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Posts Tagged ‘Federal Reserve’

How To Make Housing Less Affordable | The Libertarian Institute

Posted by M. C. on February 17, 2021

As Ludwig von Mises taught us, government intervention begets more intervention. When politicians interfere in the market in order to “improve” outcomes, the intervention not only fails to improve the situation, but makes matters worse, and often creates still more problems.

In order to address these negative consequences, government imposes still more interventions, which exacerbates the problems further. And the cycle repeats.

It’s the classic case of the “seen vs. the unseen.” The government mandates may produce some affordable housing units, but the incentives of the regulations cause a far more significant, but harder to detect, decline in overall housing starts.

https://libertarianinstitute.org/articles/how-to-make-housing-less-affordable/

by Bradley Thomas

Few things in life are more certain than the costs of something exploding whenever government embarks on programs to make them “affordable.”

It took just five years after the passage of the “Affordable Care Act” for insurance premiums on the private market to more than double.

In the 1940s, the GI Bill kicked off decades of federal government’s increasing involvement in making college more affordable. The result? Since 1985, college costs have soared by 538%, nearly five times overall inflation during that time.

And so it goes with housing. The highly regulated—and Federal Reserve fiat currency fueled—housing market has seen prices skyrocket well ahead of overall inflation, contributing to the average age of first time home buyers to increase from between 25 and 34 in 1981 to 44 today. Real estate price hikes are of course especially acute in large cities where housing regulations become more numerous and complex.

For instance, San Francisco has become the second most expensive city in the U.S. to live courtesy of strict property zoning restrictions that help make it unaffordable for the non-rich to live there. As reported by the Stanford Daily in 2018, San Francisco imposes a “rigid collection of ultra-restrictive zoning laws,” which, according to the Daily, have played an “indisputable and well-documented” role in the city’s housing crisis.

But to politicians, admitting failure of government efforts to make things more affordable is never an option. Instead, they insist on doubling down on government interventions.

The most recent evidence of this is a Feb. 11 guest column in USA Today co-authored by former Housing and Urban Development Secretary Julian Castro.

In the article, Castro tells us there is “good reason” for the Biden administration to declare “equity in housing a top priority.”

In addition to the current crisis of millions of people being behind on rent thanks to government shutdowns over the past year, Castro informs the reader that “we need to tackle the underlying housing crisis that left more than 1 million Americans without a permanent home even before the pandemic.”

As is virtually always the case, when a politician or bureaucrat says “we” need to address something, they mean the government.

In this case, Castro insists that “lawmakers have failed to adequately invest in affordable housing.”

“Adequate” is of course rarely defined by progressives urging to expand government programs. The federal government spent $51 billion on housing assistance programs in 2019, according to the Peter G. Peterson Foundation. And that doesn’t include the myriad of state and local housing programs, which included more than 3,300 local public housing authorities that own about 1.2 million housing units across the nation, according to Urban Institute research.

To address the “crisis” in affordable housing, Castro continues, “we need to pair investments with policies such as a renter’s tax credit, universal housing vouchers, direct relief checks and full enforcement of the Fair Housing Act.”

While the renter’s tax credit would be new—and all tax credits should be welcome—the rest of Castro’s recommendations largely double down on government policies that make affordable housing more scarce rather than abundant.

Affordable housing programs typically involve either financial assistance to renters/buyers or zoning rules forcing developers to sell a certain percentage of their new units at below-market prices.

Such policies work to drive up housing prices and restrict supply.

Financial assistance to renters or buyers of housing artificially props up demand for housing. Such programs inject more money into the housing market, which drives up prices.

Meanwhile, affordable housing zoning requirements mandating that a percentage of units be sold at below-market prices discourage new development, restricting the supply of housing—which drives up prices.

Higher prices not only put housing out of reach for the poor, they also place undue financial strain on the middle class. In a study of low-income housing mandates in the San Francisco Bay Area from 2003 to 2007, economists Benjamin Powell and Edward Stringham found that new home construction fell by an average of 30 percent in the first year, resulting in an average 8 percent increase in housing prices.

More specifically, as reported in this 2016 Los Angeles Times article, “In a study looking at Southern California, Stringham and Powell found that housing starts in eight cities dropped off significantly after the inclusionary zoning went into effect. In the seven years before the law, over 28,000 new homes were built. In the seven years after? Only 11,000. Yes, 770 ‘affordable’ units were constructed, but what’s more important is the 17,000 homes that weren’t built at all, making the housing shortage more acute and pushing up prices.”

It’s the classic case of the “seen vs. the unseen.” The government mandates may produce some affordable housing units, but the incentives of the regulations cause a far more significant, but harder to detect, decline in overall housing starts.

Moreover, if such mandates don’t lower new housing starts, low income housing mandates prompt developers to raise prices on the remaining houses to make up for the lost revenue from the share of houses they are forced to sell or rent at below-market rates. Thus, the real impact of affordable housing policies is less, not more, affordable housing.

As Ludwig von Mises taught us, government intervention begets more intervention. When politicians interfere in the market in order to “improve” outcomes, the intervention not only fails to improve the situation, but makes matters worse, and often creates still more problems.

In order to address these negative consequences, government imposes still more interventions, which exacerbates the problems further. And the cycle repeats.

Such is the case time and again with government efforts to make goods or services more “affordable.”

The answer to the nation’s affordable housing problem doesn’t lie with still more government interference, but rather a removal of the government interventions causing the problems in the first place.

Bradley Thomas is creator of the website Erasethestate.com and author of the book “Tweeting Liberty: Libertarian Tweets to Smash Statists and Socialists.” He is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics. Follow him on Twitter @erasestate.

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Storming Into America 3.0

Posted by M. C. on January 20, 2021

One thing you won’t see under “Woke” rule is an audit of the Federal Reserve and reform of our counterfeit fractional banking system. Or a new JFK assassination or 9/11 investigation. Or a decades overdue upgrade of our Third World infrastructure. Or an abolition of private prisons. Or a change in our misguided, Israeli-driven foreign policy. Or a demand that the intelligence agencies make their budgets public. Or spending cuts for the military industrial complex. Or demands to bring any of the troops home. And most obviously, not even a tepid debt jubilee for all those devastated by the senseless economic lockdown.

In this fantastically divided country, after the brief age of Trump, we remain locked down, wearing masks, socially distancing, listless and rudderless. Like Orwell’s Winston Smith, we have learned to love Big Brother.

https://donaldjeffries.wordpress.com/2021/01/11/storming-into-america-3-0/

Posted by donaldjeffries

I thought America 2.0- the authoritarian mess which evolved out of the 9/11 false flag- was bad. It made those of us old enough to have lived most of our lives in America 1.0 long for the days of a better looking, more competent corruption. 2020, with a deadly virus that had the beneficial effects of eliminating both the threat of terrorism and the common flu, and an unconstitutional lockdown accompanying it, was only the beginning.

2021 is off to a roaring start. First, a laughably fraudulent election in Georgia, which gave the Senate to the Democrats, and featured overt evidence like the Republican Perdue losing 30,000 votes live on air. And now, the January 6 incident at the Capitol building in Washington, D.C., which featured a terrifying unarmed mob of White riff-raff, “storming” the representative body their taxes pay for, while politely keeping between the purple ropes, taking lots of selfies, and to untrained eyes appearing to be a pretty innocuous bunch. Well, except for that dangerous fellow who dared to prop up his working class boots on Lady Nancy Pelosi’s desk.

If you believe the mainstream media, there were only 45,000 people protesting the election results on January 6. If you believe the people there, and the photo evidence, there were at least hundreds of thousands, perhaps a million. Regardless of how many there were, they came there, from all across the country, because Donald Trump and his inner circle, intimated that something “big” was going to happen. The QAnon mindset was strong here; perhaps many in attendance thought they’d witness live perp walks of the Deep State criminals they’d been told repeatedly would be arrested and convicted by a military tribunal.

Instead, Trump issued a predictable pep talk, the kind he’s perfected at countless rallies. I don’t believe he should be held accountable for “inciting” people to do the wrong thing, but he did declare that he was going to be marching with them. Not sure how that would have worked, but instead he fled back to the White House. At the first inkling of criticism, Trump threw his supporters under the bus, and called their actions “heinous.” Then he told them to “go home in peace.” I thought of all the Catholic masses that end with almost those exact words. In effect, Trump was issuing a closing statement, on the MAGA movement he started and consistently disappointed.

In the wake of the event, every media outlet and politician in both parties condemned what they invariably called a “storming” of the Capitol, and referred to the protesters as “traitors,” “terrorists,” and the like. On social media, I raised comparisons like the six block takeover last summer of Seattle, by a self-proclaimed group of insurgents, and the 1967 entrance into the Sacramento state Capitol building by an openly armed group of Black Panthers, who were not punished at all. Sadly, many good people instinctively declared there was “no comparison.” I can’t illustrate the division that exists, and the problems we face, any clearer than that. The “Woke” Left sees everything now through their own emotional bias.

The two party system was very, very bad. But we are now living under imminent One Party rule. And it’s a party that is far too similar to Big Brother’s in Orwell’s 1984. Frightening prospects exist for the common American under “Woke” party leadership. Reparations? Perhaps a ban or at least an abridgment of the First Amendment? South African-style Truth and Reconciliation committees? Open and strictly enforced quotas in all walks of life? Banning of the words “man” and “woman?” A constitutional amendment to enshrine all 57 genders as ironclad law?

One thing you won’t see under “Woke” rule is an audit of the Federal Reserve and reform of our counterfeit fractional banking system. Or a new JFK assassination or 9/11 investigation. Or a decades overdue upgrade of our Third World infrastructure. Or an abolition of private prisons. Or a change in our misguided, Israeli-driven foreign policy. Or a demand that the intelligence agencies make their budgets public. Or spending cuts for the military industrial complex. Or demands to bring any of the troops home. And most obviously, not even a tepid debt jubilee for all those devastated by the senseless economic lockdown.

Donald Trump’s legacy will ultimately be that he forever destroyed any chances of a real Third Party ever arising in this country. There will never be another populist using his revolutionary rhetoric again. Instead, his cartoon personality assures that the disastrous two party duopoly is now set in stone. Except it’s even worse than that, since the Stupid Party has ceded all power to the Evil Party, we will be completely under the rule of “Woke” tyrants, but for token clowns like Lindsay Graham, Mitch McConnell, Paul Ryan and Nikki Haley. The Stupid Party is dead, long live the Stupid Party!

Trump will not run in 2024. He many not legally be able to, because Lady Pelosi and company want to either invoke the 25th amendment, or ram through a warp speed impeachment, ironically mimicking Trump’s unwise push for a potentially deadly dose of something his loyal base strongly opposes. Trump has now been apparently banned for life from Twitter, at the initial behest of former First Lady Michelle Obama, who has an all too bright political future in our “Woke” Orwellian world. For someone who communicated exclusively through Twitter, this is a bitter pill for Trump to swallow. One pictures him tapping aimlessly away on his keyboard, while shoving down Big Macs and Diet Cokes.

Our only chance is that the AOC-types, the “Squad,” wind up embroiled in ugly disagreements with the old “Woke” guard like Pelosi, Schumer, and pseudo-President Biden. Maybe they can distract each other enough to prevent the worst measures from being implemented. Gridlock has always been our best friend on Capitol Hill. The odds of any of these glorified welfare recipients ever doing something good is so remote that their inactivity is the best we can hope for. Our new leaders may be diverse in appearance, but they certainly aren’t diverse in perspective. They will all support war, engage in corruption, and follow orders.

Rumors are that people who merely attended the rally on the Mall last Wednesday have been fired from their jobs. Well, no one protested when all those people were fired last year, for criticizing the violent riots on social media, on their own free time. AOC and others call Trump voters “complicit” in his election. That means an accessory to a crime. So Trump’s election, in their “Woke” eyes, was a crime. Maybe a “hate crime.” I would say that the logistics of attempting to punish or prosecute 70 million voters would be unfathomable, but I don’t think you can overestimate the “Wokeness” of our new leaders. They may very well make “White privilege” a crime. They may ban the word Trump from society, like one of Orwell’s unpersons.

I could not be more demoralized or disillusioned. Trump’s four years were almost entirely bereft of the “winning” he promised. “Trust the plan” seems like the most bitter joke imaginable now. The only arrests were of Trump’s associates, who were prosecuted by his Justice Department. The same Justice Department that declined to prosecute Hillary Clinton. Or look at Hunter Biden’s laptop. Or investigate vote fraud.

Trump was the commander-in-chief for four years. He could have brought all the troops home, as he often threatened to do. He could have closed the border, as he often threatened to do. He could have written those Executive Orders he promised, to ban DACA, ban birth-right citizenship, close sanctuary cities, and end the foreign VISA worker programs. Instead, while he undeniably was preoccupied with fending off attacks for his entire time in office, including a laughably partisan impeachment effort, he spent most of his time in office tweeting. And engaging in childish food fights with state-controlled journalists and clueless celebrities. The level of discourse is now less civil than it has ever been.

Trump’s rhetoric alone, however, puts him apart from all presidents since JFK. The things he alluded to, or casually mentioned, were outside the pale. No respectable politician would ever touch them. It was Trump’s rhetoric at his wildly enthusiastic rallies, and his attacks on the establishment via Twitter, that caused that establishment to hate him like no other public figure in our history. Trump Derangement Syndrome is far more real than any Soviet-style invented mental illness. So many of my former friends, good people all, have fallen victim to it. They hate him irrationally, and they will not listen to reason on the subject.

I don’t know where we go from here, or even where the scripted Punch and Judy show goes. If Trump isn’t impeached or taken out by the 25th amendment, he’ll be 78 years old in 2024. He has almost superhuman energy for someone his age, but sooner or later it will catch up with him. And I think his support has peaked. A certain number of those even at the rally have to be disappointed, in falling for the “big” event on the 6th, many traveling from far flung parts of the country (as did Ashli Babbitt, who was murdered by a cop at the Capitol), only to be unceremoniously rejected and told to go home by their leader.

Beyond Trump, the Stupid Party has no one else. Trump was only elected because he never really was a Republican. Stupid Party favorites like Nikki Haley and Paul Ryan are literally empty suits, standing for nothing except war and lowered corporate taxes. They would be lucky to win 20 percent of the vote in a presidential election. Because Trump didn’t deport the millions of illegals in this country, and Biden is about to grant them all amnesty, the voting demographic will shift into impossible territory for the Republicans. Trump will be the last Republican president.

The “Woke” rise to power is the culmination of decades of brain washing, on the Disney Channel and Nickelodeon, on ESPN, by Oprah and The View, and on every college campus in America. Only by diabolical, Pavlovian programming could you get perhaps a majority of the country to think that men can menstruate, and have babies. Or get young parents to hold parties celebrating their 3 or 4 year old child’s conversion to the opposite gender. That would be child abuse in any sane society. Here and now, it is being celebrated by every media outlet. You can’t fight city hall, when city hall completely controls the the airwaves.

And the internet, once the shining beacon for all of us, is standing on wobbly legs as well. Big tech is censoring virtually all opposition to the One Party. The people who support the horrific likes of Kamala Harris, and Beto O’Rourke, and Amy Klobuchar, and Pete Buttigieg, do not remotely believe in free speech. It’s a wonder they don’t burst into flames as they swear allegiance to a Constitution they not only don’t support, but sneer at as a “racist” relic. Unless more people stand up, the internet will eventually look like your average cable or satellite package of channels. Blogs like this will be banned. The last thing the “Woke” elites want is for average people to analyze public issues without filtering it all through an overpaid talking head.

I wish I could find some glimmer of hope. Some of Trump’s most faithful supporters are still believing that he is going to activate an Executive Order, or invoke the Insurrection Act. The White Hats are still making plans. It is almost literally the last hour, but maybe they have a sense of the dramatic. The Q folks are still trumpeting arrests and sealed indictments that are invisible to the public. All the biggest swamp creatures still seem to be walking free, so I’m not sure just who is being arrested. The swamp seems fuller than ever.

Trump is surrounded by those he can’t trust, we’re told. This is unquestionably true, but he appointed every single one of them. He put Never Trumper Christopher Wray in charge of the FBI. Was that even an improvement over the odious Comey? He replaced the strangely listless Jeff Sessions with Deep State Hall of Famer William Barr. What other Attorney General in our history has refused to investigate those scheming against his boss, while eagerly targeting his boss’s campaign aides, who have done nothing criminally wrong? And Trump picked Mike Pence as his running mate; another Never Trumper whose failure to stand by the president should have surprised no one.

One young Senator seems promising- Josh Hawley of Missouri. However, Simon & Schuster cancelled Hawley’s contract for a book exposing big tech and big pharma, because he spoke out in the Senate, protesting the fraudulent election. Many are calling on him to resign. This is the “cancel culture” element of the One Party, and we all either need to fight it or get used to it. Offend somebody who is “Woke,” and get fired. Instantly. Without passing “Go” or collecting $200. And no one will speak out in your defense. You should have known better- watch what you say. The Constitution doesn’t protect “hate speech.”

We haven’t been a free country for a long time. But we weren’t this bad. And we’re going to get a lot worse. We all saw what happened when a president spouting populist rhetoric, with millions of followers, attempted to expose electoral fraud, for which massive evidence exists. However, those videotapes, and over a thousand sworn affidavits amount to “no evidence!” according to every disciple of the “Woke” party. The mere mention of vote fraud gets you kicked off Twitter and You Tube, and brings the “Fact Checkers” out on Facebook. We’re like a collective battered wife, hoping that our abusive spouse will give us a smile and bind the wounds he caused. Stockholm Syndrome is too mild a word to describe American malaise.

The “Woke” supporters are calling what happened at the Capitol an “insurrection.” This event, being compared to Pearl Harbor and 9/11, will undoubtedly be used to further crack down on what’s left of our civil liberties. They want all those involved to be locked up for ten years. The more vicious social justice warriors want them executed for treason. Law means nothing when emotion, and not reason, rule those enforcing it. Politicized prosecutions should never happen. Under “Woke” rule, every prosecution, and every punishment, will be at the whim of who’s enforcing it.

I’ll keep writing this blog, and publishing books, and doing my weekly radio show, and doing interviews, for as long as they let me. I’ve been calling this a crumbling country. Or a collapsing country. We are no longer in the process of something; we have crumbled, we have collapsed. The only thing that can save us from a tyranny the likes of which the world has never seen is an uprising of many millions, in concert with each other, fighting for the same goals.

In this fantastically divided country, after the brief age of Trump, we remain locked down, wearing masks, socially distancing, listless and rudderless. Like Orwell’s Winston Smith, we have learned to love Big Brother.

About donaldjeffries

Author of the critically acclaimed best sellers “Hidden History: An Expose of Modern Crimes, Conspiracies, and Cover Ups in American Politics,””Survival of the Richest: How the Corruption of the Marketplace and the Disparity of Wealth Created the Greatest Conspiracy of All,” and the newly released “Crimes and Cover Ups in American Politics: 1776-1963.” Author of the 2007 sci-fi/fantasy novel “The Unreals,” which has been described as a cross between The Wizard of Oz and The Twilight Zone, and compared to A Confederacy of Dunces and classic Russian literature. A second edition of “The Unreals” was published in February 2015 by Pocol Press. Long time JFK assassination researcher. Seeker of truth, proponent of justice and fairness. Enemy of corruption. Sender of as many “tiny ripples of hope” as possible. View all posts by donaldjeffries »

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EconomicPolicyJournal.com: In His First 100 Days, Biden Plans to Out Do All of Trump’s 2020 Mad Spending

Posted by M. C. on January 10, 2021

According to Axios, Biden wants to follow this up with a $3 trillion tax and infrastructure package.

Yes, give most Americans $1,400 (in addition to the $600 they are now receiving) and then tax the hell out of the “rich.” In addition to raising capital gains taxes for all.

This is what the Democratic control of both houses of Congress is going to bring.

https://www.economicpolicyjournal.com/2021/01/in-his-first-100-days-biden-plans-to.html

Joe Biden is considering asking Congress to give Americans the balance of the $2,000 per person coronavirus payments that was promoted by Trump, Axios reports. In addition, Biden wants to send funds to state and local governments to fill gaps in revenue that were created by governors and mayors that locked down their jurisdictions because of COVID-19.

Then, get this.

According to Axios, Biden wants to follow this up with a $3 trillion tax and infrastructure package.

Yes, give most Americans $1,400 (in addition to the $600 they are now receiving) and then tax the hell out of the “rich.” In addition to raising capital gains taxes for all.

This is what the Democratic control of both houses of Congress is going to bring.

Mitch as majority leader, though a crony himself, would have stopped a lot of this.

Needless to say, the spending Biden is proposing here is going to be much higher than what will be generated by any new taxes, so Jay Powell at the Federal Reserve better start ordering a lot more barrels of green ink.

RW

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America’s Economy Cannot Survive Another Lockdown, and the Cult of the Reset Knows It – LewRockwell

Posted by M. C. on November 25, 2020

For a real free market to function, weak or corrupt elements must be allowed to fail and die. Instead, central banks around the world and most prominently the Fed kept all of those destructive elements on life support.

This has created what amounts to a “zombie economy:”

The “great reset” is just another phrase for “the new world order.” It is important to understand that the reset these people are talking about has actually been engineered and staged for many years. 

https://www.lewrockwell.com/2020/11/no_author/americas-economy-cannot-survive-another-lockdown-and-the-cult-of-the-reset-knows-it/

By Brandon Smith
Alt-Market

The U.S. economy has been on the verge of collapse for at least a decade, ever since the crash of 2008 and the subsequent explosion in fiat stimulus from the Federal Reserve. While the mainstream media has always claimed that central bankers “saved” us from another Great Depression, what they actually did was set us up for a far worse scenario — a stagflationary implosion of our society.

Here is the primary problem: By injecting trillions of bailout dollars into the system, the Federal Reserve prevented the economy from going through its natural purging cycle. This cycle would have been painful for many, but survivable, and it would have removed large amounts of excess debt, parasitic corporations that produce little or nothing of use, as well as numerous toxic assets with no legitimate value. For a real free market to function, weak or corrupt elements must be allowed to fail and die. Instead, central banks around the world and most prominently the Fed kept all of those destructive elements on life support.

This has created what amounts to a “zombie economy:” a system that needs constant outside support (stimulus) in order to continue moving forward. In the process of keeping zombie corporations and other parts of the body alive, healthy parts of the economy, like the small business sector, get devoured. Jenga Classic Game Check Amazon for Pricing.

The zombie economy is, however, highly fragile. All it takes is one or two major shocks to bring it down, and the moment this happens the whole facade will disintegrate, leaving the public in panic and disarray. This is what is happening right now in 2020, and it will get much worse in 2021.

Bailouts encourage and reward unhealthy financial behavior, and this is why national debt, corporate debt and consumer debt have recently hit historic highs. When every pillar of the economy is encumbered with the weight of debt, any instability has the possibility of bringing all those pillars down at once. The Federal Reserve turned the U.S. into an economic time bomb, and the Fed is itself more like a suicide bomber than some kind of fiscal savior.

The “Great Reset”

I first heard the term “global reset” or “great reset” back in 2014/2015. I wrote an article about how the reset was actually a long term process in my article The Global Economic Reset Has Begun. Christine Lagarde was the head of the IMF back then, and she mentioned it briefly in multiple interviews.

I made a mental note of it because it seemed planted into the discussion very awkwardly, as if it was scripted. I rarely heard it mentioned for years after that. In 2020, as we descend into social and economic chaos, I’m seeing the phrase used everywhere in the media and by globalists.

Over the past decade, globalist institutions have come up with numerous phrases that seem to refer to a worldwide planned and dramatic shift in human society sometime in the near future. The “great reset” is just another phrase for “the new world order.” It is important to understand that the reset these people are talking about has actually been engineered and staged for many years. This is not something that just popped up in 2020 — they have been talking about it since at least 2014. And before that, they talked about the new world order, and “multilateralism,” and the “multi-polar world order,” and Agenda 2030, etc. Exploding Kittens Card… Buy New $9.99 (as of 06:08 EST – Details)

The reset is the catalyst phase of an agenda that has been in the works for a long time now. The goal, as they have openly admitted many times, is to centralize the entire globe into one monetary structure, one highly interdependent and socialized economy, and eventually one faceless and unaccountable governing body.

One of the biggest obstacles to the finalization of the reset and the formation of the new world order has been liberty-minded populations across the planet — most of all, the liberty-minded people within America. The U.S. has to be destabilized or eliminated; the old world order has to be brought down before the new world order can be introduced. The people have to be beaten down and desperate, so that when the globalists offer their “reset” as the solution, the people will gladly accept it without question — simply because they want the economic pain and uncertainty to stop.

A common statement made by globalists from Klaus Shwab at the World Economic Forum to the current Prime Minister of Canada, Justin Trudeau, is that the coronavirus pandemic is the “perfect opportunity” to trigger the “great reset.” As globalist Rahm Emanuel is famous for admitting, in crisis there is opportunity to do things you were not able to do before.

In other words, when people panic in the face of crisis, they become easy to manipulate. And, if a crisis doesn’t happen naturally, then why not create a crisis from thin air and use that to cause panic?

Enter the economic lockdowns…

The lockdowns have not only been proven to do nothing to stop the spread of the coronavirus, but they are also a clear attack on what’s left of our economic system. The small business sector in particular is being gutted as more than 60% of those that shut down during the first lockdown were unable to reopen. Small businesses provide more than half of all employment in the U.S.. When they collapse, the U.S. economy will have nothing left except the big-box corporations that the Fed put on life support over a decade ago. Throw Throw Burrito by… Buy New $24.99 (as of 06:08 EST – Details)

Real unemployment, which is already at 26%, will skyrocket even further if a second national lockdown is initiated. The speedy collapse of the U.S. economy will be assured, and the “great reset” can commence. At least, that is what the globalists want to happen…

With the U.S. presidential election currently being contested, it is hard to say how the next few months will play out in detail. As I have been pointing out since July, a contested election is the best possible scenario for the globalists because it creates a Catch-22 situation:

  1. If Trump stays in office, the political left will accuse him of usurping the presidency and there will be mass riots in the streets. Conservatives will be tempted with the idea of bringing in martial law to suppress rioters, and such measures will undermine the flow of the U.S. economy, causing its fragile structure to implode.
  2. If Biden enters the White House, then he will attempt a Level 4 lockdown similar to the lockdowns we have seen in Australia, France, Germany and the UK; perhaps even worse. Our economy will crumble, conservatives will revolt, and Biden will attempt martial law measures.

Either way, the globalists get their crisis, and therein their opportunity.

Surviving the lockdowns and deterring the globalists

Taco Cat Goat Cheese P… Buy New $9.99 (as of 06:08 EST – Details) But here is where things get less certain for the elites. If liberty-minded Americans organize immediately for security and mutual aid, we can defuse the Catch-22. If we provide for our own security within our own communities, there will be no rationale for Trump to institute martial law. Community security is an awesome deterrent against leftist rioting and looting, and basic economic trade can continue.

By extension, if we organize our own community security as well as localize our economies with barter and trade, we also act as a deterrent to Biden and any ideas he might have of enforcing national lockdowns. The point is, we can’t allow the globalists to dictate the terms of the crisis. We must act to change the rules of the game.

The reset is not a natural inevitability, it is a con, a trap. No matter how bad the crisis in our nation becomes, it is the people — namely the liberty-minded people — who will determine the future, not the globalists. Their plan relies on our panic. Instead of panic, let’s show them a unified front and a plan of our own.

This article was written by Brandon Smith and originally published at Birch Gold Group

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Erie Times E-Edition Article-There is no time to wait, pass COVID relief now

Posted by M. C. on November 18, 2020

Ooops ET-N forgot to mention the CARES act gives away thousands of dollars hospitals get for every hospitalized COVID “case”.

Or that anything that moves is tested for COVID, symptomatic or not.

Or that in California for example if you go in for a re-test you are counted again if still positive.

Death rates are down but “cases” are up. “Cases” were invented to keep the fear and control factor up. See this government sponsored source (NPR) for death rates dated a MONTH ago. https://www.npr.org/sections/health-shots/2020/10/20/925441975/studies-point-to-big-drop-in-covid-19-death-rates

It is getting harder to flog fear.

https://erietimes-pa-app.newsmemory.com/?publink=03ca57827

A version of this editorial first appeared in USA Today.

Like it or not, states are going to impose more shutdowns and social distancing orders as COVID-19 numbers rise and as people move indoors.

Also, like it or not, on Dec. 31 a number of benefits provided in the March CARES Act expire. Among the lapsing provisions are protections against homeowner and renter evictions, increases in the dollar amount and duration of unemployment benefits, and provisions that make these benefits more available to freelancers, small businesses, gig workers and others.

These events could take a huge toll on the economy. Which is why Congress needs to pass an additional relief package now and not wait for the arrival of the Biden administration and a new Congress.

This is not a radical idea espoused only by the deficits-don’t-matter crowd. Nor is it something that benefits one party. It’s a mainstream, pragmatic position espoused by large sectors of the business community as well as the more liberally minded.

Just last month, Federal Reserve Chairman Jerome Powell — an appointee of President Donald Trump — urged more stimulus, even at the expense of greater deficits. Without prompt action, Powell said, “household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”

These things could play out in many ways. Restaurants and other small businesses could close, leaving empty storefronts in once vibrant commercial zones. Widespread defaults on commercial real estate loans could lead to a tightening of credit for everyone.

The next few months are the most critical period America has yet faced with the pandemic. New cases of COVID-19 are twice what they were during the summer peak, and the infection rate shows no signs of slowing even as the nation awaits the arrival of safe and effective vaccines.

On Capitol Hill, the two sides dug in as they started the lame-duck session. The Democrat-controlled House passed a $3 trillion measure in the spring, then cut it down to a $2.2 trillion plan before the election. The latest version includes a new round of $1,200 checks to individuals and aid to schools, among other things.

The Republican-controlled Senate has considered, but not passed, a $1 trillion measure in the summer, and a plan about half that size just before the election.

Neither side seems inclined to budge. And Trump is a wild card.

Something in the range of $1.5 trillion seems like the most practical idea. The two sides can negotiate what goes into it. They appear to agree on the need for additional stimulus checks, but little else. They must prioritize funding for programs that will directly impact the spread of COVID-19, including money to expedite the distribution of vaccines.

It is time for Congress to put the lives and livelihoods of Americans first and pass an economic relief measure now.

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The US Savings Bond Scam | Mises Wire

Posted by M. C. on November 17, 2020

The only real hope for savings bondholders is the re-establishment of a sound dollar. Tragically for America, that goal seems as far distant as ever…

https://mises.org/wire/us-savings-bond-scam?utm_source=Mises+Institute+Subscriptions&utm_campaign=f36a87dfdb-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-f36a87dfdb-228343965

Trevor Daher

Very insightful commentary has been made of late, much of it by fellows or fellow travelers of the Mises Institute, regarding the effects that monetary policy is having upon the lives of ordinary people and the potentially disastrous future consequences which may be wrought upon the same. This article will introduce, and lament, the reality of interest rates and inflation.

The interest rate on a thirty-year Treasury—a thirty-year loan to the US government—is 1.6 percent as of this writing. Shorter-term yields are far lower. Interest rates on savings accounts and certificates of deposit are so low that, for long-term holdings of US dollars, a mattress or an old coffee can might, for many people, constitute a satisfactory substitute for banking products.

Many individuals depend upon fixed-income securities as a means of nominally protecting the principal of their savings and wealth while also generating an income. This is particularly true of retirees or those nearing retirement. This is because fixed-income securities are generally viewed as among the safest income-producing assets, since the counterparty (the borrower) is contractually obligated to make the payments. This perception of safety and security is especially true for government-issued debts—bonds—from governments that are considered a good credit risk and whose currencies are widely accepted—such as the United States.

Consider that the individual or family in today’s interest rate environment would need to have millions of dollars saved or invested in fixed-income securities in order to generate enough income to sustain them in retirement. If we consider the case of US government debt securities, generally regarded as among the safest investments in the world, the thirty-year Treasury yields the highest interest rate, 1.6 percent as of this writing. In order to earn a retirement income in excess of, say, $30,000 per year, an individual or couple would need to hold at least $2 million dollars’ worth of Treasurys. 

Lest we forget, $30,000 may not even afford a comfortable living for those individuals or couples who do not own their own homes, who live in high-tax jurisdictions, who have debt obligations such as car payments, who may have substantial medical expenses, or who might wish to provide some financial support for their children. In other words, those prudent and thrifty individuals who have arranged their affairs such that they can retire debt-free, in a low tax jurisdiction, and with more than $2 million dollars worth of fixed-income securities may get by with these interest rates, ceteris paribus. But, presumably, these people number very few. As for the rest, they would need substantially more than $2 million dollars’ worth of assets.

Low Interest Rates and Savings Rates

Consider this, too: that the problem of where to put one’s money and what to do with one’s savings affects us all—not just the retirees. Do you want to save up your money, say, to buy a car in the future? A house? To fund your children’s education? To start your own business? To have an emergency fund? Where can you put your money, with a reasonable degree of confidence in the safety of the principal and where it can also generate a positive return? We will return to this question in a few moments.

Many institutions rely on fixed-income securities for the same reasons as the individuals and the families aforementioned. One difference, though, is that these institutions use the fixed-income securities as a means to meet their future obligations. For instance, insurance companies often invest premium payments in fixed-income securities, because they are generally regarded as safe, income-producing assets, and the insurance companies can use the future returns of these investments to meet their future contractual obligations. The same is true of pension funds, endowments, charities and nonprofits, and other institutions. Consider, now, that these institutions also serve individuals: contributors, customers, communities, and constituents. Many ordinary people are relying on these institutions, and their ability to meet their future obligations.

These artificially low interest rates, the Federal Reserve has made very clear, are here to stay. According to Federal Reserve chairman Jerome Powell, at a press conference in June of this year, “We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates.”

Chasing Yield

Many commentators here at the Mises Institute, on Wall Street, and elsewhere, have all identified another worrisome consequence of this artificially low interest rate environment: it has induced individuals and institutions to chase yield, i.e., to knowingly make successively riskier investments in the hopes of attaining a higher rate of return than can be found in the “safer” investments. Bear in mind that this problem is global; in other developed countries, interest rates are often equally low or in some cases negative! This further frustrates the search for yield and provides incentive for people and institutions to lend money to borrowers with a higher credit risk or to wade into alternative asset classes which are generally viewed as riskier than fixed-income. The now infamous mortgage-backed securities? Junk bonds? Stocks? Real estate? Savings accounts? The mattress and coffee can combo? Where are people and institutions to put their money?

In a bygone era, many people would not have worried so much about this problem. They could have held onto their cash, or put it in a savings account, a certificate of deposit, or some other banking product, and felt relatively confident that their money would retain its value and purchasing power over time. Today, though, this is no longer possible, even for the thrifty and prudent retirees who were mentioned earlier, the ones who scrimped and saved all of their lives and achieved a great deal of financial success.

“Flexible” Inflation Targets

This is because the Federal Reserve promised just earlier this year that they will debase the value of the US dollar at a rate in excess of 2 percent per year for an indeterminate period of time. For context, a 2 percent annual rate of inflation was the Federal Reserve’s previous inflation target. At a press conference in August of this year, though, Chairman Powell unveiled their new plan for monetary policy. In Powell’s words, since the Consumer Price Index—the Federal Reserve’s metric for measuring inflation—has been running at a rate below 2 percent per year for a number of years, their new inflation-targeting scheme “will seek to achieve inflation that averages 2 percent over time.” And, since the CPI has been running below 2 percent for some time, “appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” Notice that he did not specify an upper bound—a maximum annualized rate of inflation—but just stated that it would be “moderately above 2 percent.” Nor did he specify a period of time during which the inflation rate would exceed 2 percent. Rather, the Federal Reserve says, “In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting.” Flexible indeed.

If the Fed is successful in keeping the interest rates artificially low, and debasing the value of the US dollar with increasing rapidity, one might reasonably conclude that most people are going to suffer financial and economic hardship in the future. The value of people’s savings and fixed-income assets—generally viewed as the safest kind of assets—is going to decline, while their cost of living is going to rise. This is the expressly stated goal of the Federal Reserve.

The types of individuals who read articles published on mises.org will know what to expect as a consequence of this, the tragedy of our savings. In response to the grievous loss of their life’s savings, and the insufferable rise in consumer prices, many people will clamor for the government to save them. Confronted with the problems caused by monetary policy—the interest rates and the inflation—many people will lay the blame at the feet of the market, its firms and entrepreneurs, and the very nature of our economic order. They will turn to the government for a solution.

Howard Buffet on the Savings Bond Scam

None of this would surprise Howard Buffet, the Nebraska congressman and insightful critic of American monetary policy in the post–New Deal world. Buffett warned the American public about these twin problems of monetary policy and their insidious consequences more than sixty years ago.

He wrote an article, published in Human Events magazine in 1959, entitled “The U.S. Savings Bond Tragedy.” The US Congress had just held an intense debate over whether or not to allow the Treasury to raise interest rates on US government bonds. Buffett noticed that “Despite furious verbal exchanges, both sides generally avoided any talk or action that would bring into public view the investment record of savings bonds. That subject was strictly taboo.” For years, “the Treasury pulled out all the stops in glorifying the merits of these securities…the claim was made that ‘US savings bonds are the safest investment in the world today.'”

Their advertising efforts paid off. According to Buffett, at the time of his writing in 1959, “An estimated 40 million Americans, mainly of the small income group, are owners of over $40 billion worth of US savings bonds.” To Buffett, these poor Americans had been suckered into a raw deal. “Technically, savings bonds have been absolutely ‘safe,’ just as the advertising claimed. Every investor in them has gotten his dollars back on demand plus interest.” However, there is more to this story than meets the eye.

In fact, Buffett said, for the twenty years between 1939 and his writing in 1959, “no large group of Americans has been hurt worse financially than that which placed its nest-egg in savings bonds.” Depending on the date when they were purchased, the owners of these bonds had suffered a loss of “up to 50 per cent or even more” because of “the rotting of the dollar.” Buffett’s analysis didn’t stop there, though, with the mourning of the loss of these Americans’ savings. He continues,

During this same period, of course, all holders of fixed dollar obligations suffered similar losses. Without minimizing their losses, it is our purpose here to examine the facts and circumstances surrounding the specific disaster to those who had directly entrusted the Government with their savings.

Fair play, to this special category of 40 million thrifty citizens, has been entirely within the control of successive Administrations and Congresses. It is the Government that has created the inflation that has raised the cost of living 100 per cent since 1939. Likewise, it is the Government that fixes the dollar income of the various groups paid out of the US Treasury.

So it is instructive to learn how Congress has treated not only savings bondholders, but also several other groups whose income is determined by the lawmakers. Then it will be possible to decide whether or not savings bondholders have been treated fairly.

Buffett then went on to analyze and compare five categories of people whose incomes are paid out of the Treasury and are determined by the Congress (these ideas are Buffett’s but have been edited and adapted by the author of this article):

  1. The US congressmen themselves. Between 1940 and his writing in 1959, congressional salaries had increased by 125 percent and their pay, according to Buffett, was mostly tax-free.
  2. The federal civil service employees. Between 1944 and 1959, their income had increased 149 percent.
  3. Social Security recipients. During the same period, their income had increased by 111 percent, and was totally tax-free.
  4. Welfare recipients (ADC, Aid to Dependent Children, in his day). Between 1942 and 1959, their incomes had increased 196 percent.
  5. Savings bondholders. “The percentage increase to the savings bondholders’ income was 30 per cent between 1939 and 1959.” This was calculated assuming that all of the bonds were held to maturity.

For Buffett, these figures led to some very clear conclusions. First, that Congress has “been thoroughly aware of the rising cost of living.” And, second, that the Congress had taken “prompt and vigorous action to protect and preserve living standards for various other groups whose income comes direct from the U.S. Treasury.” This led Buffett to ask, “Are savings bondholders a class of second-rate citizens, entitled to less consideration than the other groupings mentioned?” Buffett spoke a few words in their defense:

They have by voluntary act shown a superior degree of trust in the Government….They have been the most responsive to patriotic appeals by Government for financial support….They have demonstrated the stamina to forego comforts now in order to be self-supporting in their declining years….They possess the industry and self-restraint to have achieved frugality in their personal finances.

Buffett pulls no punches and minces no words with his former colleagues in Congress. “Is there any item in this list of qualities that justifies a Federal policy of spoilation of these thrifty and patriotic people?” and “Yet, so far, the Government has caused them to be among those who have lost the most from inflation. It would be sobering to conclude that these better citizens have experienced unfair treatment simply because they were not organized into a pressure group.”

Buffett’s conclusion to this article, “The U.S. Savings Bond Tragedy,” is as powerful and stirring as it is prescient. In his own (abridged) words:

The only real hope for savings bondholders is the re-establishment of a sound dollar. Tragically for America, that goal seems as far distant as ever….In the background there is a political aspect of this problem that should not be overlooked. The integrity of our electoral system ultimately depends on the preservation of economic independence by the small and middle-income citizens. Unless this grouping can exist without Government subsidies, the term “free elections” can and will become a mockery. The savings bond episode is the most devastating blow this segment has ever been dealt.

Indeed, the terrible loss suffered could be worth its cost if our people would learn from this episode that Government is not benevolent, is not humanitarian, is not filled with compassion for low income people. 

If the delusion that Government ever truly embraces such noble attributes could be revealed for the mirage that it is, then this sad chapter in government finance could pave the way for a recovery of public understanding of the perils of the State.

The story of US savings bonds should teach us that most political talk professing deep concern for “the little people” is nothing more than oratory designed to catch votes.

The learning of that lesson in all its ramifications could bring about a revitalized America—equal to the challenges of the modern world, both at home and abroad. Author:

Trevor Daher

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The Coming of Corporate Collectivism – Doug Casey’s International Man

Posted by M. C. on October 28, 2020

Benito Mussolini stated that “Fascism should more appropriately be called Corporatism, as it is the merger of corporate and government power.”

https://internationalman.com/articles/the-coming-of-corporate-collectivism/

by Jeff Thomas

Benito Mussolini stated that “Fascism should more appropriately be called Corporatism, as it is the merger of corporate and government power.”

Quite so.

Interestingly, many, and perhaps most people today, lack an understanding as to the system under which they are ruled.

In the US in particular, most people who vote Republican take pride in believing that the US is a capitalist state.

Democrats, too, regard the US as a capitalist state, and take the view that that’s what’s wrong with America today. Increasingly, they seek a move in the socialist (or collectivist) direction to save them from the perceived evils of capitalism.

Interestingly, though, the evils to which they refer are the socio-economic inequalities that exist and the fact that those on the lower levels of society have decreasing opportunity to improve their lot in life. And, of course, since they believe they live under a capitalist system, they assume that capitalism must be the problem.

But this is not the case.

It can be said that the first major introduction of corporatist collectivism occurred in 1913, with the introduction of the Revenue Act and the Federal Reserve Act.

These were enacted under President Woodrow Wilson and were peddled to the American public as being anti-corporatist. The Revenue Act, which introduced income tax, was touted as creating a tax primarily for the rich, which would even out income disparities. The Federal Reserve was claimed to be a government agency that would ride herd over the greedy banking interests on Wall Street.

However, those few who actually read the bill learned that the Federal Reserve was neither federal nor a reserve. It was to be owned by the larger banks and would give them the power to control the currency of the US.

By promising collectivist changes, the goals of corporatism were advanced.

And so it is today. Virtually all the ills of American society, as described by liberals, have been caused by the introduction of collectivist concepts, capitalized upon by the plutocracy of the US.

The US is not a capitalist state. If we were to define it accurately, the economic system is corporatist and the social system is collectivist. It is, however, true that there exist the remnants of a free market, or capitalism.

Yet, to most – either liberal or conservative – this would seem impossible. We’ve been taught to regard Wall Street as a denizen for greedy capitalists. Surely, they would never support collectivism – the saviour of the masses.

Well, yes and no. Wall Street has dominated the American economy for over one hundred years. And in all of that time, they’ve sought a greater level of collectivism. They understand that collectivism (under any of its guises of socialism, fascism or communism) is a highly effective means by which to rule over others.

Collectivism does not raise up the masses, as Karl Marx suggested. Instead, it evens out the classes by lowering the great majority of people to an equal level of poverty.

The premise is a simple one: Promise largesse from the government, with the stipulation that basic freedoms must be relinquished in order to receive the largesse. Then, once all have been subjugated under collectivism, the largesse is steadily diminished. Corporate leaders convince the people to give up their rights, but then fail to deliver on their end of the bargain: to bestow riches upon the now-subjugated populace.

And again, this is nothing new. In 1917, one Leon Trotsky was hosted in New York by the most prominent banking and industrial firms. He was provided with funding, along with a US passport, courtesy of President Wilson. A contingent then went with Mister Trotsky to Russia with the funds necessary to wrest control of the new Soviet Union – to replace the Mensheviks with the Lenin/Trotsky-led Bolsheviks. The bargain was that the Soviet Union would be collectivist and that the goods needed by Russians would be supplied from New York, in perpetuity, unseen by the public in either Russia or the US.

Within a decade, the same firms began funding an up-and-coming Adolf Hitler. They funded his rise to power in 1933 and spent the remainder of the decade taking control of much of German industry, in addition to installing American-owned plants in Germany.

Prior to Hitler’s rise, Germany was flat broke and heavily in debt, but the massive monetary shot in the arm from Wall Street firms ensured that Germany would rise quickly and come to dominate Europe. Indeed, without US funding, the creation of the German war machine would have been impossible.

The term “Nazi” is an abbreviation for Nationalsozialistische – the National Socialist German Workers’ Party. Like the Russian people, the German people had been sold the collectivist promise, believing that their lives would somehow be better if they agreed to give up their liberties and accept totalitarian rule.

What they received was the totalitarian rule without the promised largesse.

The effort to create the same situation in the US has long been in the works. In the 1930s, great strides were made toward collectivism under the New Deal. However, post-war prosperity made Americans unwilling to give up liberties for largesse.

But today, increased governmental regulation has diminished the free market, diminishing opportunities for the average American. This has created a condition in which roughly half of Americans now buy into the empty promise of collectivism.

America no longer has true “liberal” and “conservative” parties. They now have “liberal” and “liberal-light” parties. Regardless of who is president, the US is on course to go full-bore in 2021 into dramatic social and legislative changes that will complete the transformation into Corporate Collectivism. All that’s needed is a trigger, as occurred in Germany in February of 1933.

Just two weeks prior to the 1933 German national elections, Adolf Hitler hosted a secret fundraising meeting for German and American industrialists, which netted him millions in donations, upon which he could finance a totalitarian corporate collectivist government.

He then surreptitiously created the Reichstag fire, blaming it on dissidents and political opponents, ensuring that he would be elected.

In his address at that fundraiser, he stated,

“There are only two possibilities, either to crowd back the opponent on constitutional grounds, and for this purpose once more we have this [upcoming] election, or a struggle will be conducted with other weapons, which may demand greater sacrifices… I hope the German people thus recognize the greatness of this hour.”

Germany was about to receive a totalitarian corporate collectivist rule, either through election or through the creation of civil unrest.

Similarly, the US today is about to undergo dramatic change. The remaining question is whether that will take place through election or its historic alternative.

Editor’s Note: The economic, political, and social volatility in the days and weeks ahead promises to be extreme. The impact on your savings, retirement funds, and personal freedoms could be unlike anything we’ve ever seen.

Do you want to know exactly what you should be doing differently with your portfolio and in your personal life?

EXCLUSIVE VIDEO: The Day After—How to Prepare for What Comes Next 

It reveals what you can do to prepare so that you can avoid getting caught in the crosshairs. Click here to watch it now.

Be seeing you

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Erie Times E-Edition Article-Socialism is no longer just a specter

Posted by M. C. on October 25, 2020

The pandemic has propelled government toward promiscuously picking economic winners and losers. As has been said, governments are not good at picking winners, but losers are good at picking governments.

https://erietimes-pa-app.newsmemory.com/?publink=15304d8cb

In 1906, Werner Sombart, the German economist, explained America’s resistance to socialism in five words, “roast beef and apple pie,” his shorthand for affluence.

In 2020, however, semisocialism has come to a United States that is stunningly wealthier — real per-capita income six times larger than in 1906; today’s superiority of purchasable products, from antibiotics to smartphones — than 114 years ago.

This year is drenched with politics, yet the nation seems oblivious that coming decades of American governance have been irrevocably shaped by what Nicholas Eberstadt of the American Enterprise Institute calls “the largest single ‘state surge’ in American history,” a “tidal wave of public resources”: debt.

In June alone, the federal government’s $864 billion budget deficit was larger than the deficit in all of fiscal 2017. And fiscal 2018. In eight years, the Reagan administration almost tripled the national debt, to $2.9 trillion, but that sum is less than Congress has increased the debt in the past nine months. Because both parties have a powerful permanent incentive to disburse more current government services than current revenues will fund, the pre-pandemic deficit in fiscal 2019 was already almost $1 trillion — at full employment, with 2.3% gross domestic product growth.

In 1946, after financing four years of global warfare, the national debt was 106% of GDP.

After nine months of spending to counter COVID-19’s impact on the economy — spending soon to be increased by additional trillions — the debt is about 100% of GDP, heading (according to the Congressional Budget Office) to almost 200% by 2050. And the Federal Reserve has, Eberstadt says, “crossed a Rubicon.”

Wading waist-deep into political policies, the Fed is adopting, Eberstadt says, “the role of managing and even micromanaging the American economy through credit allocation, potentially lending vast sums not only to financial institutions but also directly to firms it judges suitable for government support. The Fed already dominates the markets for U.S.

Treasury debt and mortgage debt as a result of previous, lesser crises.

It is by no means inconceivable that the current crisis will propel it to a comparably dominant position in domestic commercial credit.” If socialism is government allocation of economic resources (and hence of opportunity), then … John Cochrane of Stanford’s Hoover Institution, who blogs as the Grumpy Economist, notes that in the 2008 financial crisis, the Federal Reserve launched “creditor bailouts, propping up asset prices to keep investors from losing money, buying unprecedented assets.”

The risk of moral hazard — incentives for reckless behavior — is obvious.

Today, counter-COVID-19 spending already is approximately five times larger than that triggered by the Great Recession of 2008. By 2020, Cochrane says, “Once again a huge vat of debt had built up; once again, nobody kept any cash around for bad times, once again, the government stepped in and offered an enormous put option, just as, arguably everyone expected.” The Fed has propped up the prices of corporate and municipal bonds, and bailed out airlines, “or rather airline bondholders.”

“This time, however,” Cochrane writes, “I don’t even hear the promise to clean up the moral hazard. We are, apparently, permanently in a financial system in which people should load up on debt and risky assets in good times, and the government will buy them up should prices ever waver. Private gain, public loss.” Central banks buying trillions of assets are thereby “allocating credit.” Which is the essence of socialism.

The Fed buying government and corporate debt creates something difficult to unwind — what Cochrane calls “an entirely governmentrun financial system”: an attribute of socialism. “Modern Monetary Theory,” which Democrats praise and hope soon to practice, and which Republicans have been practicing without acknowledging, says: A nation with fiat money (not convertible into something — e.g., gold — valuable, but accepted by the public as a store of value) need never run short of money. It can borrow and create money as long as interest rates are, and are apt to remain, low. A theory that validates wishful thinking will not lack devotees.

Near-zero interest rates — the no-longernew normal — create, Eberstadt says, “zombie companies” that “can only survive in a lowinterest [rate] environment.” The result is rent-seeking and economic sclerosis, because “America cannot succeed unless a lot of its firms fail — including its largest ones. Bankruptcy and reallocation of resources to more productive ends are the mother’s milk of dynamic growth.”

The pandemic has propelled government toward promiscuously picking economic winners and losers. As has been said, governments are not good at picking winners, but losers are good at picking governments.

George Will is a Washington Post columnist. His email address is georgewill@washpost.com.

George Will

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Of Two Minds – What Could Go Wrong? Plenty

Posted by M. C. on October 9, 2020

https://www.oftwominds.com/blogoct20/go-wrong10-20.html

Charles Hugh Smith

Quite a lot of things can go wrong, especially if the mainstream’s rose-tinted sunglasses induce a delusional confidence in fantasy.

The conventional assumptions are remarkably rosy: the “recovery” is V-shaped in all the ways that count (i.e. the top 10% are once again doing well), the Federal Reserve will never let stocks go down or interest rates rise ever again (never never ever!), and the Federal government will borrow and blow endless trillions in stimulus ($2 trillion every six months seems about right, but since there’s no limit, we’ll double it if that’s needed to bail out every zombie corporation, bloated bureaucracy, skim and scam in the land).

what could go wrong? Gordon Long and I considered the question and came up with: quite a lot of things can go wrong, especially if the mainstream’s rose-tinted sunglasses induce a delusional confidence in fantasy.

What Could Go Wrong? (43 min. video)

1. A key part of the happy story is the US dollar (USD) will continue its decline, which is wunnerful for stocks and exporters: dollar down, stocks up, yea!

The official explanation for this free-fall is the USD will weaken as the Fed eases / prints. The mainstream thinking is that Japan and the Euro bloc are farther along in their socialization of debt (i.e. their central banks are monetizing fiscal deficits) and so the US will have to play catch-up, weakening the USD.

What could go wrong?

US-centric analysts forget the USD is the primary reserve currency and due to Triffin’s Paradox, it doesn’t just serve the US economy, it serves the global economy. You will never hear a Fed representative admit this publicly, because the PR / fantasy is that the Fed only cares about the American public (awww, gosh-darn it, aren’t they sweet?) and keeping inflation low and employment high.

In reality, the Fed’s core interests are enriching and protecting private banking globally, and maintaining U.S. global hegemony via a strong dollar. Recall that geopolitically, no empire ever got stronger by weakening its currency.

The Fed never addresses the USD’s global role and so conventional pundits ignore geopolitical forces: capital flows, the global need for dollars to service debt denominated in USD and reserves, etc.

Also recall that China pegs its currency to the US dollar, not the other way around. That alone tells you the role each currency plays in the global economy.

For the USD to weaken, the yen and the euro would need to significantly strengthen. But there’s a problem with this thesis.

Rather than being stronger, Japan and the EU are weaker than the US. Credit impulse is essentially zero in both Japan and the EU, both their banking sectors are insolvent, their economies have been stagnant for years (EU) or decades (Japan) and their demographic declines are accelerating. Both are export-dependent, an Achilles Heel as world trade / globalization enters a secular decline that could easily gather momentum.

The US needs capital flows into the US economy, so negative rates are a non-starter. Non-US borrowers have USD denominated debts of around $3 trillion, so demand for USD is not optional, it is a function of credit, commerce and reserves.

Simply put, the US is not about to sacrifice the euro-dollar / petro-dollar and its commercial hegemony just to satisfy domestic pleading for negative rates. Furthermore, Japan and Europe have proven that negative rates only weaken the private banking sector–the exact opposite of the Fed’s Prime Directive.

If the USD strengthens substantially, which it tends to do in crises, that will be very negative for equities. (No, no, no, the Fed has our backs! The Fed will never let my precious portfolio drop a single dollar!)

So sorry, but the Fed’s Prime Directives are not related to your portfolio at all. The Fed’s PR is all about domestic stocks, implicitly or explicitly, but when push comes to shove, your portfolio will be sacrificed without any hesitation to protect private banking and USD hegemony. The empire eats first, and only the tragically misguided believe US stocks are all that matters to the Fed.

2. The Fed’s easing, QE, etc. will spark a new round of credit expansion.

What could go wrong?

Credit expansion is on life support. There are very few investment opportunities, which is one reason why corporations have poured earnings into stock buybacks. The Fed can’t create low-risk, high-profit investment opportunities, not can it make poor credit risks into good credit risks.

Banks can’t afford to lend to insolvent households, zombie corporations or small businesses. The credit expansion impulse is impaired by the overhang of bad debt, excessive leverage, zombie corporations, etc. and there’s nothing the Fed can do about it. The Fed is pushing on a string.

Furthermore, the Fed is now encountering political resistance to its “enrich the wealthy and bail out zombie corporations” monetary policies. Its room to bail out the super-wealthy is increasingly constrained politically. The Fed is signaling that its focus is shifting from free money for financiers to funneling new money directly to households.

3. The federal government will borrow and spend trillions, sparking renewed growth.

What could go wrong?

As noted, banks cannot lend to poor credit risks, nor can they force those who don’t want to borrow more to take on new loans. Federal spending doesn’t magically create good credit risks or well-collateralized creditors.

Small businesses cannot lower their fixed costs enough to survive, and many of these costs such as taxes and fees will be rising as cash-starved local governments seek more revenues.

The free money will flow not into productive investments but into demand for goods and services which are constrained by declines in trade, high fixed production costs, retirement of key workers, etc.

Inflation will leap, surprising everyone who believed the “low inflation forever” story. As inflation soars, the purchasing power of the federal spending will plummet accordingly.

As UBI, Fed helicopter money, etc. becomes institutionalized, the working poor will exit low-paying, high-stress jobs, creating labor shortages. Small business won’t be able to pay higher wages and survive, and low-margin corporations will be squeezed as well.

There’s much more in our discussion: What Could Go Wrong? (43 min. video)



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The Story Behind the Book and the Introduction.



Recent Podcasts:

What Could Go Wrong? (43 minutes, with Gordon Long)

AxisOfEasy Salon #24: It’s Not a Conspiracy. It’s a Culture. (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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The Rutherford Institute :: Since 9/11, the Government’s Answer to Every Problem Has Been More Government | By John W. Whitehead |

Posted by M. C. on September 1, 2020

In other words, in the eyes of the U.S. military, noncombatants are American citizens a.k.a. domestic extremists a.k.a. enemy combatants who must be identified, targeted, detained, contained and, if necessary, eliminated.

https://www.rutherford.org/publications_resources/john_whiteheads_commentary/since_9_11_the_governments_answer_to_every_problem_has_been_more_government

By John W. Whitehead

“A government big enough to give you everything you want is a government big enough to take away everything that you have.”—Anonymous

Have you noticed that the government’s answer to every problem is more government—at taxpayer expense—and less individual liberty?

The Great Depression. The World Wars. The 9/11 terror attacks. The COVID-19 pandemic.

Every crisis—manufactured or otherwise—since the nation’s early beginnings has become a make-work opportunity for the government to expand its reach and its power at taxpayer expense while limiting our freedoms at every turn.

Indeed, the history of the United States is a testament to the old adage that liberty decreases as government (and government bureaucracy) grows. To put it another way, as government expands, liberty contracts.

To the police state, this COVID-19 pandemic has been a huge boon, like winning the biggest jackpot in the lottery. Certainly, it will prove to be a windfall for those who profit from government expenditures and expansions.

Given the rate at which the government has been devising new ways to spend our money and establish itself as the “solution” to all of our worldly problems, this current crisis will most likely end up ushering in the largest expansion of government power since the 9/11 terrorist attacks.

This is how the emergency state operates, after all.

From 9/11 to COVID-19, “we the people” have acted the part of the helpless, gullible victims desperately in need of the government to save us from whatever danger threatens. In turn, the government has been all too accommodating and eager while also expanding its power and authority in the so-called name of national security.

As chief correspondent Dan Balz asks for The Washington Post, “Government is everywhere now. Where does it go next?

When it comes to the power players that call the shots, there is no end to their voracious appetite for more: more money, more power, more control.

This expansion of government power is also increasing our federal debt in unprecedented leaps and bounds. Yet the government isn’t just borrowing outrageous amounts of money to keep the country afloat. It’s also borrowing indecent sums to pay for programs it can’t afford.

The government’s primary response to this COVID-19 pandemic—flooding the market with borrowed money in the amount of trillions of dollars for stimulus payments, unemployment insurance expansions, and loans to prop up small businesses and to keep big companies afloat—has pushed the country even deeper in debt.

By “the country,” I really mean the taxpayers. And by “the taxpayers,” it’s really future generations who will be shackled to debt loads they may never be able to pay back.

This is how you impoverish the future.

Democrats and Republicans alike have done this.

Without fail, every president within the last 50 years has expanded the nation’s debt. When President Trump took office on January 20, 2017, the national debt—the amount the federal government has borrowed over the years and must pay back—was a whopping $19.9 trillion. Despite Trump’s pledge to drain the swamp and eliminate the debt, the federal debt is now approaching $27 trillion and is on track to surpass $78 trillion by 2028.

For many years now, economists have warned that economic collapse would be inevitable if the national debt ever surpassed the size of the U.S. economy. The government passed that point in June 2020 and has yet to put the brakes on its spending.

In fact, the Federal Reserve just keeps printing more money in order to prop up the economy and float the debt.

At some point, something’s got to give.

As it now stands, the U.S. is among the most indebted countries in the world.

Almost a third of the $27 trillion national debt is owed to foreign entities such as Japan and China.

Most of the debt, however, is owed to the public.

Read the rest of this entry »

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