MCViewPoint

Opinion from a Libertarian ViewPoint

Posts Tagged ‘Fed’

Erie Times E-Edition Article-Go green on housing with no additional cost

Posted by M. C. on June 4, 2021

“Go green on housing with no additional cost”

The point here is “no additional cost” really means “free government money” pays the tab. This person, vice president of the Environment Program at the JPB Foundation, is delusional.

Free government money comes from 3 places. Taxes (not free to the taxpayer), loans from other countries and entities (the resultant interest is not free) and printing money which generates the hidden tax that is inflation which is now again rearing it’s ugly head (paid for by everyone).

The sad part is the author and most of the unwashed masses may actually believe free government money is really a free lunch.

The real housing crisis is sky high home prices. And that is courtesy of free government money supplied by the Fed.

https://erietimes-pa-app.newsmemory.com/?publink=276b95073_1345dd0

Go green on housing with no additional cost

Your Turn Dana Bourland | Guest columnist Two of the biggest problems we face today — a shortage of decent, affordable housing and climate change — are connected. Fortunately, the solutions are connected as well. That’s why we must not only ‘build back better’ in the wake of pandemic and recession, but build back greener.

Most housing in the United States is inefficient and expensive to heat and cool. That means high utility bills and higher carbon emissions; residential energy use accounts for a fifth of climate-changing greenhouse gases emitted in the United States.

At the same time, the facilities that produce the power to build and operate our homes — like coal-fired power plants — contribute to a changing climate. Because they are often located in communities of color, these facilities also exacerbate environmental injustice. And producing the petrochemicals used in adhesives, cabinets, carpets, insulation and other building materials not only contributes to climate change, but pollutes the air outside and inside our homes.

The good news is that we can address our housing crisis and our climate crisis with green affordable housing at no additional cost.

President Joe Biden’s infrastructure plan includes a large allocation for housing — an important first step. And the much-needed recent expansion of the Weatherization Assistance Program will make homes more comfortable and efficient.

But these investments can accomplish so much more, by ‘greening’ the entire building supply chain. That means going beyond energy consumption in our homes to address energy usage and petrochemicals in the manufacturing and transportation of materials.

In other words, how we build is as important as what we build. We can’t make one home green while polluting other communities in the process.

Biden’s ‘American Jobs Plan’ calls for investing $213 billion in the nation’s housing infrastructure. This includes $40 billion to repair public housing, $45 billion for the national Housing Trust Fund, an expansion of the Housing Choice Voucher program and more.

The administration can ‘green’ this investment by requiring these programs to use holistic green affordable housing criteria. These should go beyond energy efficiency to include the use of sustainably produced, non-toxic building materials. In this way, the infrastructure bill could stabilize the climate and improve public health while expanding access to affordable housing.

Similarly, the Weatherization Assistance Program could be expanded to include health and safety improvements as well as energy-efficiency upgrades, creating well-paying jobs for contractors while reducing triggers for asthma and other health impacts.

To solve our housing and climate crises, we must integrate how we think about both. We do not have the time or the resources to meet our housing crisis without considering how to meet our climate crisis. And if new investments in infrastructure deploy green building practices, we can score a triple win for housing, health and the climate.

Dana Bourland is vice president of the Environment Program at the JPB Foundation and author of ‘Gray to Green Communities: A Call to Action on the Housing and Climate Crises.’

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Weekly Update — The ‘Woke’ Fed

Posted by M. C. on June 3, 2021

The use of the woke agenda as an excuse to further politicize the allocation of capital and continue to expand the Fed’s easy money, low interest rate policy will hasten and deepen the next economic crisis.

Prioritizing certain approved companies. Like Solyndra and other entities not likely to be able to pay back the loans.

AUDIT THE FED

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‘Big Government and Big Inflation’ – Ron Paul’s 17 May Column

Posted by M. C. on May 18, 2021

The refusal of Congress to cut spending means the Fed will keep increasing its balance sheet in an effort to monetize skyrocketing debt. Eventually, the increasing debt and inflation will lead to a major economic meltdown. The meltdown will likely include a rejection of the dollar’s world reserve currency status.

https://mailchi.mp/ronpaulinstitute/inflation?e=4e0de347c8

May 17 – April’s 4.2 percent past year increase in the Consumer Price Index is not likely to dissuade the Federal Reserve from continuing its policy of near-zero interest rates. Fed Chairman Jerome Powell believes the rising prices are just a temporary phenomenon caused by the ending of lockdowns releasing pent-up consumer demand.

Powell may be right that the ending of lockdowns would inevitably be accompanied by a rise in prices. However, this is just the latest reason the Fed has given for putting off increasing interest rates. Powell does not want to admit that the real reason the Fed will continue to keep rates low is that increasing rates will cause the federal government’s interest payments to rise to unsustainable levels.

One way the Fed increases the money supply — and thus lowers interest rates — is by purchasing US Treasury securities. These purchases increase demand for US government debt, keeping government’s borrowing costs low. An expansionary monetary policy thus enables increased federal spending and deficits. Since the lockdowns, the Fed has worked overtime to monetize federal debt, doubling its holdings of Treasury securities.

A Truth in Accounting report from April concluded the real federal debt is 123 trillion dollars — over four times larger than the 28 trillion dollars “official” debt. The higher debt calculation includes the federal government’s unfunded liabilities. The biggest unfunded liabilities are the 55 trillion dollars in promised but unfunded Medicare benefits and the 41 trillion dollars in promised but unfunded Social Security benefits.

Congress could transition away from entitlement and welfare programs without harming current or soon-to-be beneficiaries by cutting spending on militarism and corporate welfare. Part of the savings from these cuts could be used to pay down the debt, and part could be used to provide payments for current and soon-to-be beneficiaries of government programs while we transition to a free market.

Unfortunately, there is not much appetite in Congress for spending cuts. The main Democratic criticisms of President Biden’s 1.52 trillion dollars budget, which increases spending by 8.4 percent, are that Biden is not proposing bigger increases in spending and debt, or in taxes on “the rich.” Biden’s budget increases are in addition to the trillions in other spending Biden is pursuing, including related to Covid, infrastructure, and his “American Families Plan.”

Republicans are making obligatory attacks on Biden’s spending, while also attacking Biden for increasing military spending to “only” 753 billion dollars. Republican complaints about Biden’s big spending ring hollow given their support for Presidents Donald Trump and George W. Bush’s spending increases and Republicans’ proposals to spend billions on infrastructure.

Some conservatives have even embraced the madness of Modern Monetary Theory. These conservatives are urging people to stop worrying about spending and debt and instead figure out how to use Fed-financed government spending to advance conservative ends.

The refusal of Congress to cut spending means the Fed will keep increasing its balance sheet in an effort to monetize skyrocketing debt. Eventually, the increasing debt and inflation will lead to a major economic meltdown. The meltdown will likely include a rejection of the dollar’s world reserve currency status.

The only way to avoid the crash is to spread the truth among enough people to force Congress to reverse course. Early steps in reversing course are blocking Biden’s big spending plans and passing Audit the Fed so the American people can finally know the truth about the Federal Reserve’s actions.



Read more great articles on the Ron Paul Institute website.
Subscribe to free updates from the Ron Paul Institute.
Copyright © 2021 by Ron Paul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.

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Inflation Raises Its Ugly Head: What Will The Fed Do Now?

Posted by M. C. on May 7, 2021

Yellen wants to use the Fed “tools”. The same tools that didn’t work when she was Fed chairperson.

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‘The Fed Enabling Biden and Congress’ Destructive Agenda’ – Ron Paul’s 8 Mar. Column

Posted by M. C. on March 9, 2021

https://mailchi.mp/ronpaulinstitute/bidenfed-115290?e=4e0de347c8

Mar 8 – According to the Congressional Budget Office (CBO), 2021 will be the second year in a row in which the federal debt exceeds Gross Domestic Product (GDP). CBO also projected that this year’s federal deficit will be 2.3 trillion dollars, which is 900 billion dollars less than last year. However, CBO’s projections do not include the 1.9 trillion dollars “stimulus” bill Congress is likely to pass.

The CBO’s report was largely ignored by Congress and the media. One reason the report did not get the attention it deserves is Federal Reserve Chairman Jerome Powell’s continued commitment to making sure Fed policies enable Congress to spend as much as Congress deems necessary to address the economic fallout from the coronavirus panic.

As financial analyst Peter Schiff points out, the Fed’s commitment to ensuring the government can run up massive debt means the Fed will not allow interest rates to increase to anywhere near what they would be in a free market. This is because increasing interest rates would cause the federal government’s debt payments to rise to unsustainable levels. Yet, the Fed cannot admit it is going to keep rates near, or even below, zero indefinitely without unsettling the markets. So, the Fed continues to promise interest rate hikes in the future and the markets pretend to believe the Fed. When (or if) the lockdowns end, the Fed will find a new crisis justifying “temporarily” keeping interest rates low.

The Federal Reserve has not just endorsed massive federal spending, Fed Chairman Powell has also endorsed masks, vaccines, and social distancing to defeat the coronavirus and restore the economy. It is disappointing, but not surprising, to see the Fed go full Fauci.

The overreaction to coronavirus is a cause of the explosion in federal spending and debt we have witnessed over the last year. However, federal spending already greatly increased from January 2017 until the lockdowns. This spending growth occurred under a Republican president, a Republican Senate, and, from 2017 to 2019, a Republican House. One bright spot in Democratic control of the presidency and both houses of Congress is more Republicans will fight excessive spending and claim to be “deficit hawks.”

Republican hypocrisy in claiming to care about spending and debt only when a Democrat sits in the Oval Office is one reason why Democrats can so easily disregard debt. Another reason is the left’s embrace of Modern Monetary Theory. Modern Monetary Theory is the latest version of the fairy tale that politicians need not worry about debt and deficits as long as the central bank can monetize the federal debt.

Unless the government changes course, America will experience a crisis greater than the Great Depression. The crisis will include a final rejection of the dollar’s world reserve currency status. There will also be much increased price inflation. At that point Congress will have no choice but to limit spending, although it will try to hide cuts in popular entitlement programs by “adjusting” government measures of inflation. Congress could then blame the Fed for the reduction in value of government benefits.

Those who know the truth have two responsibilities. First, ensure they and their families are protected when the crash comes. Second, redouble efforts to spread the ideas of liberty and grow the liberty movement so politicians are pressured to cut spending and debt and to end the Fed.



Read more great articles on the Ron Paul Institute website.
Subscribe to free updates from the Ron Paul Institute.
Copyright © 2020 by Ron Paul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.

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Erie Times E-Edition Article-Massive student loan relief hurts the needy

Posted by M. C. on February 8, 2021

The problem is the Fed providing easy money allowing schools to jack up tuition.

I wonder how much of the tax payer funded relief is for “studies” programs that offer no chance of a real job.

I am not sure re-allocating money to another round of shovel ready government make work is the answer.

Can I get reimbursed for meeting my obligations?

https://erietimes-pa-app.newsmemory.com/?publink=1decefbf9

It’s not surprising that most of the arguments against widespread student loan forgiveness are coming from the political right, given that the idea itself originated from the 2020 presidential campaigns of Sens. Bernie Sanders and Elizabeth Warren. But perhaps the strongest reasons for yelling “Stop” should come from the left, because of the negative impact that such a step would cause to our most vulnerable families and communities.

For conservatives, across-theboard, no-strings-attached forgiveness of student loans is an obviously bad idea. It’s enormously expensive. The version sponsored by Warren and Senate Majority Leader Chuck Schumer to waive up to $50,000 in student loan debt per person would cost upwards of $1 trillion. It would cut against deepseated principles of personal responsibility and fairness, especially given that most college graduates — not to mention holders of professional degrees — are relatively affluent. And it would create expectations for more such windfalls in the future, encouraging future generations to over-borrow and encouraging university bureaucrats to overspend and hike tuitions further.

It’s unclear if the narrow Democratic Senate majority would approve anything like the Warren-Schumer plan, or even President Joe Biden’s more limited proposal to waive up to $10,000 per person. That’s why a coalition of more than 200 progressive groups is calling on Biden to take action unilaterally, by directing his Education Secretary to use discretion under the Higher Education Act to “minimize the harm to the next generation and help narrow the racial and gender wealth gaps.”

But progressives should curb their enthusiasm, because untargeted loan forgiveness could in fact harm the very people they purport to champion: the most disadvantaged Americans, including children growing up in poverty.

The reasons are two-fold. First, the immense cost would dry up federal resources that could otherwise be used for anti-poverty efforts. Imagine the good that $1 trillion could do if invested in the neediest Americans, rather than relatively well-off college-goers. For example, a National Academies committee estimates that we could reduce child poverty by 50% with an additional investment of $90-110 billion a year in the Earned Income Tax Credit, housing vouchers and SNAP benefits.

For $1 trillion, then, we could slash child poverty in half for an entire decade. Second, canceling student debt without asking for anything in return would wreak havoc with several forgiveness programs already on the books. These encourage teachers, doctors, nurses, lawyers and others to serve in high-need areas, or young Americans to opt for public service, including the military. Many of these programs need reforms, and Biden has promised to make them.

Targeted programs are smart ways to tackle social programs, provide relief to borrowers, and support the notion of mutual obligation. So let’s have more of them. Given the massive learning loss experienced by so many students during this awful pandemic, especially Black and Brown children and those growing up in poverty, our schools desperately need millions of tutors to help kids catch up. We also have critical needs in other areas. For example, some have suggested that the heroes who volunteer to be kidney donors could receive loan forgiveness.

The massive overhang of student loan debt is no joke. Millions are struggling to pay back what they borrowed for college. As tuition has skyrocketed and two punishing recessions have weighed down wages and employment, some college-goers face a real squeeze. But canceling debt outright, especially at massive scale, would represent an enormous lost opportunity. We can find ways to provide relief to the people who need it most while also working to solve some of America’s thorniest social problems. That is the sort of “jubilee” that would be worth celebrating.

Michael J. Petrilli is president of the Thomas B. Fordham Institute and a visiting fellow at the Hoover Institution.

Your Turn

Michael J. Petrilli Guest columnist

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BIDEN’S BANANA REPUBLIC – Matterhorn – GoldSwitzerland

Posted by M. C. on January 16, 2021

https://goldswitzerland.com/bidens-banana-republic/

By Egon von Greyerz

Donald Trump is probably the luckiest presidential candidate in history to have lost an election. He doesn’t realise it yet as he suffers from a self-inflicted wound in the final moments of his presidency. Nor does Biden yet realise how unlucky he is to have won. But that will soon change as his presidency goes from crisis to crisis in all areas from monetary to fiscal to social and political. Very little will go right during his presidency.

The next four years could easily be four years of hell for Biden (if he stays the course for the whole four years), for the US and thus for the world.

TRUMP OBLIGED AS PREDICTED

When Trump won the election in November 2016 I wrote an article, dated Nov 18, 2016, called “Trump Will Grow US Debt Exponentially” .

The article also contained the following graph. In the article I predicted that US debt would double by 2025 to $40 trillion and that it would be $28t in January 2021 at the end of the four years.

Well, surprise, surprise, the debt is today $27.77t which can easily be rounded up to $28t.

I am certainly no forecasting genius, nor was the forecast just luck.

No, it was applying the best method that we have all been given but that few apply or understand.

This method is called HISTORY.

DEBT UP 31X & TAX REVENUE UP 6X

US debt had on average doubled every 8 years since Reagan took over in 1981. So as Trump became president in Jan 2017, he inherited a debt of $20t. Easy then to forecast that 8 years later the debt would be $40t. The $28t forecast for Jan 2021 is just the mathematical in-between point between $20t and $40t.

Even worse than the debt explosion is the the lack of tax revenue to finance the escalating and chronic budget deficits. As the graph above shows, debt has grown 31x since 1981 whilst tax revenues have only grown 6x.

The US deficit is currently $3.3t which is virtually equal to total tax revenue of $3.4t. This means that 50% of annual government spending needs to be borrowed.

BANANA REPUBLIC

The US economy now clearly fits the definition of a Banana republic. A brief description is: “In political science, the term banana republic describes a politically unstable country with an economy dependent upon the exportation of a limited-resource product, such as bananas or minerals.”

In the case of the US, the product they export is of course dollars printed out of thin air – a wonderful export item since supply is unlimited.

Further description is: “Typically, a banana republic has a society of extremely stratified social classes, usually a large impoverished working class and a ruling class plutocracy, composed of the business, political, and military elites of that society.”

Like all Banana Republics, the US economy and social structure is now on the way to perdition with virtually nil chance for Biden & Co to reverse the inevitable course of events.

HISTORY – HISTORY

So back to history – History is what has formed us and history doesn’t just rhyme as Mark Twain said but it often repeats itself. The debt explosion is another good example.

If more people studied and understood history, they would not just recognise the utmost importance of what lies behind us but also that history will teach us about what lies in front of us.

But very few scholars and no journalists study history. Instead we are now in an era when both the media and universities worldwide want to erase history and rewrite the history books. This shows us the total lack of understanding of the utmost importance of history in the evolution of the world.

But this is part of the total decadence and denial that we see at the end of major eras or cycles. The current cycle, whether it is just a 300 year cycle or a 2,000 year old cycle is now coming to an end. These changes clearly don’t happen overnight but the first phase of the fall can be dramatic. And that phase is likely to be starting very soon.

BIDEN ONLY HAS ONE TRICK UP HIS SLEEVE

So what will Biden and his masters do? Well Biden has already called for $ trillions of further support.

He also said: “If we don’t act now, things are going to get much worse and harder to get out of a hole later.”

Well we always knew that Biden really only had one trick up his sleeve – TO PRINT MORE than any president has done in history. To beat Trump is not hard, he only printed $8t in 4 years!

Let’s just remind ourselves that it took 200 years (1808-2008) to increase the US debt from $65 million to $10 trillion.

When Obama took over in Jan 2009 he inherited a $8t debt. Eight years later he handed over a $20t batten to Trump.

In 8 years Obama printed and borrowed more money than the previous presidents had achieved in the course of 200 years!

So will Biden print more than $10t?

Definitely!

Will he do it in 4 years? Most probably!

As I forecasted in my article in 2016, the debt will be at least $40t in Jan 2025, a $12t increase from today.

But no one should believe that Biden will stop at $40t. The US economy is already leaking like a sieve. And the problems have just started.

The problems in the currently semi-paralysed US economy will escalate at a rapid rate and the Biden team will attempt to plug every hole at all levels from a minimum wage to saving major corporations.

But sadly, Banana Republics don’t survive by printing worthless money.

PROBLEMS IN THE FINANCIAL SYSTEM AND NOT CV-19 STARTED THE CRISIS

Still, we mustn’t forget what started the latest phase of problems in the US economy.

It wasn’t Covid back in February 2020. No, that was a mere catalyst. The underlying disaster was a lot deeper. The real problem started back in Aug-Sep 2019. This is when the problems in the financial system became acute and both the ECB and Fed started flooding the system with money. But not real money of course but just worthless paper money created with just pushing a button.

Between the Fed and the ECB just under $8t of “fake” money has been created digitally since Sep 2019. It must obviously be called fake since nobody had to perform any work or produce any goods or services against this money.

It is really scandalous to call it money since it is no different from the Monopoly game money.

WHEN THE MUSIC STOPS…….

The printed $8 trillion at $15 per hour (Biden’s new minimum wage) equals 60 million man hours. But in the modern MMT (Money Market Theory) paradigm, you don’t need to work for the money. Whatever the world needs, central banks and governments can just create out of nothing.

That is until the music stops. And Biden or Harris are the likely conductors who will preside over the music stopping and the whole edifice collapsing.

The wise will obviously find a chair already now because when the music stops there will be no chairs free and all hell will break loose.

By that time debt will not just be in the $trillions or $100s of trillions. No, the printing will have reached $ and EUR quadrillions as not only most collapsing debt will need to be bought by central banks but also derivatives which probably amount to $2 quadrillion or more.

In addition, medical care, social security and unfunded pensions will probably exceed $1 quadrillion globally and add to the demise of the financial system.

Could I be wrong. Maybe. A close friend gave me once a T-shirt with the inscription:

“I AM NOT ALWAYS RIGHT – But I am never wrong”!

The gift must have been a subtle hint – Hmmm

Still, in my humble view I don’t believe that any orderly reset will change the inevitable course of events. So as far as I am concerned, it is not IF but WHEN.

A professional life of over half a century has taught me that even the most evident events can take longer to develop than you think.

But as I see risk at an extreme, now is the time to prepare.

MARKETS

So to finish, let’s have a quick look at where I see markets. I know forecasting is a mug’s game and I am not really interested in how markets move in the short term more than from an observational point of view.

In the next few years it is all about economic survival and wealth preservation rather than worrying about where the Dow or the Dax is going next.

See the rest here

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David Stockman: Janet Yellen’s Return and the Financial Storm Ahead

Posted by M. C. on January 2, 2021

By the time Yellen became Fed Chairman in February 2014, however, there was no plausible excuse for keeping Bernanke’s bloated Fed balance sheet in place or continuing to keep interest rates at the zero bound. If there was ever a chance to normalize Bernanke’s misbegotten Depression-fighting policy, it was during the 48 months of Yellen’s term.

Needless to say, Yellen’s Fed did no such thing. After 45 years of devotion to the 1960s Keynesian bathtub theory of full employment economics, Yellen kept real interest rates buried in negative territory during the entirety of her term, and not just marginally.

https://www.newsmax.com/Finance/DavidStockman/janet-yellen-fed-economy-invest/2016/02/15/id/714444/

The operative words here are “European countries” and “add accommodation.” Yet even a brief reflection on those items demonstrates that Janet is a delusional Simpleton.

https://internationalman.com/articles/david-stockman-on-janet-yellens-return-and-the-financial-storm-ahead/

by David Stockman

Janet Yellen is back.

Naturally, the follies of Keynesian central banking come to mind.

In many ways, Yellen’s tenure as Fed chairman was far worse than Ben Bernanke’s. At least Bernanke’s money-printing madness was undergirded by his credentials as a misguided scholar of the Great Depression and the mistaken conclusion that the Wall Street meltdown of September 2008 was the prelude to another such occurrence.

The Great Depression of the 1930s was caused by way too much Fed-fostered foreign borrowing on Wall Street during the roaring twenties. It stimulated an unsustainable boom in US exports—soaring domestic CapEx in order to expand production capacity and a stock bubble–fueled consumer-spending boom in cars, radios and appliances. Therefore, when the Wall Street bubble burst in October 1929, foreign borrowing dried up, US exports and CapEx crashed and spending on consumer durables plummeted.

This was the cause of the massive contraction in 1930–1933, which took the GDP down from $95 billion to $58 billion in dollars of the day. By contrast, it had nothing to do with Milton Friedman’s crashing M-1 (money supply), which was a consequence of unavoidable and necessary bad debt liquidation by the banking system. Nor did it stem from any lack of credit availability to solvent borrowers, as demonstrated by market interest rates that remained ultralow (under 2%) throughout the downturn.

The depression of 1930–1933 wasn’t owing to the stinginess of the Fed, which actually expanded its balance sheet by 72% between August 1929 and early 1933.

Consequently, Bernanke’s maneuver of flooding the zone with fiat credit during 2009–2013 was a mistaken page from Milton Friedman’s counterfactual playbook, which was wrong the day it was written in the early 1960s and even more wrong when Bernanke cut and pasted it into his PhD thesis at MIT in 1979.

By the time Yellen became Fed Chairman in February 2014, however, there was no plausible excuse for keeping Bernanke’s bloated Fed balance sheet in place or continuing to keep interest rates at the zero bound. If there was ever a chance to normalize Bernanke’s misbegotten Depression-fighting policy, it was during the 48 months of Yellen’s term.

Needless to say, Yellen’s Fed did no such thing. After 45 years of devotion to the 1960s Keynesian bathtub theory of full employment economics, Yellen kept real interest rates buried in negative territory during the entirety of her term, and not just marginally.

The 16% Trimmed Mean CPI increased by an average of 1.90% per annum during that four-year period, while the Fed’s target interest rate averaged just 0.40%.

During the sweet spot of the longest business cycle expansion in history—from month #55 to month #103—when the economy should have been left to expand on its own without “stimulus” from the central banking branch of the state, Yellen kept real money market rates pinned at an unprecedented -150 basis points.

The justification for such economic insanity was the claim that the US economy was not at its full-employment level as measured by the dubious U-3 unemployment rate and that the job of the central bank was to keep injecting “demand” into the economy until the bathtub was full to the brim and 100% of “potential GDP” was attained.

But here’s the thing. Potential GDP and full-employment labor markets are Keynesian malarkey.

In a world in which domestic labor competes with China’s price for goods, India’s price for internet-based services and Mexico’s price for manufactured goods assembly, full employment cannot be measured by the headcount metrics of the BLS, nor can it be achieved by injecting massive amounts of fiat credit into the bank accounts of Wall Street dealers.

In fact, with total outstanding credit now at $81 trillion, or 382% of GDP, the Fed’s liquidity injections never really leave the canyons of Wall Street. The result is increased speculation on Wall Street and accelerating inflation of financial asset prices.

After all, money markets do not finance the working capital or fixed asset investments of business, nor do they fund consumer borrowing for automobiles and durables. Instead, short-term money markets are where Wall Street dealers finance their inventory and where speculators fund their positions in the options markets—or via margin and repo credit against stocks and bonds held outright.

Consequently, negative real interest rates are the mother’s milk of financial speculation and the resulting asset price bubbles.

Yellen’s policies constituted an epic monetary error that has fueled bond- and stock -market bubbles that are off the charts, thereby sending erroneous price signals to Wall Street gamblers, corporate C-suites and spendthrift politicians alike.

The yawning gap below between the purple line, signifying (the running inflation rate) and the brown line (the money market rate) connotes the massive subsidy Yellen’s Fed conferred on speculators and day traders.

Real Cost of Money Market Borrowings, 2014–2018: 16% Trimmed Mean CPI Less Fed Funds Rate

In short, Yellen sowed the wind of monetary excess, and now we are reaping the whirlwind of a gargantuan Wall Street bubble that is a clear and present danger to the economic future—because it will crash, and the resulting financial and economic damage will be biblical.

Ironically, Janet Yellen may be sitting in the captain’s chair when the most violent and destructive financial storm in history finally comes ashore. It would serve her right.

Editor’s Note: The coming economic and political crisis is going to be much worse, much longer, and very different than what we’ve seen in the past.

That’s exactly why New York Times bestselling author Doug Casey and his team just released an urgent new report titled Doug Casey’s Top 7 Predictions for the Raging 2020s.

Click here to download the free PDF now.

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Doug Casey on the Fed to Address Inequality And Climate Change

Posted by M. C. on December 25, 2020

Doug Casey: The Fed is one of the main creators of inequality. The Establishment, the Deep State types, and the other cronies who hang around the government are closest to the fire hydrant of money spewing from the Fed. They get their fill of it before any trickles down to the “little people.”

The solution to the problem is to abolish the Fed. But it’s so entrenched and so central to the corrupt system, that’s impossible. At least short of a monetary collapse—although a monetary collapse is in the cards. But, at a minimum, the Fed shouldn’t try to act as a social engineer.

https://internationalman.com/articles/doug-casey-on-the-fed-to-address-inequality-and-climate-change/

International Man: Recently, the calls for the Fed to add a third mandate to address racial and economic inequality have grown louder.

Will we see a redistribution of wealth soon?

Doug Casey: It seems the movement towards black “reparations” is building momentum. These things always start small, testing the water, then grow when nobody either laughs at them for being stupid or decries them as evil. Most Americans are now too intimidated and confused to do that, however.

It’s similar to MMT. A year ago, the notion of Modern Monetary Theory was too outrageous a notion for a sensible person to bother considering; now, it’s practically public policy.

And, incidentally, when I say “black,” I don’t capitalize the word, as very recent politically correct fashion dictates. Capitalizing it just emphasizes and accentuates racial differences—as do most “woke” practices.

It’s another sign of the mass insanity that’s sweeping the world. Like almost everybody wearing masks when walking down the street, or even bicycling in the countryside. Not to mention locking down the whole country, practically the entire world, like a prison. It’s quite ironic to me. In the past, I’ve often joked that the Earth was a prison planet. Now it’s no joke.

Anyway, the idea of reparations is even more insane, but it’s taking off. It’s the destructive, racist idea of affirmative action on steroids.

It’s one genuinely crazy thing after another, like NASDAQ requiring listed companies to have at least two board members of so-called minority groups, including one non-white person and one with a sexual aberration.

Movies are expected to have the same kind of composition now. You see it to a large degree in commercials on TV. When I watch the boob-tube, I feel like I’m the only straight white male left in the US.

The discrimination against Asians is equally criminal, especially when it comes to getting into college. If you’re a smart and hard-working Asian, you now have to be even smarter and harder working to compete.

These PC fools are making accidents of birth into defining features of existence. The only good thing about the trend is that these people may be overreaching and will self-destruct. Hopefully, that will happen before they destroy society itself.

International Man: Federal Reserve Chairman Jerome Powell has spoken in length about the Fed’s interest to address economic inequality.

Ironically, the one institution that is single-handedly responsible for destructive monetary policies and money printing of epic proportions plans to do more of the same to “solve” the very problem they created.

What are your thoughts on this?

Doug Casey: The Fed is one of the main creators of inequality. The Establishment, the Deep State types, and the other cronies who hang around the government are closest to the fire hydrant of money spewing from the Fed. They get their fill of it before any trickles down to the “little people.”

The solution to the problem is to abolish the Fed. But it’s so entrenched and so central to the corrupt system, that’s impossible. At least short of a monetary collapse—although a monetary collapse is in the cards. But, at a minimum, the Fed shouldn’t try to act as a social engineer.

It certainly shouldn’t give money to blacks just because they’re black in the form of reparations or for any other reason. The notion is criminally stupid. All exchange must be mutual and free. If it’s not, it breeds resentment for both the giver and the receiver.

Free stuff, like welfare and free government housing, has already destroyed black families and black individuals. Places like Cabrini-Green and Pruitt-Igoe are monuments to government planning. If the Fed gets involved in passing out more free money, it’s only going to cement the average black more solidly to the bottom of society and create more race antagonism.

Well-positioned blacks like Jesse Jackson, Al Sharpton, Maxine Waters, and hundreds of others who are getting rich by virtue of being black are all for it, of course. There’s big money in disguising race-baiting as virtue signaling.

International Man: Recently, Joe Biden announced that he would nominate former Fed Chairman Janet Yellen for US Treasury Secretary. In her first remarks, Yellen spoke about her plans to address racial disparities and inequality.

Is there a trend developing here where racial and economic inequality has become the justification for dangerous monetary policies?

Doug Casey: Race has become a justification for practically everything today. Deep State types in general, and the Democrats in particular, emphasize race and gender differences, which does nothing but aggravate the situation.

This nomination is an excellent deal for Yellen, who’s moved from being a nothing nobody academic to Fed Chair, and now Treasury Secretary. By the time she finishes her term in office, she’ll be a centimillionaire—the usual drill, six-figure speeches, seven-figure book contracts, fat directors fees, consulting fees, and insider investment deals. She’ll do well for someone who has zero business experience and has detracted hugely from the world’s real wealth.

She’s a model for the kind of people who want to go into government to become rich and famous.

International Man: Fed chairman Powell has made countless remarks about the need for the US central bank to address climate change.

What is going on here?

Doug Casey: It’s a good question.

How can they address the so-called problem of climate change? Climate change has been going on since the Earth came together 4.5 billion years ago, and it will continue on its own path, primarily influenced by the sun and secondarily by things like volcanism, cosmic rays, and peculiarities of the planets orbit, long after mankind has gone.

But destroying the economy by printing up more money certainly isn’t an answer to climate change. However, I’m sure that what’s on Powell’s mind is making money easier to get for things like windmills and solar panels. This is more state direction of investment. It was a disaster for the USSR and every other socialist and state-directed economy and will be for us as well.

You’ll notice that the Chinese and other Asian economies don’t indulge in this kind of politically correct investing. It’s a major reason why they’re on the way up, and we’re on the way down.

Janet and Jerome’s excellent adventure in climate engineering won’t end well.

International Man: With climate change and racial inequality, the Fed is creating all sorts of new ridiculous pretexts to justify whatever it wants to do. It would be comical if the consequences weren’t so destructive. What do you think comes next?

Doug Casey: At this point, the Federal Reserve, which most Americans barely even know exists, has become extremely important to everybody.

It’s now the main source of government income—greater even than the income tax—and this is likely to continue. Agencies like the Fed grow when they have unlimited funding. But it’s more than just mission creep at this point.

We saw mission creep during the Vietnam war and all other wars. Now the Fed has been enlisted to fight the war on poverty, the war on racism, and global warming. The problem is that war is the health of the State—but a catastrophe for society.

The Fed started out as essentially a clearinghouse for banks; it was instructed to maintain the value of the currency. It has totally failed at that mission since its creation. The US dollar was stable from 1789 up until 1913 when the Fed was instituted. Since then, the dollar lost has about 97% of its value, and the degeneration is radically accelerating.

Now the Fed is supposed to ensure full employment, racial and gender equality, and sunny days in addition. The next abomination will be Fed Coin, a digital dollar, which will eliminate all privacy from financial transactions.

I don’t think anything can turn the situation around at this point. The only thing you can do is become as wealthy as possible to insulate yourself.

The next step will be something resembling World War III, probably with China. The US will turn into a police state, which in many ways, it was during World Wars I and  II.

It’s going to be much more serious this time around.

Editor’s Note: Economically, politically, and socially, the United States seems to be headed down a path that’s not only inconsistent with the founding principles of the country, but accelerating quickly toward boundless decay.

In the years ahead, there will likely be much less stability of any kind.

That’s exactly why New York Times bestselling author Doug Casey and his team just released an urgent new report titled Doug Casey’s Top 7 Predictions for the Raging 2020s.

Click here to download the free PDF now.

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The Ron Paul Institute for Peace and Prosperity : Can the Fed End Racism?

Posted by M. C. on October 14, 2020

Supporters of this scheme say that inflation raises wages and creates new job opportunities for those at the bottom of the economic ladder. However, these wage gains are illusory, as wages rarely, if ever, increase as much as prices. So, workers’ real standard of living declines even as their nominal income increases.

http://www.ronpaulinstitute.org/archives/featured-articles/2020/october/12/can-the-fed-end-racism/

Written by Ron Paul

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House Financial Services Chair Maxine Waters and Senator Elizabeth Warren have introduced the Federal Reserve Racial and Economic Equity Act. This legislation directs the Federal Reserve to eliminate racial disparities in income, employment, wealth, and access to credit.

Eliminating racial disparities in access to credit is code for forcing banks and other financial institutions to approve loans based on the applicants’ race, instead of based on their income and credit history. Overlooking poor credit history or income below what would normally be required to qualify for a loan results in individuals ending up with ruinous debt. These individuals will end up losing their homes, cars, or businesses because banks disregarded sound lending practices in an effort to show they are meeting race-based requirements.

Forcing banks to make loans based on political considerations damages the economy by misallocating resources. This reduces economic growth and inflicts more pain on lower-income Americans.

The Carter-era Community Reinvestment Act has already shown what happens when the government forces banks to give loans to unqualified borrowers. This law played a significant role in the housing boom and subsequent economic meltdown. The Federal Reserve Racial and Economic Equity Act will be the Community Reinvestment Act on steroids.

This legislation also requires the Fed to shape monetary policy with an eye toward eliminating racial disparities. This adds a third mandate to the Fed’s current “dual mandate” of promoting a stable dollar and full employment.

Federal Reserve Chair Jerome Powell has already publicly committed to using racial disparities as an excuse to continue the Fed’s current policy of perpetual money creation. Since inflation occurs whenever the Fed creates new money, Powell and his supporters want a policy of never-ending inflation.

Supporters of this scheme say that inflation raises wages and creates new job opportunities for those at the bottom of the economic ladder. However, these wage gains are illusory, as wages rarely, if ever, increase as much as prices. So, workers’ real standard of living declines even as their nominal income increases. By contrast, those at the top of the income ladder tend to benefit from inflation as they receive the new money — and thus an increase in purchasing power — before the Fed’s actions cause a general rise in the price level. The damage done by inflation is hidden and regressive, which is part of why the inflation tax is the most insidious of all taxes.

When the Fed creates new money, it distorts the market signals sent by interest rates, which are the price of money. This leads to a bubble. Many people who find well-paying jobs in bubble industries will lose those jobs when the bubble inevitably bursts. Many of these workers, and others, will struggle because of debt they incurred because they listened to “experts” who said the boom would never end.

The Federal Reserve’s manipulation of the money supply lowers the dollar’s value, creates a boom-and-bust business cycle, facilitates the rise of the welfare-warfare state, and enriches the elites, while impoverishing people in the middle and lower classes. Progressives who want to advance the wellbeing of people in the middle and lower classes should stop attacking free markets and join libertarians in seeking to restore a sound monetary policy, The first step is to let the people know the full truth about the central bank by passing the Audit the Fed bill. Once the truth about the Fed is exposed, a critical mass of people will join the liberty movement and force Congress to end the Fed’s money monopoly.


Copyright © 2020 by RonPaul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.


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