza is closely aligned in Spain with Podemos, now polling ahead of the ruling conservative People’s Party. “2015 will be the year of change in Spain and Europe,” tweeted Podemos leader Pablo Iglesias in the aftermath of the election, “let’s go Alexis, let’s go!” Unemployment in Spain is 24 percent, and over 50 percent for young people.
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The French Communist Party hailed the Greek elections as “Good news for the French people,” and Jean-Luc Melenchon of the Parti de Gauche called for a left-wing alliance similar to Syriza. French President Francois Hollande made a careful statement about “growth and stability,” but the Socialist leader is trying to quell a revolt by the left flank of his own party over austerity, and Paris is closer to Rome than it is to Berlin on the debt issue. While the conservative government of Portugal was largely silent, Left Bloc Member of Parliament Marisa Matias told a rally, “A victory for Syriza is a victory for all of Europe.”
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At home, the Party will have to take on Greece’s wealthy tax-dodging oligarchs if it hopes to extend democracy and start refilling the coffers drained by the troika’s policies. It will also need to get a short-term cash infusion to meet its immediate obligations, but without giving in to yet more austerity demands by the troika. For all the talk about Syriza being “extreme”—it stands for Coalition of the Radical Left— its program, as Greek journalist Kia Mistilis points, is “classic ‘70s social democracy”: an enhanced safety net, debt moratorium, minimum wage raise, and economic stimulus. Syriza is pushing for a European conference modeled on the 1953 London Debt Agreement that pulled Germany out of debt after World War II and launched the “wirtschaftswunder,”or economic miracle that created modern Germany. The Agreement waved more than 50 percent of Germany’s debt, stretched out payments over 50 years, and made repayment of loans dependent on the country running a trade surplus.
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The centerpiece of Syriza’s Thessaloniki program is its “four pillars of national reconstruction,” which include “confronting the humanitarian crisis,” “restarting the economy and promoting tax justice,” “regaining employment,” and “transforming the political system to deepen democracy.” Each of the “pillars” is spelled out in detail, including costs, income and savings, and, while it is certainly a major break with the EU’s current model, it is hardly the October Revolution. The troika’s austerity model has been quite efficient at smashing trade unions, selling off public resources at fire sale prices, lowering wages and starving social services. As a statement by the International Union of Food Workers argues, “Austerity is not the produce of a deficient grasp of macroeconomics or a failure of ‘social dialogue,’ it is a conscious blueprint for expanding corporate power.”
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Under an austerity regime, the elites do quite well, and they are not likely to yield without a fight. But Syriza is poised to give them one, and “the little party that could” is hardly alone. Plus a number of important elections are looming in Estonia, Finland, and Spain that will give anti-austerity forces more opportunities to challenge the policies of Merkel and the troika. The spectre haunting Europe may not be the one that Karl Marx envisioned, but it is putting a scare into the halls of the rich and powerful.
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I'm struck again by the poltical brilliance of Russia's decision to drop the South Stream Pipeline in favor of a new pipeline through Turkey to the border with Greece. Russia has gained an ally in Greece in terms of fighting economic sanctions on Russia and reinstating trade between Russia and the EU. Greece has veto power in the EU on any new sanctions or renewal of existing sanctions, at least most of which have sunset provisions. Russia also made allies of two NATO members, Greece and Turkey. And Greece is positioned by its threat of refusal to repay debt to the troika banksters to break the absolute hold the banksters have on monetary policy in the Eurozone. Russia magnifies that threat by saying that it is open to a proposal to bail out the Greek government. Not yet known is whether a condition would be abandoning the Euro as Greece's own currency. Greece might conceivably reinstate the drachma with its value pegged to a basket of foreign currencies, including the ruble and yuan. In other words, Greece leaving the EU and NATO and joining BRICS is conceivable.
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Americans on Wrong Side of Income Gap Run Out of Means to Cope - 0 views
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“We’ve exhausted our coping mechanisms,” said Alan Krueger, an economics professor at Princeton University in New Jersey and former chairman of President Barack Obama’s Council of Economic Advisers. “They weren’t sustainable.” The result has been a downsizing of expectations. By almost two to one — 64 percent to 33 percent — Americans say the U.S. no longer offers everyone an equal chance to get ahead, according to the latest Bloomberg National Poll. The lack of faith is especially pronounced among those making less than $50,000 a year, with close to three-quarters in the Dec. 6-9 survey saying the economy is unfair.
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The diminished expectations have implications for the economy. Workers are clinging to their jobs as prospects fade for higher-paying employment. Households are socking away more money and charging less on credit cards. And young adults are living with their parents longer rather than venturing out on their own. In the meantime, record-high stock prices are enriching wealthier Americans, exacerbating polarization and bringing income inequality to the political forefront. Even independent government agencies like the Securities and Exchange Commission and the Federal Reserve have been dragged into the debate.
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“The basic bargain at the heart of our economy has frayed,” Obama said in a Dec. 4 speech in Washington. “This is the defining challenge of our time: Making sure our economy works for every working American.” Democratic lawmakers also intend to press next year for a higher minimum wage to tackle the yawning gap between rich and poor, Durbin said. Republicans aren’t ceding the issue. “The American dream is certainly more in doubt than in decades,” House Speaker John Boehner of Ohio said in response to Obama’s speech. “But after more than five years in office, the president has no one to blame but himself.”
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Income inequality has been rising more or less steadily since the mid-1970s. The Gini coefficient, a broad-based measure of inequality, stood at a record high last year, according to Census Bureau data dating back 46 years.
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Women who became unemployed during the recession and its aftermath have been slower to find new positions. Among women losing jobs they’d held for at least three years between January 2009 and the end of 2011, 50 percent were re-employed by the start of 2012, while the share for men was 61 percent, according to a Bureau of Labor Statistics report released in February. Households turned to stepped-up borrowing to help make ends meet, until that avenue was shut off by the collapse of house prices. About 10.8 million homeowners still owed more money on their mortgages than their properties were worth in the third quarter, according to Seattle-based Zillow Inc. The fallout has made many Americans less inclined to take risks. The quits rate — the proportion of Americans in the workforce who voluntarily left their jobs — stood at 1.7 percent in October. While that’s up from 1.5 percent a year earlier, it’s below the 2.2 percent average for 2006, the year house prices started falling, government data show.
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“The middle has really collapsed,” said Lawrence Katz, an economics professor at Harvard University in Cambridge, Massachusetts, and a former chief economist at the Labor Department in Washington. Even those with college degrees are having trouble keeping up, he said. While they earn more than those with less schooling, they’ve seen no real wage growth in recent years. The median income of men 25 years of age and older with a bachelor’s degree was $56,656 last year, 10 percent less than in 2007 after taking account of inflation, according to Census data.
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It’s the richest of the rich who are reaping the most benefit as an increasingly interconnected and technologically sophisticated world puts a premium on those perceived to have the highest skills — a phenomenon dubbed “winner take all” by Cornell University Professor Robert Frank. Government policies also play a role. The Treasury Department, for instance, taxes capital gains racked up by the wealthy on the sale of shares, bonds and other assets at about half the rate of ordinary income. The top 1 percent captured 95 percent of the gains in incomes in the first three years of the recovery, based on analysis of tax returns by Saez. Those less well-off, meanwhile, are running out of ways to cope. The percentage of working-age women who are in the labor force steadily climbed from a post-World War II low of 32 percent to a peak of 60.3 percent in April 2000, fueling a jump in dual-income households and helping Americans deal with slow wage growth for a while. Since the recession ended, the workforce participation rate for women has been in decline, echoing a longer-running trend among men. November data showed 57 percent of women in the labor force and 69.4 percent of men.
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The disparity has widened since the recovery began in mid-2009. The richest 10 percent of Americans earned a larger share of income last year than at any time since 1917, according to Emmanuel Saez, an economist at the University of California at Berkeley. Those in the top one-tenth of income distribution made at least $146,000 in 2012, almost 12 times what those in the bottom tenth made, Census Bureau data show. Economists have posited a variety of explanations for the growing differences in incomes. Manufacturing companies moved once high-paying jobs abroad, to China and elsewhere. Technological advances led to the loss of clerical and office work, especially relating to routine tasks. The decline of unions — 11.3 percent of workers were represented in 2012 compared with 20.1 percent in 1983 — has advantaged bosses at the expense of their employees.
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Millennials — adults aged 18 to 32 — are still slow to set out on their own more than four years after the recession ended, according to an Oct. 18 report by the Pew Research Center in Washington. Just over one in three head their own households, close to a 38-year low set in 2010. Obama has proposed a raft of policies to attack the widening wage gap — from simplifying the tax code and increasing exports to enhancing worker training and boosting pre-kindergarten education. Yet in a divided Washington he hasn’t made much progress pushing them through. The president’s renewed focus on income inequality has more to do with politics than policy, said Douglas Holtz-Eakin, president of the American Action Forum, a self-described center- right institute in Washington.
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“It’s great politics to demagogue income distribution and complain about the rich getting ahead and the poor falling behind,” said Holtz-Eakin, a former Congressional Budget Office director. “The substance of what he’s actually done doesn’t match the enormity of the problem as he’s portrayed it.”
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The wage-gap debate has reverberated to other parts of Washington, as the SEC published a rule Sept. 18 that would compel public companies to reveal pay ratios between chief executives and their employees. While businesses have decried the requirement as overreach, some investors welcome the data as a way to help assess a company’s health.
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Across companies in the S&P 500, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, according to data compiled by Bloomberg in April. The Fed also has been caught up in the debate over growing income disparities. Lawmakers from both parties have questioned whether its bond-buying policy, called quantitative easing, has benefited the rich at the expense of those less well-off by boosting prices of stocks and other assets.
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The S&P 500 stock index has risen 29 percent in 2013. The richest third of U.S. households account for 89 percent of all equities ownership, according to the Center for Retirement Research at Boston College.
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Janet Yellen, nominated to take over as Fed chairman next year, defended the central bank’s actions at a Senate Banking Committee hearing on Nov. 14. “The policies we’ve undertaken have been meant to generate a robust recovery,” Yellen told the committee. The growing calls for action to reduce income inequality have translated into a national push for a higher minimum wage. Fast-food workers in 100 cities took to the streets Dec. 5 to demand a $15 hourly salary.
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Monetary policy of, by, and for banksters continues in the U.S. One irony is that banksters press for transition to an all digital currency so that savers can be penalized, a blatant "trickle-up"economic policy, whilst also pressing for more bank bailouts, wielding the thoroughly-discredited "trickle down" economic theory. But "trickle down" theory, in the context of bank bailouts, has not successfully trickled down and the only beneficiaries have been the few Americans who can still invest in the stock market, paying the highest dividends to the wealthiest among us. Has their ever been a time when the stock market's behavior has been so divorced from the well-being of the middle and lower economic classes? I doubt there has been at least in the last 50 years. Where would we be if the bank bail-out trillions had instead been mailed as checks to the middle and lower economic classes? "Trickle up" works and that is what built the American economy to its peak in inflation-adjusted dollars -- an affluent middle class. But do not expect leadership from Washington, D.C. in correcting income inquequality; only political rhetoric and a fight over extension of unemployment benefits, now lapsed. "According to the World Bank, the GINI coefficient "measures the extent to which the distribution of income or consumption expenditure among individuals households within an economy deviates from a perfectly equal distribution." Therefore it is used as an indication of income inequality within countries. ... In the late 2000s, Chile had the highest GINI coefficient, after taxes and transfers, among OECD member countries. The United States, Turkey and Mexico came right before it. At the other end of the scale, Slovenia, Denmark and Norway led the ranking with the lowest levels of income inequality." http://www.gfmag.com/tools/global-database/economic-data/11944-wealth-distribution-income-inequality.html#ixzz2pGpv4xGZ Higher minimum wages? How about instead abolishing the Feder
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Iceland Stuns Banks: Plans To Take Back The Power To Create Money | Global Research - C... - 0 views
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Who knew that the revolution would start with those radical Icelanders? It does, though. One Frosti Sigurjonsson, a lawmaker from the ruling Progress Party, issued a report today that suggests taking the power to create money away from commercial banks, and hand it to the central bank and, ultimately, Parliament. Can’t see commercial banks in the western world be too happy with this. They must be contemplating wiping the island nation off the map. If accepted in the Iceland parliament , the plan would change the game in a very radical way. It would be successful too, because there is no bigger scourge on our economies than commercial banks creating money and then securitizing and selling off the loans they just created the money (credit) with. Everyone, with the possible exception of Paul Krugman, understands why this is a very sound idea. Agence France Presse reports: Iceland Looks At Ending Boom And Bust With Radical Money Plan Iceland’s government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A better monetary system for Iceland”.
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“The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy,” Prime Minister Sigmundur David Gunnlaugsson said. The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.
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According to a study by four central bankers, the country has had “over 20 instances of financial crises of different types” since 1875, with “six serious multiple financial crisis episodes occurring every 15 years on average”. Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle. He argued the central bank was unable to contain the credit boom, allowing inflation to rise and sparking exaggerated risk-taking and speculation, the threat of bank collapse and costly state interventions. In Iceland, as in other modern market economies, the central bank controls the creation of banknotes and coins but not the creation of all money, which occurs as soon as a commercial bank offers a line of credit. The central bank can only try to influence the money supply with its monetary policy tools.
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Under the so-called Sovereign Money proposal, the country’s central bank would become the only creator of money. “Crucially, the power to create money is kept separate from the power to decide how that new money is used,” Mr Sigurjonsson wrote in the proposal. “As with the state budget, the parliament will debate the government’s proposal for allocation of new money,” he wrote. Banks would continue to manage accounts and payments, and would serve as intermediaries between savers and lenders. Mr Sigurjonsson, a businessman and economist, was one of the masterminds behind Iceland’s household debt relief programme launched in May 2014 and aimed at helping the many Icelanders whose finances were strangled by inflation-indexed mortgages signed before the 2008 financial crisis.
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In closely related news, a Pentagon spokesman announced that soldiers of the U.S. Army's 101st Airborne Brigade and 22nd and 26th Marine Expeditionary Units were in the "mopping up stage" of routing terrorists who had captured the city of Reykjavík, Iceland in an April 7, 2015 surpise attack. According to knowledgeable sources in the White House, the terrorist invasion was reported by an unidentified official of the Federal Reserve Bank of New York, who had received urgent telephone calls from counterparts in Iceland's central bank. "We're still assessing the situation, but it looks like all members of the Icelandic government were brutally executed by the terrorists just before they retreated," Rear Adm. John Kirby said. Asked for the name of the terrorist organization that carried out the attack, Adm. Kirby said that the name had not yet been declassified, but said that he hoped to be able to announce that information soon.
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Amend the Federal Reserve: We Need a Central Bank that Serves Main Street | Global Rese... - 0 views
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December 23rd marks the 100th anniversary of the Federal Reserve. Dissatisfaction with its track record has prompted calls to audit the Fed and end the Fed. At the least, Congress needs to amend the Fed, modifying the Federal Reserve Act to give the central bank the tools necessary to carry out its mandates. The Federal Reserve is the only central bank with a dual mandate. It is charged not only with maintaining low, stable inflation but with promoting maximum sustainable employment. Yet unemployment remains stubbornly high, despite four years of radical tinkering with interest rates and quantitative easing (creating money on the Fed’s books). After pushing interest rates as low as they can go, the Fed has admitted that it has run out of tools. At an IMF conference on November 8, 2013, former Treasury Secretary Larry Summers suggested that since near-zero interest rates were not adequately promoting people to borrow and spend, it might now be necessary to set interest at below zero. This idea was lauded and expanded upon by other ivory-tower inside-the-box thinkers, including Paul Krugman. Negative interest would mean that banks would charge the depositor for holding his deposits rather than paying interest on them. Runs on the banks would no doubt follow, but the pundits have a solution for that: move to a cashless society, in which all money would be electronic. “This would make it impossible to hoard cash outside the bank,” wrote Danny Vinik in Business Insider, “allowing the Fed to cut interest rates to below zero, spurring people to spend more.”
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Business Week quotes Douglas Holtz-Eakin, a former director of the Congressional Budget Office: “We’ve had four years of extraordinarily loose monetary policy without satisfactory results, and the only thing they come up with is we need more?” Paul Craig Roberts, former Assistant Secretary of the Treasury, calls the idea “harebrained.” He is equally skeptical of quantitative easing, the Fed’s other tool for stimulating the economy. Roberts points to Andrew Huszar’s explosive November 11th Wall Street Journal article titled “Confessions of a Quantitative Easer,” in which Huszar says that QE was always intended to serve Wall Street, not Main Street. Huszar’s assignment at the Fed was to manage the purchase of $1.25 trillion in mortgages with dollars created on a computer screen. He says he resigned when he realized that the real purpose of the policy was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.”
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Bernanke created debt-free money and bought government debt with it, returning the interest to the Treasury. The result was interest-free credit, a good deal for the government. But the problem, says Lounsbury, is that: The helicopters dropped all the money into a hole in the ground (excess reserve accounts) and very little made its way into the economy. It was essentially a rearrangement of the balance sheets of the creditor nation with little impact on the debtor nation. . . . The fatal flaw of QE is that it delivers money to the accounts of the creditors and does nothing for the accounts of the debtors. Bad debts remain unserviced and the debt crisis continues.
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Bernanke delivered the money to the creditors because that was all the Federal Reserve Act allowed. If the Fed is to fulfill its mandate, it clearly needs more tools; and that means amending the Act. Harvard professor Ken Rogoff, who spoke at the November 2013 IMF conference before Larry Summers, suggested several possibilities; and one was to broaden access to the central bank, allowing anyone to have an ATM at the Fed. Rajiv Sethi, Barnard/Columbia Professor of Economics, expanded on this idea in a blog titled “The Payments System and Monetary Transmission.” He suggested making the Federal Reserve the repository for all deposit banking. This would make deposit insurance unnecessary; it would eliminate the need to impose higher capital requirements; and it would allow the Fed to implement monetary policy by targeting debtor rather than creditor balance sheets. Instead of returning its profits to the Treasury, the Fed could do a helicopter drop directly into consumer bank accounts, stimulating demand in the consumer economy. John Lounsbury expanded further on these ideas. He wrote in Econintersect that they would open a pathway for investment banking and depository banking to be separated from each other, analogous to that under Glass-Steagall. Banks would no longer be too big to fail, since they could fail without destroying the general payment system of the economy. Lounsbury said the central bank could operate as a true public bank and repository for all federal banking transactions, and it could operate in the mode of a postal savings system for the general populace.
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The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. It is their own private club, and its legal structure keeps all non-members out. A century after the Fed’s creation, a sober look at its history leads to the conclusion that it is a privately controlled institution whose corporate owners use it to direct our entire economy for their own ends, without democratic influence or accountability. Substantial changes are needed to transform the Fed, and these will only come with massive public pressure. Congress has the power to amend the Fed – just as it did in 1934, 1958 and 2010. For the central bank to satisfy its mandate to promote full employment and to become an institution that serves all the people, not just the 1%, the Fed needs fundamental reform.
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Stephen Moore: Obamanonics vs. Reaganomics - WSJ.com - 0 views
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In any case, what Reagan inherited was arguably a more severe financial crisis than what was dropped in Mr. Obama's lap. You don't believe it? From 1967 to 1982 stocks lost two-thirds of their value relative to inflation, according to a new report from Laffer Associates. That mass liquidation of wealth was a first-rate financial calamity. And tell me that 20% mortgage interest rates, as we saw in the 1970s, aren't indicative of a monetary-policy meltdown.
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If the Reagan deficits powered the '80s expansion, the Obama deficits—twice as large—should have the U.S. sprinting at Olympic speed.
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The two presidents have a lot in common. Both inherited an American economy in collapse. And both applied daring, expensive remedies. Mr. Reagan passed the biggest tax cut ever, combined with an agenda of deregulation, monetary restraint and spending controls. Mr. Obama, of course, has given us a $1 trillion spending stimulus. By the end of the summer of Reagan's third year in office, the economy was soaring. The GDP growth rate was 5% and racing toward 7%, even 8% growth. In 1983 and '84 output was growing so fast the biggest worry was that the economy would "overheat." In the summer of 2011 we have an economy limping along at barely 1% growth and by some indications headed toward a "double-dip" recession. By the end of Reagan's first term, it was Morning in America. Today there is gloomy talk of America in its twilight. My purpose here is not more Reagan idolatry, but to point out an incontrovertible truth: One program for recovery worked, and the other hasn't. The Reagan philosophy was to incentivize production-i.e., the "supply side" of the economy-by lowering restraints on business expansion and investment. This was done by slashing marginal income tax rates, eliminating regulatory high hurdles, and reining in inflation with a tighter monetary policy.
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shared by Paul Merrell on 30 Dec 14
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Non-Dollar Trading Is Killing the Petrodollar -- And the Foundation of U.S.-S... - 0 views
www.huffingtonpost.com/...us-saudi-policy_b_6245914.html
economic-war de-dollarization OPEC rouble yuan petrodollar MSM
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A profound transformation of the global monetary system is underway. It is being driven by a perfect storm: the need for Russia and Iran to escape Western sanctions, the low interest rate policy of the U.S. Federal Reserve to keep the American economy afloat and the increasing demand for Middle East oil by China.The implications of this transformation are immense for U.S. policy in the Middle East which, for 50 years, has been founded on a partnership with Saudi Arabia.
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A profound transformation of the global monetary system is underway. It is being driven by a perfect storm: the need for Russia and Iran to escape Western sanctions, the low interest rate policy of the U.S. Federal Reserve to keep the American economy afloat and the increasing demand for Middle East oil by China.The implications of this transformation are immense for U.S. policy in the Middle East which, for 50 years, has been founded on a partnership with Saudi Arabia.
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s economic sanctions are increasingly part of the West's arsenal, those non-Western countries that are the target -- or potential target -- of such sanctions are devising a counterpunch: non-dollar trading. It would, in effect, nullify the impact of sanctions. Whether in yuan or roubles, non-dollar trading -- which enables countries to bypass U.S. claims to legal jurisdiction -- will transform the prospects facing Iran and Syria, particularly in the field of energy reserves, and deeply affect Iraq which is situated between the two. President Putin has said (in the context of reducing Russia's economic vulnerabilities) that he views the dollar monopoly in energy trade as damaging to the Russian economy. Since hydrocarbon revenues form the most substantive part of Russia's revenues, Putin's desire to take action in this area is not surprising. In the face of sanctions, Putin is seeking to reduce its economic dependence on the West. Russia has signed two "holy grail" gas contracts with China and is in negotiations to offer the latter sophisticated weaponry. It is also in the process of finalizing significant trade deals with India and Iran. All of this will be to the benefit of Iran, too: the Russians recently announced a deal to build several new nuclear power plants there.
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Is this a trend? This is the second article I've read in MSM during the last two days that sounds the alarm that the petrodollar system is collapsing and that de-dollarization is in motion, along with noticing that U.S. fiscal and foreign policy is helping to accelerate de-dollarization. Perhaps the propagandameisters have decided that they can't squelch this information any longer because the alternative press has publicized it too widely?
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shared by Gary Edwards on 16 Oct 13
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The Daily Bell - Catherine Austin Fitts on Moral Investing and the Coming Equity 'Crash... - 1 views
www.thedailybell.com/...and-the-Coming-Equity-Crash-Up
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If you talk about legacy systems and then a breakaway civilization, the legacy systems were financed with debt and if the resources have basically been shifted out and over into "NewCo" then that's going to be an equity model. We're literally coming into what I consider to be a planetary debt for equity swap. So the question for all of us is how do we navigate the turn? When do you leave the bond market and when does the equity increase occur? We've seen North America equity markets rising and the emerging markets falling this year.
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We're seeing a tremendous divergence in the economy in North America between those portions of the economy that are adapting new technology and growing and the rest of the economy.
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The other thing I watch is what the divergence means to bond credits and to equity valuations. If you look at the indices you don't really see it. If you look inside the indices you see some enormous splits in quality and value going on.
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The slow burn is a world in which for most people income is flat or falling and expenses are steadily rising. It's a debasement scenario. And the reality is the central banks have been able to have a quite liberal monetary policy because we've been able to offset that with labor deflation. So by globalizing labor and instituting technology you have tremendous deflationary pressures, which offset very generous monetary policy.
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Starting in the '90s a decision was made to move significant amounts of capital out of existing systems in the developed world and literally trillions of dollars of financial fraud was engineered to do that. As a financial phenomenon it was quite clever and trillions have literally been moved out between the fraud and the bailouts. I think what the Fed has been doing with quantitative easing is running a shredding operation where they buy up the fraudulent mortgage securities paper and are shredding it.
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If you look at the Treasury, they've run a very tight regulatory process where that money doesn't seep out on Main Street. It's quite phenomenal the way they've managed to control it. I think one of the big questions is where is that money going to go now? It certainly looks to me like a great effort is being made to make sure it goes into equities, sort of keeps the bond market afloat and goes into equities. So I look it as a very political move.
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You can balance the budget with fiscal measures or you can balance the budget by the Fed just buying bonds and if you look at the Fed's balance sheet, I think they have a much greater capacity to buy bonds. If you look at all the money that was stolen, the breakaway civilization has plenty of money to buy bonds.
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I would say so far the Fed's policies have worked for what they're intended to do. We've moved a tremendous amount of money out of the economy. We've now basically run through the statute of limitations or done whatever management needed to cut the cords so that what I call the legacy systems can't get the money back. So the financial coup d'état has been successful and now the cover-up is pretty much over and successful.
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So now you have big decisions. You have two economies. Before this started what I call the legacy systems had $100 trillion of liabilities and $100 trillion of assets – now, I'm just pulling those numbers out of the air – and
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if you will. Now we've got the legacy systems trying to reconcile $60 trillion of assets to $100 trillion of liabilities and there is a long, drawn-out, grinding process by which some people will get 50 cents on the dollar, some people will get zero cents on the dollar, some people will get 100 cents on the dollar. It's just a very difficult, complex and tangled political scene as to how that's going to all happen. Meantime, NewCo, with $40 trillion dollars, is investing and going gangbusters. NewCo is enjoying an unprecedented boom, investing in lots of new technology and new frontiers, including space. So I think the next step is to manage the lowering of expectations in the legacy systems. That's basically what the administration and the Fed are going to be doing for the next couple years, is just gutting their way through retirees' disappointment.
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Number one, Obamacare was created to create a framework that would allow significant reduction of costs and benefits under Medicare over time and healthcare over time;
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number two, Obamacare was to provide much more control over both the medical establishment and the population at large;
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in a relatively short period of time US Medicare expenses would be several multiplicities of the GNP.
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It's clearly a system that makes no economic sense. It's not just that people are aging. If we eat food that has little nutrition and provide healthcare in which pharmaceutical companies are allowed to charge many multiples of what they charge in other countries you're going to get a financial train wreck, which is where we're headed.
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If you go around the entire financial ecosystem, they're getting hit within every line by the same pro-centralization policies that ultimately go up to the same people.
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Do I think it will snuff out the recovery? No. I think it will simply destroy the economics for a whole world of people who were productive.
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I don't think the banks are fragile. What happened was they were asked to do a job, they did it and now they've taken all the fraudulent paper and sold it to the Fed or torn it up because they had so much in federal credit arbitrage earnings during this period. So I don't think they're fragile.
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So it certainly puts us in a position where the creditworthiness of a lot of sovereign debt depends on government military might and the ability to debase a variety of players.
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If you look at it across all the different tools, from fabrication technology to new composite materials to robotics to lasers, we're reaching a critical mass of the economic costs dropping and the speed of learning accelerating.
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if you want to go really fast and prototype and build out infrastructure, the best way to do it is to make capital available to early venture and start-ups.
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we, as a society, have stopped the markets from working in the start-up and the small business space.
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There's been a lot of regulation to make it easy for Wall Street to control and make it difficult for small businesses to raise and circulate liquid equity. It's one of the areas in the economy where there really has been a very serious conspiracy.
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If you look back at the history of the US stock market you'll see two huge spikes, one in the '20s, one in the '90s, both when very profound new communication and information technology came out.
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I think we're in danger of another tech bubble. If you look at who's interested in putting money in this and getting lots of prototypes, the last time they did this was in the '90s. They made a fortune on fraud and they used it not only to serve some fundamental economic purposes but they used it to drain out the pension funds and the retail investors.
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Wall Street doesn't understand about crowdfunding, are the new alignments that are going to be created in terms of circulating knowledge and purchases and money between consumers and entrepreneurs and companies. It's going to create a whole new level of intimacy.
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I recommend the documentary, "The Naked Brand." It gives a good sense of the worth of that intimacy and the change from a mass media model to much more intimate relationships
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in North America there is almost an astonishing lack of transparency about how government money works within the jurisdiction for which we vote for political representation.
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So if you were going to have proper transparency in America you would have annual financial statements for your congressional district as well as for the whole country.
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Now, the government has refused since 1995, as required by law, to produce annual financial statements let alone for the places in which you're voting for jurisdiction. And if you're going to have any kind of citizenry accountability or legislator accountability you have to have that kind of transparency and the government has gone to enormous lengths to prevent that kind of transparency while pretending that we're very transparent. So the Internet is going to make it more and more difficult for that absence of transparency to continue or be justified, and that's good.
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The final thing is, of course, and readers know this if they're reading The Daily Bell, you're dealing in a system that includes a significant amount of corruption and fraud so you just need to be extremely careful about the quality of the people or the enterprises in which you invest or do business with and keep your assets fairly diversified in terms of both areas of the economy, or sectors, and places.
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Number two, a lot of households have assets which represent liabilities of the legacy economy, whether Social Security, Medicare or others, and one of the things you have to understand is the politics – you need to not get trapped in the politics of stringing people out for those benefits. Do the best you can but don't get lost in the treadmill of trying to get promised benefits that may or may not come true. And to the extent that you can not get financially dependent on those benefits it would be very good.
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if you have all your assets in the legacy economy and none in the growing economy you're going to suffer.
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Take a look at different predictions that gold is going to increase significantly in value. All those predictions assume that the monetary inflation is going to spill into commodities. And what you're watching instead is the G-7 have been essentially building a corral that forces the horses to run out through the stock market. That's why I call it a crash-up.
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I think one scenario we're looking at is the possibility of a crash-up scenario where that monetary increase is funneled into the equity markets. One of the most important questions there is, can you get the global population interested in investing in equities? Because the long bond market bull is coming to a close.
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We have two choices. We can basically write down the debt and go through a huge crunch period or we can have a crash-up in the equity markets.
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Right after 9/11 – and General Wesley Clark has said this and I experienced it in my tiny little community in Tennessee – we were basically given what the battle plan was going to be – the US military taking over Eurasia. First we were going to go to Afghanistan, then we were going to go to Iraq, then we were going to go to Libya, then we were going to go to Syria and then we're going to Iran. It was all laid out for us and we seem to be following that battle plan, albeit slower than predicted at that time.
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If we're going to create a global financial system and a one-world currency, you need everybody in the central banking model. You have outliers. We seem to be bringing in all the outliers. As we do, we are trying to checkmate Russia and China within Eurasia, because I think control of Eurasia is essential for maintaining global empire.
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what we're watching is an effort to bring everybody into a centrally controlled central banking model.
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Another Global Financial Crisis in the Making | Global Research - 0 views
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The Swiss-based Bank for International Settlements has stated that the current policies of central banks and monetary authorities could lead to another financial crisis, potentially bigger than that of 2008. The warning is contained in the latest annual report of the bank, sometimes referred to as the central bankers’ bank, issued yesterday. The report expressed concerns that the present low-interest rate regime, initiated to try to overcome the effects of the 2008 crash, has pushed financial markets to new highs while lowering the rate premium for many risky loans. The BIS noted that markets had been “exuberant over the past year,” particularly in advanced economies. They were “dancing mainly to the tune of central bank decisions,” with volatility reaching historical lows and “market participants … hardly pricing in any risks.”
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“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” the bank stated. The “disconnect” is most clearly expressed in the United States, where the Federal Reserve’s policy of pumping trillions of dollars into financial markets has seen stock market indexes reach record highs, while the underlying economy stagnates and reverses. Last week, it was revealed that the US economy contracted almost 3 percent in the first quarter of 2014, but stock markets climbed even further in the belief that the on-going stagnation would lead to the provision of still more ultra-cheap money. The BIS noted that despite an increase in economic growth, the world economy had not shaken off its dependence on monetary stimulus. Regardless of the euphoria in financial markets, investment remained “weak.” On a global scale, the total debt of private non-financial sectors had risen by 30 percent since the global financial crisis, pushing up the ratio of this debt to global output. Moreover, a concentration on short-term growth figures ran the risk of ignoring the long-term dangers created by present monetary policies.
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shared by Gary Edwards on 20 Oct 10
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The Weekend Interview with Robert Mundell: On Currency, Where Do We Go From Here? - WSJ... - 0 views
online.wsj.com/...4361504575552481963474898.html
gold gold-currency robert-mundell milton-friedman international-monetary-system fiat-currencies
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Mr. Mundell has a knack for boiling things down to simple terms. He grew up on a four-acre farm in Ontario, went on to earn a Ph.D. from the Massachusetts Institute of Technology, and would ultimately challenge the renowned Milton Friedman at the University of Chicago during the late 1960s. Both economists were strong proponents of free markets, but Mr. Mundell disagreed with Mr. Friedman's advocacy of floating exchange rates. The sound of a buzzer indicates lunch has arrived. Mr. Mundell suggests that we continue our discussion at the table and politely invites his assistant Ivy Ng, who has been taking careful notes, to join us. "We've been talking about the possibility of global monetary reform," I continue, deciding to switch gears. "Let's talk a bit about domestic monetary policy. What do you think the Federal Reserve should be doing right now?" It's a seamless transition for Mr. Mundell. "The Fed is making a big mistake by ignoring movements in the price of the dollar, movements in the price of gold, in favor of inflation-targeting, which is a bad idea. The Fed has always had the wrong view about the dollar exchange rate; they think the exchange rate doesn't matter. They don't say that publicly, but that is their view." "Well," I counter, not particularly savoring the role of devil's advocate, "I suppose Fed officials would argue that their mandate is to try to achieve stable prices and maximum levels of employment." Mr. Mundell looks annoyed. "Well, it's stupid. It's just stupid." He tries to walk it back somewhat. "I don't mean Fed officials are stupid; it's just this idea they have that exchange-rate effects will eventually be taken into account through the inflation-targeting approach. In the long run, it's not incorrect-it takes about a year. But why ignore the instant barometer that something is happening? The exchange rate is the immediate reaction to pending inflation. Look what happened a couple weeks ago: The Fed started to say, we've got to pr
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US Federal Reserve to end quantitative easing programme | Business | The Guardian - 0 views
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The US Federal Reserve has called time on its $4.5tn bond-buying programme, halting a radical monetary policy introduced nearly six years ago to steer the world’s largest economy through the financial crisis. The central bank, led by Janet Yellen, said the final tranche of bonds under its quantitative easing programme would be bought this month, but it committed to keeping record low interest rates for “a considerable time”. Announcing the decision on QE, made at its October policy meeting, the Fed said: “The committee judges that there has been a substantial improvement in the outlook for the labour market since the inception of its current asset purchase programme. Moreover, the committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the committee decided to conclude its asset purchase programme this month.”
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It brings to an end a programme which marked a departure for US monetary policy when it was launched in December 2008, hugely swelling the Fed’s balance sheet in an effort to prop up a battered financial system. The Fed began to slow its purchase of Treasury bonds and mortgage-backed securities in January, but until now it had not confirmed an end date. The central bank has steadily reduced its monthly bond purchases from a peak of $85bn a month to $15bn a month. Despite the end of its bond-buying programme, US monetary policy remains ultra loose, with an interest rate range at a record low of between zero and 0.25% since December 2008.
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A coming crackdown on Federal Reserve power? - Jennifer Liberto - POLITICO - 0 views
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A move to shift power away from the New York Federal Reserve Bank is finding some powerful friends in Congress amid lingering worries that a key part of the central bank is too cozy with Wall Street. Two Republicans running the banking committees have both said they plan to explore proposals from the outspoken, former Dallas Federal Reserve Bank President Richard Fisher that would roll back a long-standing provision that gives the president of the New York Federal Reserve Bank an automatic position as vice chairman of a powerful committee and weaken New York’s oversight of Wall Street banks. Story Continued Below The politics may be ripe for chipping away at the power of the Federal Reserve, uniting liberals who want to crack down on Wall Street, Republicans who don’t like the Fed’s easy money policies and libertarians who are suspicious of the Fed altogether.
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Fisher, who retired Thursday after 10 years at the Dallas Fed, wants to yank the New York Fed’s permanent position as vice chair of the all-powerful Federal Open Market Committee, the panel charged with making monetary policy decisions, which met Wednesday. While the New York Fed president could still participate in monetary policy discussions, he or she would no longer always get a vote. Fisher suggested the job should rotate among the regional Federal Reserve Banks every two years.
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The move would upend the current structure, as the New York Fed has had a lock on that spot since 1936, thanks largely to its role as the infrastructure, which supplies the trading desk that carries out the Fed’s monetary policy decisions. Fisher is also proposing that other regional Fed banks oversee some of the Wall Street giants in a move aimed at addressing criticism the New York Fed missed warning signs of the financial crisis, is too soft on Wall Street and holds too much power and influence at the Fed. “The greatest concern appears to be the problem of regulatory capture by the largest and most powerful institutions,” Fisher said in a February speech in New York laying out his plan. Wall Street critics have been suspicious of the New York Fed since it and its then leader, Timothy Geithner, played a key role in responding to the 2008 financial crisis and the bailouts that entailed.
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Late last year its current president, William Dudley, was hauled before the Senate Banking Committee after reports from ProPublica and NPR’s This American Life that focused on a New York Fed examiner who said her warnings about certain business practices and deals at Goldman Sachs were ignored or brushed aside by her superiors. She provided recordings of her dealings with Fed officials to back up her case. “We’ve got on tape higher-ups at the New York Fed calling off the regulators,” Warren told Dudley at the November hearing. “And I’m just asking the same kind of question — is there a cultural problem at the New York Fed? I think the evidence suggests that there is.”
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shared by Gary Edwards on 09 May 12
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End the Fed! Congress Debates the Federal Reserve: Reform or Abolish? - 0 views
www.thenewamerican.com/...eral-reserve-reform-or-abolish
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synopsis: Tuesday May 8th, 2012 - Dr. Ron Paul Chaired the Congressional subcommittee holding the first hearings on the Federal Reserve Bankster Cartel. Dr. Paul has become famous around the world for his tireless efforts to audit, expose, and abolish the central bank. Even making that effort the centerpiece of his "Restore the Constitution - Take Back America" run for the presidency. He published a best-selling book in 2009 entitled "End the Fed", a title that has become a rallying cry for millions of Americans angry about the institution's multi-trillion-dollar bailouts, market manipulations, corruption, and debasement of the currency. The subcommittee hearing, entitled "The Federal Reserve System: Mend It or End It?", examined a range of different proposals to reform the nation's monetary system - it was supposed to look at six different options emanating from both parties. One of the measures on the agenda was Congressman Paul's own "Federal Reserve Board Abolition Act," legislation to dismantle the central bank and restore sound money based on market principles. "More and more people are beginning to understand just how destructive the Federal Reserve's monetary policy has been. I hope that this hearing will kick start a serious discussion on the need to rein in the Fed," Chairman Paul said in a statement about the event. "A hundred years is far too long for Congress to have taken a hands-off approach. The Fed continues to reward Wall Street banks while destroying the dollar's purchasing power and driving up the cost of living for average Americans. This reckless behavior must come to an end."
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shared by Gary Edwards on 19 Mar 14
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The Mythical Banking Crisis and the Failure of the New Deal :: The Mises Economics Blog... - 0 views
bastiat.mises.org/...nd-the-failure-of-the-new-deal
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Everything you know about FDR, The New Deal and the Great Depression Banking Crisis is wrong!!!! "From David Stockman's Contra Corner. Remarks to the Committee For The Republic, Washington DC, February 2014 (Part 4 in a 6-Part Series) Go to Part 1. The Great Depression thus did not represent the failure of capitalism or some inherent suicidal tendency of the free market to plunge into cyclical depression-absent the constant ministrations of the state through monetary, fiscal, tax and regulatory interventions. Instead, the Great Depression was a unique historical occurrence-the delayed consequence of the monumental folly of the Great War, abetted by the financial deformations spawned by modern central banking. But ironically, the "failure of capitalism" explanation of the Great Depression is exactly what enabled the Warfare State to thrive and dominate the rest of the 20th century because it gave birth to what have become its twin handmaidens--Keynesian economics and monetary central planning. Together, these two doctrines eroded and eventually destroyed the great policy barrier--that is, the old-time religion of balanced budgets- that had kept America a relatively peaceful Republic until 1914. To be sure, under Mellon's tutelage, Harding, Coolidge and Hoover strove mightily, and on paper successfully, to restore the pre-1914 status quo ante on the fiscal front. But it was a pyrrhic victory-since Mellon's surpluses rested on an artificially booming, bubbling economy that was destined to hit the wall. The Hoover Recovery of 1932 Worse still, Hoover's bitter-end fidelity to fiscal orthodoxy, as embodied in his infamous balanced budget of June 1932, got blamed for prolonging the depression. Yet, as I have demonstrated in the chapter of my book called "New Deal Myths of Recovery", the Great Depression was already over by early summer 1932."