Sometimes we get so quickly and deeply into a technical issue that no one ever slows down and backs up to explain it all in simple and direct terms. This should take care of it: http://www.youtube.com/watch?v=jiadcgYQguo
More trouble at security. Jay Leno reports that an older woman came out of TSA screening all out of breath, angry, crying and hollering to her husband, 'How come YOU never touch me like that anymore?!'
CCP, You are exactly right. In the one example I would cite, the weight came off seemingly easily to a very healthy level but did not stay off, nor did he ever repeat the weight loss - ever. For most that I know, the excess weight seems stable, just not near levels considered healthy.
One thing I have learned in this discussion is to make a distinction between the obese with the difficulty in losing weight compared with the fit with their challenge of staying fit. In this forum, most people likely range from extremely fit to fanatically fit. The self discipline referred to by the fit is to keep doing what has always worked, where life is centered around awareness, health and fitness. The obesity problem is a wholly different challenge - to change everything about a person whose lifestyle and history is very much the opposite. I have not watched the video yet but what 5rings says make sense to me. Conscious choice is only a part of behavioral choice. I assume the conscious part of the brain and nervous system is a small part (1%?) of all that is going on. The martial artist likely is unusually proficient at controlling the rest of the system, with mind very in tune with and in control of body, extremes in awareness and self control. The obese patient is, I assume, very much the opposite. Innate within us, someone else mentioned, is the subconscious survival urge to eat all that you can, when you can, because it might not be there tomorrow.
Anther observation is that with a smoker, an alcoholic, a coke, meth or heroin addict after withdrawal and treatment, if successful, would hopefully never try it or use again. With food, it is necessary and keeps getting reintroduced. It would be like training an alcoholic or addict to get high in moderation 3 times a day with complete self control instead of quitting.
'Eat less. Move more...all these overweight people never thought of that either.'
Doc, It doesn't work if they only think about it, they have to do it for it to work.
Same advice might likely apply to most knee, hip, back issues - the load bearing areas of the body being asked to carry the wrong sized load. Also the location of the load moves outward with increases in size. Just tell them to lose the excess baggage and get back to you... I think you will lose your license if you do. They are looking for staples and pills by the time they come to you for weight loss. Sometimes that is what they need.
My grandpa always enjoyed telling us that in the early 1960s I think, WAY before warning labels, his doctor told him to quit smoking - 'Neal, those cigarettes are going to kill you.' No one told him about addiction or offered him patches, pills or hypnosis, but he did quit - right then. Everybody is different.
The powerline link will save you from a signup and age check at youtube.
A very worthy cause, I admire these brave protesters and the work that they do.
"A group of feminists called Femen went topless at an event at the Iranian embassy to protest the sentence of death by stoning that Iran meted out to Sakineh Mohammadi-Ashtiani. Few things attract attention like a group of topless women; you can see what happened in this brief, somewhat-explicit video:" http://www.powerlineblog.com/archives/2010/11/027685.php
In a series of posts earlier this year in which I discussed the growing list of fatal flaws in healthcare reform, I opined that "the defects of this legislation are so massive and pervasive that it will never see the light of day." Arguably, that's still true today, especially as we can now add one more fatal flaw to the list: you don't have to comply with the law because you can get a waiver! To date, 111 firms have been granted waivers by the Obama administration, and the list is sure to grow by leaps and bounds. The very fact that many firms need to apply for waivers is good evidence that ObamaCare is fatally flawed. To celebrate the increasing likelihood of ObamaCare's eventual demise, let me recap the fatal flaws as I see them:
Fatal flaw #1: The penalty imposed for not buying a policy is very likely to be less than the cost of insurance for a great many people. This, combined with the requirement that insurance companies may not deny coverage to anyone with a pre-existing condition, means that a large number of people will forgo signing up for a policy, knowing that they a) will save money and b) can always sign up for insurance if they turn out to develop a serious medical condition. Thus, the actual revenues will far way short of projections.
Fatal flaw #2: The government has no ability to enforce the penalty for noncompliance.
Fatal flaw #3: Mandating that people buy a health insurance policy simply because they are alive is arguably unconstitutional. It is also a way of hiding the fact that young people will effectively be paying a huge new tax in order to subsidize older people.
Fatal flaw #4: Regulating the price which insurance companies must charge for policies, coupled with a requirement that companies must rebate to their customers the amount by which their loss ratios fall below 90%, effectively turns these companies into government-run enterprises and would likely result in the effective nationalization of the healthcare industry. That is a violation of the Fifth Amendment, and of a Supreme Court requirement "that any firm in a regulated market be allowed to recover a risk-adjusted competitive rate of return on its accumulated capital investment."
Fatal flaw #5: A government-imposed restructuring of the healthcare industry can't possibly improve our healthcare system, and is extremely likely to make it worse. As Don Boudreaux has noted, "Trying to restructure an industry that constitutes one-sixth of the U.S. economy is ... so complicated that it's impossible to accomplish without risking catastrophic failure."
Fatal flaw #6: In cases wherein companies find that complying with the law would result in large increases in healthcare premiums that would threaten employees' access to a plan, the Dept. of Health and Human Services may grant a waiver to the company. As evidence of the first five fatal flaws accumulates, and as healthcare insurance companies continue to raise premiums to pay for the unintended consequences of government attempting to regulate an entire industry and hundreds of millions of people, more and more companies are likely to apply for waivers. At some point the whole edifice will come crashing down of its own weight.
I have a more detailed discussion of each of these flaws here, here, here, here, and here.
UPDATE: Lest I be accused of offering only non-constructive criticism, I refer readers to previous posts about the right way to reform healthcare, here, here, and here.
"We think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus."
- I couldn't agree more
The Fed response hit the exact same note Bernancke hit earlier, referring to their dual mission, employment and currency. [The Fed]"is confident that it has the tools to unwind these policies at the appropriate time".
Right. Don't suppose anyone there remembers 10.8% unemployment of 1981-1983 while we used those 'tools' to 'unwind' the previously excessive, expansionary policies. If we have those types of increases coming on top of this type of underlying unemployment, 12.5% unemployment looks possible to me in the aftermath of this fool's game. -------------- http://blogs.wsj.com/economics/2010/11/15/open-letter-to-ben-bernanke/
The following is the text of an open letter to Federal Reserve Chairman Ben Bernanke:
We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.
We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.
The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.
Cliff Asness AQR Capital
Michael J. Boskin Stanford University Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)
Richard X. Bove Rochdale Securities
Charles W. Calomiris Columbia University Graduate School of Business
Jim Chanos Kynikos Associates
John F. Cogan Stanford University Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)
Niall Ferguson Harvard University Author, The Ascent of Money: A Financial History of the World
Nicole Gelinas Manhattan Institute & e21 Author, After the Fall: Saving Capitalism from Wall Street—and Washington
James Grant Grant’s Interest Rate Observer
Kevin A. Hassett American Enterprise Institute Former Senior Economist, Board of Governors of the Federal Reserve
Roger Hertog The Hertog Foundation
Gregory Hess Claremont McKenna College
Douglas Holtz-Eakin Former Director, Congressional Budget Office
Seth Klarman Baupost Group
William Kristol Editor, The Weekly Standard
David Malpass GroPac Former Deputy Assistant Treasury Secretary (Reagan Administration)
Ronald I. McKinnon Stanford University
Dan Senor Council on Foreign Relations Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle
Amity Shlaes Council on Foreign Relations Author, The Forgotten Man: A New History of the Great Depression
Paul E. Singer Elliott Associates
John B. Taylor Stanford University Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)
Peter J. Wallison American Enterprise Institute Former Treasury and White House Counsel (Reagan Administration)
Geoffrey Wood Cass Business School at City University London
A spokeswoman for the Fed responded:
“As the Chairman has said, the Federal Reserve has Congressionally-mandated objectives to help promote both increased employment and price stability. In light of persistently weak job creation and declining inflation, the Federal Open Market Committee’s recent actions reflect those mandates. The Federal Reserve will regularly review its program in light of incoming information and is prepared to make adjustments as necessary. The Federal Reserve is committed to both parts of its dual mandate and will take all measures to keep inflation low and stable as well as promote growth in employment. In particular, the Fed has made all necessary preparations and is confident that it has the tools to unwind these policies at the appropriate time. The Chairman has also noted that the Federal Reserve does not believe it can solve the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators, and the private sector.”
The right of the people to be secure in their persons, houses, papers, and effects (against unreasonable search/seizure)...
No. That did not protect anyone in Kelo (wrongly decided) and there was more privacy discovered in Griswold, Roe, and Lawrence decisions for examples than contained in the 4th. Can't speak for Crafty by I am saying a much greater right of privacy than the standard for which we require a search warrant. I don't know the words but an assumption of privacy, to be left alone in the pursuit of happiness, until another compelling interest becomes greater.
Not a gold standard (IMO) as in the past with dollars redeemable, putting toothpaste back in a tube, but a basket of goods where gold and commodities play a large role at telling us how we are doing with value of the dollar. They already look at that and then just choose a different path. Bernancke gave it all away in his recent explanation. His "dual mission" is dollar and employment. But the employment problem is not monetary. Re-write his mission. Bad management of the Fed is no reason to have no management or no real currency IMHO.
Elsewhere I hear hindsighters whine that Greenspan was a Republican chosen by Reagan and Bernancke was George W's choice. But Greenspan was selected for his opposition and skepticism to Reaganomics, and Bernancke was the institutional, status quo choice, not a supply sider whatsoever. His viewpoint from his last writing seems to be more from the Krugman camp, that $3 trillion in Keynesian stimulus is failing because it too small, and nothing else needs addressing.
How about selecting the best and the brightest instead and making their mission crystal clear: We want a stable currency that the whole world can count on.
I agree with Rarick 100% on the previous post here with more emphasis on pay as you go taxes, much lower rates overall, and that excessive inheritance taxes just discourage economic success. ----
Big talk this week that Obama might go along with extending tax cuts. Good decision, lousy timing after unemployment doubled over the period of promising expiration and rate increases. He can't run again or even govern if we don't grow this economy so he has no choice except over hammering out the details. The Pelosi-Reid Lame-Duck should steal this one and do it now. They should have done it when unemployment hit whatever they considered to be unacceptable, if not before.
The liberal rationale to go along is that everyone knows that you don't raise taxes in a recession. Precise definition aside, an economy with 9.6% partially measured unemployment is bad enough to follow that rule. If raising rates is 'contractionary', why would you ever do it?
What they will get wrong is to again make the rate extensions 'temporary'.
The problem is not just the marginal rates investors and businesses face, it is the unnecessary destruction that uncertainty causes. Now we are poised to repeat that mistake. Slightly higher rates the last two years might have been less damaging than not knowing the future rates. At least investors and businesses could calculate choices and make decisions.
Making tax rates 'permanent' just means eliminating automatic expiration; temporary extensions mean continuing the uncertainty depending on political winds and economic results.
Sustained growth isn't built in an uncertain system. We don't need one or two quarters of good growth or one or two years of it. We need DECADES of sustained growth and even then we still face huge fiscal challenges.
If the lame duck Dems pass on this, what should the new R congress do? In the end that depends on what they can get some Dem senators and the President to sign on with, but the starting point has to be what is right and what the economy needs. If they extend by one year they create the same uncertainty that hampered growth the past year. If they extend two years, then the second year is exactly where we were last year. That may set up another Republican year in a bad economy in 2012 but it doesn't favor sustained growth, so it is irresponsible.
The responsible action is to make current rates 'permanent' which only means subject to new congressional action at any time.
The package from a new Republican House does not have to be exactly as things were. The estate tax does not have to stay at zero, it just needs to be low and permanent and not return to 55%. The Corp rate needs to be near the OECD average or median. Any worse destroys Obam's goal of doubling exports in 5 years. Capital gains rates need to reflect no taxation for inflationary gains which are not income. And maybe rates across the board should be cut by one point or even one tenth of a point, nothing severe before real spending cuts, but make the symbolic statement that when the other team punted on growing this economy, they gave up possession of the ball.
Thanks GM and George Will. This whole episode turns my stomach over all that is wrong in this country. One is the lies - it is not all-electric. The govt money was not paid back. It doesn't save the earth etc. Two is the govt ownership, one of the most egregious of all the unconstitutional federal actions I have ever seen. Three is the tax credit. Where to start on that one? The govt pays you to buy from them. What ever happened to equal protection under the law. Pay me equally to not buy one. It's a $41k new car, have ordinary taxpayers pay rich ones?? Since we are already a TRILLION AND A HALF in deficit, no one is paying. We are just devaluing our standard of living to pretend we are paying someone to do something of no commercial or market value. Then they count the 7500 expense as a TAX CUT Four, It has absolutely no environmental value. How many Dolt buyers will have this as there only car - then refuse all air travel, home heating, air conditioning etc all the other 'sources' of carbon. It is a bunch of BS. Even the plug goes into a carbon based coal supply while drag our feet another decade with no new nuclear.
If you believe the pathological science, the tax credit should go only to people who will go 100% off the grid, which of course is illegal in most of this country.
"no quick, easy, inexpensive, unobtrusive methods of screening passengers and cargo"
That's right. I hate to be facetious but we are getting to the point where we might just as well walk through airport screening buck naked. My answer has been mostly to drive which unfortunately increases the time and limits the distance I can travel.
Some improvements it seems to me could be made in identifying, discriminating and priortizing the passengers screened, and with those who packed, sealed and certified the cargo. For example, my sister who travels on business every week of the year should mostly have to just voluntarily prove that she is who she is, and speed through the fast lane. A frequently screened law abiding traveler with no suicidal leaning and no demographic or otherwise tendency toward blowing up planes doesn't need every crevice examined as closely as the unidentified or higher risk passenger. If I fly only once a year maybe they look a little closer because security doesn't know me. And if you are a young male of Saudi or Yemen origin, expired visa, one way cash ticket and ties to jihad, sorry but expect a closer look. If the science and the data supports discrimination, then discriminate. Our military discriminates what countries we go into. Marketers discriminate the markets they go into. Criminal investigators discriminate where they look for clues. Screeners need to discriminate at least to some degree or else fewer people and packages are going to be transported.
The problem widens as screening has moved to government buildings and to everywhere terrorists will choose to target next.
If I read this correctly, Obama was arguing on behalf of Big Auto which is partly US government owned that a foreign nation Korea should LOWER its emissions standards to accept American cars. But at home he wants to shut down those same companies from building those same cars BECAUSE of emissions with Cap Trade legislation, Kyoto targets, energy taxes, EPA rulings, etc. Unbelievable.
Maybe a little bipolar is mixed with the narcissism identified in the previous post?
Anyone who can remember the heating and air conditioning capability of an old air-cooled VW might wonder what heat or even defrost capability you will have in your all-electric car. I also wonder how the already short range might be affected by running the AC at full blast. Don't get me wrong. I love electric vehicles, just not when I need to go fast, go far, carry a load, pull a boat or travel in foul weather.
While our progressive-in-chief and his entourage are jetting the globe, hard core liberals here in the north country are wishing they had put chains on their bicycle tires and sand and salt on their bake trails last night before the seasons changed so quickly and so drastically:
http://www.startribune.com/ (Minneapolis paper, current lead story) SNOW EMERGENCIES DECLARED Foot of snow; thousands without power The largest November snowfall in two decades stormed across Minnesota on Saturday, dumping a foot of snow in parts of the Twin Cities. | Statewide warnings.
"private property which extends further than the human eye can see...Do I have [a right of] privacy?"
We will see what GM and others say. I say yes. Of course you have that right, up and until it conflicts with some other more compelling right of someone else. Let's say that law enforcement has a reason to believe armed bank robbers may be hiding out there or that forest fire officials have reason to believe a fire may may spread from there. People also have the right to have bank robberies pursued and forest fires prevented. That does not eliminate your right, it just may in rare cases supersede it.
I recall county officials used to write to my uncle regarding a little used family lake cabin that we needed to update an old septic system to newer standards. My uncle, a 9-term county attorney of a nearby county, would answer them with two questions. He wanted to know why he hadn't seen any report showing that the property was polluting in any way, and secondly he wanted them to refresh his memory with a copy of a letter signed by him giving them the permission they need to go on the property to conduct such a study, because he certainly didn't recall granting that permission. It never went any further than that except that after he passed away the septic system suddenly needed upgrading. If they had pressed on with legal action, I doubt he could have stopped them, but I think the question goes to Crafty's point, what right do they have to enter (observe, run tests) and what right does the property owner have to prevent them?
"there is a reasonable expectation of privacy in the public sphere if there is no one in sight"
I think so. GM sees this I think from a different perspective. If you are a suspect in a recent armed robbery, other competing rights come into play. But under ordinary circumstances, in a wilderness area or park, others have the same right to be there and enjoy nature and privacy, but not a right to follow or snoop on you. Stalking laws are based on that exact unenumerated right of privacy, everywhere you go. Federal employees in a national forest likewise have a right to be there, to go about their business protecting trees, enforcing rules, doing their specific job, but don't otherwise have any right to mess with your privacy, follow you or observe you without official reason. There might be an expectation that forest officials could stop by your campsite briefly to see if camping and fire rules are complied with, for example, but not to pull up a chair and observe continuously. That would be an obvious violation of an unemumerated right as you correctly suggest, IMHO.
In a slightly different context, 5rings wrote: "he who treats the site of pain is lost".
Under that philosophy or similar, I did not approve of a doc treating the consequences of what was happening before we attacked the likely causes.
My suspicion was exactly what GM posted, the over-weighted backpack. Add to that study habits that include lying sideways and contorted on a bed or on the floor leaning unsupported against something - for hours. Not exactly on ergonomic design. Never using the chair and drafting table I measured, built, adjusted to fit her.
A lot of it goes back to the textbook racket. There is no reason these kids couldn't be just carrying the pages or chapter they need for each class or just access it all online, instead of carrying 6-8 full textbooks everyday, every where they go. Second idea would be something with wheels pulled like a flight attendant's carry on bag. There was no way she was going to be first to change book carrying habits.
As an aside, same was true with hockey gear. People think hockey is dangerous but I like to joke that 80% of the injuries really come just from lugging the gear in and out of the arena. Athletes too proud to use wheels. A couple of years ago I started noticing all the new expensive hockey bags have wheels.
"China will overtake the US as the world’s biggest economy by 2012, or within two years."
Put me down as ... not buying it. US GDP is 3 1/2 times that of China. I don't think the currency under-valuation is off by 3 1/2 fold.
Strong dollar or weak dollar? Please think about it - which is better? No country ever devalued its way to prosperity. A well known adage. Yes a weak currency helps the exporter to win the business but only in the same way that lowering your price does. Lowering your price means you make less. Then you invest back in that economy and it costs you more. Right? Undervaluation doesn't lead to prosperity according to (all?) economists. Why would massive undervaluation be a good thing from anyone's point of view? In business, why would anyone want to be more than a hair in price under their nearest competitor? --- From one of the comments at the link: "Best thing in this article is the photo - look closely." - (Obama is bowing to a totalitarian dictator.)
I always wonder what is the correct category for Ronald Reagan speeches. He deserves founding fathers status or a place of his own. With Marco Rubio, he fits just fine under 'the way forward' but it looks to me like at this point in his career deserves a category of his own or could share easily share one with the Gipper.
Anyone who remembers Nov-Dec 2000 with the Florida recount bouncing from the Sec. of State to the candidates' attorneys to the Florida Supreme Court to the hanging chads and mistaken Buchanan votes in Palm Beach County to the absentee military vote controversy to the uneven recounts from Miami Dade and Broward unlike the rest of the state and then up to the Supreme Court where two different questions are settled with two different votes and the recount ends with Bush (rightly)awarded the President in total anger and disbelief by the other side... anyone who remembers all of that should appreciate that within one decade a 39 year old son of an exiled maid and a bartender is elected U.S. Senator from Florida - by a margin of a MILLION VOTES - over a second place Republican sitting Governor and third place sitting Democratic Congressman. In his victory speech he asked his supporters to pray that he never lets Washington change him and with this speech introduces himself to the nation along with the serious challenge the new congress faces.
My first criteria for leadership of the movement is the ability to articulate freedom. This is what I mean by that!
"1. Secure the border. 2. Prosecute the employers of illegal aliens 3. Empower local level law enforcement to enforce the laws against illegal immigration. 4. Cut off all welfare, medical benefits to illegals. Make these stick and the vast majority will self deport."
- I am confident that we can get you, me and everyone to the right of you and me, (not exactly a controlling majority) to support this. Point 4 is not going to happen, therefore mass self-deportation is not going to happen. Only the people who wanted to work would leave. During the heated debates for point 4, we will drop our percentages to single digits, lose all branches and return to my plan b: lose the country, buy gold and go underground ourselves.
"I will clarify that I do not fail to distinguish the difference between marijuana and hard drugs."
Making that distinction and moving toward decriminalization over legalization, maintaining some stigma, maybe we could come to some kind of cease fire here.
Couple that with a recognition that very small personal amounts in your home, growing on your property or even in your personal vehicle if not connected with another driving error or crime would be out of the jurisdiction of an officer or prosecutor of a limited government.
"Rewarding illegal immigration is corrosive to the rule of law."
I agree, but what then? The status quo IS an acceptance of illegality. Mass deportation is not going to happen. If Republicans write the bill, new border enforcement could actually come ahead of other provisions. I'm suggesting some sort of documentation agreement tough enough to be hated by extreme groups but to put some kind of offer on the table to bring an underworld out of the shadows within 10 years, I would say, before the next census. The last census was a missed opportunity. For security alone, we should know who is here.
Perhaps renewable work papers with some enforceable criteria, some deportation, and never citizenship or voting for anyone who entered illegally and won't go back to re-apply.
The other path I see is to ignore the problem, let Dems win in 2012 - all branches, buy gold, allow the collapse, and go underground ourselves.
Stupid needs to hurt instantly. If a 2-year old puts a hand on a hot stove, the kid screams and pulls the hand off the stove. He doesn't leave his hand on the stove until it is charred and smoldering. These housing market mistakes didn't need to go into the tens of trillions of dollars of damage. We constantly insulate economic errors from correction or consequence, and that only makes everything much much worse.
Everybody makes mistakes. Instant correction makes them stay small. In prosperous times we wanted a wider cross-section of America to become home owners. But a home owner doesn't become a home owner by government decree unless you eliminate the meaning of the term. First you build up your education and then your income. Then you build up your credit while you live beneath your means (imagine that!) and save up your down payment. By then you have developed the level of commitment, maturity and responsibility to pursue a 30 year plus life decision and stick with it. Shortcut that and you haven't. Borrow 100% or more and you aren't a homeowner. If we artificially drive up the price of homes, we aren't helping people get in. If we make the interest rate on savings 0% we aren't helping them save. Take away the right to foreclose and we don't have mortgages. Policy error, policy error, policy error.
Forrest Gump could have figured this out better than the current class of clowns.
"While I place great importance on demographics (indeed, we have a thread here on exactly that) and recognize the role baby boomers in the US economy, I would ascribe the over-supply of large lot family homes to government intervention into the market place. We may not yet fully realize just how heavy the misallocation of resources due to this intervention has been."
- I will buy that, though I would say people were building and living further out because they wanted to (distance from decaying core became a good thing), but they borrowing and spending absurd amounts for those homes because of artificially and temporarily low rates. Then of course the over-construction due to failed monetary policy is necessarily followed by total unemployment of that sector for both labor and capital, while the Fed chief claims that full employment is half of his dual mission. What else did they think would follow artificial stimulation?
Booms and busts are NOT the natural business cycle. They are the direct result of governments trying to avoid and delay the effects of constant and ongoing natural corrections. -----
Palin and Zoellick (President of World Bank) may be ahead of the curve on this, but we were all over it 3 days ahead of them. Again, nice to see famous people are reading and paying attention to the Dog Brothers Public Forum.
Put me with Crafty here, it was the tampering (to put it lightly) with the market to create defective underlying assets, not the packaging of the product that caused failure.
I recall a Dem friend blaming gas prices (under Bush) on greed. Oil companies are doing this and oil companies are doing that, as if that inspiration came on suddenly. Excuse me but greed (self interest / profit motive) was the only thing that remained constant during that market turmoil.
Competition is what squeezes out excess profits (in housing, healthcare, investment banking, manufacturing, energy, anything) and it is usually excessive government regulations that prevent a price-competitive environment from forming.
A well articulated, optimistic economic message gets you up to mid-30s percent of Hispanic vote on a good year. Those numbers and Crafty's earlier post confirm what I suspected about Cuban Americans. They are not politically connected to other Hispanics.
"Texas Governor Rick Perry won 38% of the Hispanic vote"
"Marco Rubio won 40% of the non-Cuban Hispanic vote in Florida"
As I suspected, Marco Rubio's ethnic and culture advantage with Hispanics is worth about 2 points outside of Florida though his across the board appeal is very high.
Republicans need to consider (again) getting out ahead of their opponents with a passable 'documentation' solution that improves the status quo. There isn't going to be mass deportation and Republicans can't simultaneously play to the resentment of illegals and hope for increasing their Hispanic support.
We need a settlement framework that will give us a shot at winning more than 40% of the national Hispanic vote without tearing apart the coalition and losing people with the concerns that CCP has very well expressed here. I know Rove and McCain types already tried. It needs to be a much tougher, longer term agreement (IMHO).
I'm sure about all of those specifics, but in general I agree - ten times. ---- "7. The deflationary tendency in the US, such as it is, is mainly demographic: as the Boomers retire, they sell real assets (the US may have a 40% oversupply of large-lot family homes by 2020)"
This one in particular scares me. I don't know about the percentage, but the concept is true and 2020 is right around the corner. ---- "unless the price of gold were to go to $10,000 an ounce"
There you have it. It didn't occur to me that there is enough gold in world the to back up the dollar - once the dollar falls to nothing.
BBG, Enjoying the discussion and very much appreciate you correctly pointing out failure and challenging the status quo.
We are today so far away from living in a free society. I would like to examine all the laws that make it illegal to open a lemonade stand first before tackling more difficult areas. You didn't address my point (I don't think) that in this government-centric world, the cost of drugs if legalized would not decrease, and thus not remove the underworld profit structure. I'm sure you oppose the excessive sin taxes but they would most certainly accompany or follow legalization.
"I think decriminalization could occur without explicit sanctioning": This I think is more do-able. More simply would be to allow certain organic products, the ones no more dangerous than beer, to be home cultivated on a hobby scale and shared narrowly with no large transactions or cross border movement. Give the responsible user some outlet for safe recreation or relaxation, more decentralized and at zero cost to weaken the incentive and control of the underworld industry that seems to be concentrating into a very sophisticated organized crime structure.
I know there is truth in it, but I don't like the logic that the man robbed or stabbed because of the high cost of drugs. Seems to me (intuitively) that the blacksmiths migrated into other legal trades and the drug gang profiteers will move into armed robbery, kidnapping and hostage taking, or crimes I haven't thought of yet.
I don't know what to make of our high incarceration rates. So often certain incarcerations seem too minor in terms of horrible offenders freed and re-offending. I shouldn't digress here, but I personally like Singapore-style caning as an option for effective deterrence (for thuggery not usage) with less time serviced.
"Spreading the wealth - The gap between rich and poor"
JDN, Following rant not aimed at you. From what I can see your post agrees with my view. Historic efforts to spread wealth just made everything worse.
We have now found 2 ways to worsen the gap. Income inequality, we know, widens in a freely growing economy. And now we know income inequality also grows when we throw the brakes on and try to even things up.
My theory in the fall of 2008 was that inequality would drop during a crash because the invested class was losing wealth while the lower income/wealth groups just kept plugging away at their paycheck to paycheck struggles, with constant income. Not true.
Capital employs labor. 9.6% unemployment isn't the half of it. Real unemployment in some areas is closer to 20%. You can't have an all-out frontal assault on key groups that you share an economy with including employers, investors, potential employers and your largest customers and suppliers and then scratch your head wondering what happened to your own income.
The whole point of measuring inequality is a chase down the wrong street. IT IS NONE OF OUR BUSINESS WHAT SOMEONE ELSE MAKES legally and pays proper taxes on (IMHO). What the hell ever happened to a right of privacy.
"When we asked respondents to tell us what their ideal distribution of wealth was, things got even more interesting: Americans wanted the top 20% to own just over 30% of the wealth, and the bottom 40% to own about 25%. They still wanted the rich to be richer than the poor, but they wanted the disparity to be much less extreme."
This sounds like a Jaywalking question or from that Canadian video explaining that Canadian hours and and minutes need to be converted into American time.
Income disparity is a fact, and it is irrelevant because you can join in or climb to any level that you want or deserve. The questions that should be asked are things like: Are their unfair barriers to entry in investment banking and other lucrative professions? Are there public infusions of money going into colleges, medicine or other industries that skew the costs artificially upward beyond what their customers can afford to pay? Are public servants paid on a scale and structure equal and competitive to a private free market? Are people discriminated in employment or investment for wrongful reasons? Are there laws and taxes that unreasonably keep people from unleashing their entrepreneurial potential?
This is a land of opportunity, not outcome. When we focus on outcomes, we end up screwing up opportunity, and outcomes, IMHO.
The more people that are rich around you, the better your opportunities to advance as well, but it doesn't all move together in lock-step. Focus on economic opportunity and tear down the barriers.
To do that we probably need to start hundreds of thousands of other businesses that don't go quite as far but provide a good living and market value for the services of the people who work there.
People can play any role in this that they want. Inventor, banker, human resources, customer service, front desk, warehouse, sales, marketing, supplier, customer, you name it. But the jobs won't all pay the same; each needs to be competitive, and if you are taking shares instead of pay in a start up you might be measured as poor today when in fact you are not.
In a market, your services are worth what the second highest bidder is willing to pay.
Crafty's post elsewhere of the top 10% of Cubans coming to Florida in the 1950s brought a flashback to me of a Cuban American I knew in business past who had been a founder of the Intel memory systems division in the late 1960s. I will bet that few people in or outside of their group knew then the future impact of what they were doing or what wealth and jobs it would create. They just needed to believe in their own ideas and their own capbilities - in an environment with the freedom to unleash it. What is the proper worth of his contribution? I have no idea. Let a free market decide. What were the odds of any of that happening if he had stayed in a government enforced, equal society? Zero.
Hey BBG, Going back to your link regarding incarceration rates. I get the concept - that the profits from illegality support the criminal industry which supports the violence, burglary, territory wars, etc. I don't see politically how you get to full legalization. The failure of legalization of just marijuana in just California means that we aren't headed toward full legalization of everything everywhere even if that was the best solution. I also don't quite get what happens to the former drug gang underworld if we did. Do they go to trade schools and become welders and programmers and raise families in the suburbs or do they continue in crime. At the borders, it sounds like human trade is a big part of it too, so that would continue without the drugs or maybe escalate.
There are exceptions pointed out in the incarceration figures. Countries with laws far stricter than ours also have lower incarceration rates, so our incarceration rates are partly a part of some other dynamic.
There is a third world country within American inner cities that people outside these areas don't see. It is based mostly I think on the long term effects of welfare dependency but everyone has their own theory of why it exists. Girls/women have babies before they grow up and get a free pass for it. Men are unneeded and available for whatever the temptation is that comes their way. What we call juvenile crime includes 13-17 1/2 year olds that haven't reported to a parent authority for years, if ever.
I know a lot of drug money comes from executives and rich kids in rich suburbs, people in any walk of life, but a whole lot of it also comes from free money that we pass around. If women with children did not get a free pass, men would have to shape up and get a job, a car, a home and maybe a marriage in order to knock up women. Not so much hit and run. George Gilder among others wrote books on this subject. If you hold people more personally accountable for productive behavior, they have less time and inclination for the rest of it.
One thing I don't like about legalization is the sanctioning aspect. What might be a sweet or pleasant smell to me in one situation is not something I want to run across out with my daughter or advertised on prime time television. Another thing I don't like about it is government control. Why do you think the price would go down? The authorities we have now will not allow that to happen. They argue for higher sin taxes on beer supported by studies that as we keep raising the price, the quantity that gets to underage drinkers goes down. That would only widen and deepen under 'legalization'. That is not legalization (IMO). Tax laws alone would be enough drug deals to stay underworld. http://www.ehow.com/list_7289139_minnesota-marijuana-laws.html "States such as Minnesota, failure to comply with the state’s drug tax law may result in a defendant facing an additional fine of up to $14,000 and seven years in jail."
I favor limited decriminalization and the lowering or rightsizing of prison sentences to match the damage or cost to society. I could see how full legalization might fit acceptably into a lower taxed, personally accountable, otherwise free society, but I don't see how it would work in ours.
I agree with your definition. Drug use becomes abuse as soon as it starts to screw up other important aspects of your life.
"China produces more than just trinkets. A very large percentage of our consumer goods come from China."
GM has this right. It isn't the happy meal toys it is the things that fill people's shopping carts at Walmart, Home Depot etc. that people consider household essentials.
But it doesn't make any sense that China would stop selling to us short of war because that means to closing their cash register to our willing customers. The REE situation is different, but they appear to already be tightening the screws there, and it is OUR fault for shutting down our own supplies.
The US Government could slap a 20% duty for example on these imports, but that is a highly regressive tax on American consumers, not a direct penalty on China. Also I'm sure a violation of WTO trade agreements.
Maybe they attack Taiwan in a trade war but I don't see it unless they were planning to attack anyway. I think instead they will be busy at home with millions of layoffs.
A shorter answer I think is that a trade war right now would bring down the global economy - so neither side will do it. And I still think the economy and the regime in China is more fragile than ours.
I never understood why Republicans couldn't get a group of very persuasive black conservatives into predominantly black neighborhoods and at least expose people to a different message and win maybe a few votes.
Republicans today should use the historic and impressive new class of newly elected Hispanic Republicans to take a very optimistic, pro-growth economic message to the Hispanic community.
Second is to somehow get ahead of the curve on getting the undocumented documented and out of the shadows, without true amnesty and without ripping apart the conservative base. But I really don't see how that can be done.
One question I have regarding Marco Rubio is what connection Cuban-Americans have with Mexican-Americans and people here from South America. It often seems that politically they do not. Does anyone out there have any insight on that?
"Doug, anyone: Any thing else at the federal level? And what about at the state level?"
At the state level, hard to answer with 50 different states. Mine just made the biggest flip in the legislature since parties have been designated on ballots. Yours, ... Seriously, the states have some role in this mainly by keeping their competitiveness up and lessening the burden they place on enterprise and investment. I would like to see states implement preferential long term capital gains rates. (Does your state have that now?) It make no sense to tax inflationary gains as ordinary income. If nothing else it violates cruel and unusual punishment. I like what states have done to join together and fight PelosiCare.
At the federal level, we face two tasks: a) rescue the republic, and b) keep the political momentum moving forward because point a. will take more than one election cycle.
Here is a 6-legged stool, taxes, healthcare, spending, energy, monetary reform and the border, to set the foundation for sustained growth.
Taxes: The House should vote to make tax cuts permanent immediately upon taking office. The Senate will probably agree to extend them all for one year, but that only leaves us in the same lousy situation we were in the past year with investors still not knowing what future rates will be. I think this will need to settle at two years which rightfully passes it to the next congress (and next President) which means letting the people decide again.
Health care defund needs to be accompanied with 'repeal and replace'. Don't let the critics say it is going back to the way it was. Republicans had bills that did most of the popular parts of this bill without the total takeover of government. Go back to the best of those ideas and pass it in the House. Then defund the PelosiCare while the 'greatest deliberative body bloviates and dithers on the new proposals.
Spending. End earmarks for two years - really - and roll back discretionary spending to 2008 levels. That is a pretty good compromise; I would rather roll them back to 1956 levels.
Cap / Trade / Energy Tax: I would take each serious proposal in this arena and conduct an up or down vote on each. In other words reject these political limits on energy and get Dems on record for their votes. Again I would do it right away so manufacturers know those caps and taxes are not coming. Then approve ANWR, some offshore drilling, more clean coal and more nuclear. Also a major new effort toward expanding clean natural gas into more areas of production and usage from north American sources.
The Fed: I would put the Fed on notice that we aren't going to tolerate another failed attempt at wealth through inflation and devaluation. That isn't where the jobs are. Let the Fed know they will be getting their congressional charter re-written if they can't stay focused on their primary mission, a strong stable dollar.
Border: Link some of the human talent returning from Iraq and Afghanistan and resources freeing up with the need to secure the border.
Total US trade with China is about $400 Billion a year (330 in imports, 70 in exports, 2008). Only in a full scale war would that go to zero. Let's say we have have a trade interruption of half that - $200 Billion in lost business between the countries. Our economy is 3 1/2 times larger than theirs. Just from a numeric standpoint we are 3 1/2 times more able to absorb that loss.
Now let's say that loss causes economic contraction and social disorder on both sides. Our system is designed for revolution - to throw the bums out. We did it last week. Their system is not. They have a new generation entering leadership at the PRC politburo but really the same regime since 1949. A lot has changed in Chinese society since Tiananmen 1989. If they had a new uprising, I don't think anyone has any clear idea how it would play out. The leadership must carry a substantial fear of that, IMHO.
"but THEN we must be able to specifically name the leashes that hold them back and what we are going to do to cut them"
Okay, here's one. Besides lowering and simplifying tax rates, how about a 90 day delay for all government compliance requirements for all private sector new-hires, including no tax withholding for 90 days, and a delay to file all paperwork, forms, IRS/OSHA/workman's comp/healthcare etc. requirements.
What I meant by hoping Obama does an about face is that the center of the Democrat party needs to move right. Obviously Obama won't but someone needs to. If he says or does one or two things right, it is a head fake - like expanded offshore drilling, deficit concern etc.
The blamed Rahm for leaving, not for giving bad advice while he was there. Amazing.
Thanks for the Bernardine Dohrn video, my first experience seeing and hearing her. Outrageous that someone would accuse him of 'palling around with terrorists', lol. Easy to see Obama enjoying a talk about strategy or economics with her, agreeing privately with everything she says. He should hide Valerie Jarrett too if he wants his inner political thoughts concealed.
You know they are left wing when they think the media is right wing controlled.
Wealth and Poverty How's that inequality thing working out?
If there is a single unifying principle behind the Democratic agenda of the last two years, it is this: Reduce income inequality. So yesterday's annual Census Bureau review of American incomes is a kind of progress report on how this agenda is working out. In a word, our wealth isn't spread any more equitably, though more of us are poor.
The Current Population Survey shows that in 2009 the poverty rate climbed to 14.3% from 13.2% in 2008—the highest since 1994. That figure translates into 43.6 million Americans living below the poverty line, the largest absolute number in the half-century for which comparable data are available. At $49,777, the real median household income fell slightly, though not in a statistically significant way. It declined 1.8% among families and rose 1.6% for individuals.
In a statement yesterday, President Obama attributed these results to the financial panic and recession, and that's true in part. The Census data also overstate the true level of poverty because they don't include noncash government payments like housing subsidies, food stamps, the earned income tax credit or entitlements like Medicaid.
But then Mr. Obama couldn't resist adding that "Even before the recession hit, middle class incomes had been stagnant and the number of people living in poverty in America was unacceptably high, and today's numbers make it clear that our work is just beginning." So to address the rising poverty on his watch, the President wants to plow ahead with the same policies that aren't reducing poverty.
We draw a different lesson, which is the continuing imperative of rapid economic growth. Census Bureau figures over the last 50 years show that poverty falls most rapidly during times of the most sustained growth—the 1960s, 1980s and second half of the 1990s. The poverty rate also fell in the mid-2000s before heading up again when the recession hit. The most important goal of economic policy should be to increase society's overall wealth. This helps the poor and everybody else.
Yet starting with his first budget proposal, Mr. Obama has made clear that his main policy purpose is reducing inequality. As the White House budget scribes put it, "There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few. . . . It's a legacy of irresponsibility, and it is our duty to change it."
Thus the 2009 stimulus was assembled around social programs and redistribution, defying even Keynesian precepts about immediate job creation. Among its many other goals, ObamaCare is intended to produce "a leveling" of the "maldistribution of income in America," as Senate Finance Chairman and chief author Max Baucus put it. Even now, amid a mediocre recovery and 9.6% unemployment, the inequality imperative is driving Democrats to insist on a huge tax increase—no matter the impact on growth.
The irony is that, while there has been a modest widening of the income gap in recent decades, the Census (as measured by the "Gini index") shows that inequality has remained mostly unchanged since the early 1990s—regardless of which party is in power. The reasons are many and rooted in larger economic and social forces that can't be fixed with higher taxes and White House social engineering.
More important, this preoccupation with inequality is actively harmful because it leads to economic policies that inhibit growth. That's the real warning in the new Census data. Democrats are succeeding in their goal of punishing business and the wealthy, but to the extent that this has produced anemic growth it is also punishing the poor and middle class.
The moral claim of Obamanomics is that it ensures that everyone pays his "fair share," but its early returns show this agenda is producing more poverty. In their obsession with income shares and how many people have how much wealth, the Obama Democrats are imposing policies that ensure only that there will be less wealth for everyone to spread around.
Rarick, I think you nailed this one: "That is why Reid won. The thinking independants of nevada would mostly dislike Schumer, and if there is going to be a democratic majority in the senate- better to have OUR guy there rather than someone else's."
R's were projected to fall short in the Senate so Reid would still be the powerful majority leader for Nevada. If this were to be a sweep and he would lose power anyway then they may have swung the other way to the inexperienced challenger. It is hard for me to think like centrists absent of core principles. --------------
“Making an argument that people can understand,” Mr. Obama continued, “I think that we haven’t always been successful at that. And I take personal responsibility for that. And it’s something that I’ve got to examine carefully … as I go forward.”
"we were too stupid to know he is right." - Yes, he is saying he needs to work on his talk-down-to-us skills. We aren't all Ivy Leaguers. -------------- Interest insight into Barack Obama from my radio, James Lilacs on the Hugh Hewitt show, goes something like this:
All the great men who rose to be President all faced great setbacks along the way... and he named a few. Obama however is the first President to ever have the first setback in his life be while he was President. ---------- Think about it, all that early family turmoil and he ends up in the best school in Hawaii living with loving grandparents. Looks a little different than others so he gets into Columbia. Ordinary grades and blows coke, gets into Harvard law School. Can't write a lick without a script, is chosen Editor of the Law Review. Runs for State Senate, gets his opponent removed. Runs for a US Senate in a hard blue state, gets Alan Keyes from elsewhere as an opponent. Speaks at the convention, brings down the house. "Harry, I have a gift", he said afterward to the majority leader. Enters the Presidential fray before authoring a bill or casting a vote, beats Hillary Clinton, Gov/Ambassador Bill Richardson and all the others. Starts to get close in the general election and the world financial system falls down on his opponents, beats the former media darling McCain. Needs a 60th vote in the senate to pass health care, ACORN compatriots come through raising Al Franken from second place to first in a recount. Loses his 60th vote with Scott Brown, but deems it passed after the fact. No problem. ... Then they promise and declare that the healthcare in spite of the steamroller tactics will be loved and its supporters will be loved. As far as we knew then, he was right, but he wasn't.
Lifting the veil. Now he had two wars lingering too long. Promised negotiations on CSPAN became cornhusker kickbacks hidden in private. Unemployment will be 8% if we don't pass the stimulus became 10% with it. All the political opportunism against Bush over Katrina started to become Obama's oil spill. His own daughter couldn't understand why he wouldn't command the resources of the greatest country on earth and plug the hole. Instead he sat powerless while private engineers at a big-oil firm eventually did it.
Alinsky-economics is false. Krugman and Keynes are wrong. No amount of gift of gab can change that but it didn't matter because his gift of gab was still aimed at destroying the pillars of our economy, not building them back up.
I honestly hope he does an about face, but there is nothing whatsoever in view to believe that.
I think it sounded bad but Obama was put on notice when Mitch McConnell said defeating this President is a top priority. A change of direction is going to come out of the House in the form of legislation, and then presumably die in the senate. Republicans will need just 3 or 4 Dem Senators from red states up for re-election to sign on to make legislation popular and bipartisan while it dies of the filibuster obstruction or the veto pen.
Obama has never been in this situation before. He can veto to stop a Republican agenda, but he cannot lead or win.
"It's like being in a slow motion car wreck, waiting for the final impact. Tell me I'm wrong and these people know what they are doing."
- I've been a pretty big defender of the Fed compared to others here, but reading Bernanke in his own words today he makes about as much sense to me as Krugman and I think we are exactly as you described, headed into a wreck.
It's just nuts to think the lack of jobs today comes from a lack of money considering already easy money along with everything else we know that is wrong, such as new taxes coming on capital movement scaring away new investment and locking in old investment, the new health monstrosity scaring away hiring, looming new energy taxes and regs scaring away production or factory expansion, $3 trillion in new debt hovering over the dollar and the future budgets, new individual tax rates aimed at small business owners along with the highest corporate tax in western civilization while are biggest competitor's was lower already and lowered it twice more since 2008. No, this slump isn't caused by lack of money or solved by throwing money at it, and what slump ever was?
At the center of this, the Fed's mission is not a "dual mandate" and that needs to be re-set by the new Congress. The Fed has a singular mandate, a stable dollar, and then some secondary objectives come in to play that are not at all equal to the Fed mission of protecting the value of our currency IMHO.
Seems to me this goes to Murkowski. Margin of victory matters. Total write-ins lead Miller by 41 to 34%. Of those 41%, how many are not Murkowski or no good? Who knows but this was a hotly contested, 3-way race. I don't see why people would bother to go vote if they didn't have a clear preference.
81,876 write in votes 68,288 votes, Joe Miller 47,414 Scott McAdams, Dem. in 3rd place
13,589 Number needed to disallow for Miller to win.
Seems to me that maybe several hundred will be wrong or not Lisa with maybe several hundred others to argue over, but not 13-14,000 to be disqualified. The rules were clear and well-publicized. The name is familiar. The list is available, long but not that hard to read through. Seems to me that maybe several hundred will be wrong or not Lisa and several hundred others to argue over, but not 13 or14,000 to be disqualified.
I think Lisa, when she gets to Washington, will make us appreciate why people were taking such a big chance supporting inexperienced tea party candidates.
"The Federal Reserve's objectives - its dual mandate, set by Congress - are to promote a high level of employment and low, stable inflation."
"there is scope for monetary policy to support further gains in employment" - Ben Bernanke, below.
- monetary policy is not the only or the correct lever to expand employment!
" lower mortgage rates will make housing more affordable and allow more homeowners to refinance"
- mortagage rates are artificially low already, and generally not available to buy foreclosures that need buying. It is the principal that is too high on these loans, not the interest.
" Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending."
- Other factors outside of the Fed's jurisdiction are destroying investment, and get the hell out of artificially stimulating stock prices and spending! ------------------ Perhaps Ron Paul's job will be to simply the Fed's double assignment. This is a policy subcommittee Ron Paul is to head, if the report is accurate. Bernanke appears before the full committee.
Ron Paul did a nice job of staying out of the spotlight during Rand Paul's senate election; I forgot he was still in the congress. We might not need a monetary policy (IMO) if we followed Ron Paul's foreign policy. I hope he will use this role to steer, expose, oversee and influence the Fed, not as a podium to try to end the Fed.
My view of monetary policy is that there isn't a policy possible to compensate for a federal government that incurs $3 trillion in deficits in 21 months and that taxes and regulates itself out of production and into an unbalanced, import economy. The current administration and congress want a Keynesian injection of trillions without correcting structural and competitive problems. An independent Fed chair is not obligated to oblige if that destroys the purchasing power of the dollar and if the real answers to the problem lie outside of Fed policy. Strong questioning along these lines could draw the Fed Chair into revealing how these other excesses create imbalance and complicate the monetary challenge.
Here is what Bernanke says, including his meddling with private investment and target of keeping inflation ABOVE 2%. ----------
What the Fed did and why: supporting the recovery and sustaining price stability
By Ben S. Bernanke Thursday, November 4, 2010
Two years have passed since the worst financial crisis since the 1930s dealt a body blow to the world economy. Working with policymakers at home and abroad, the Federal Reserve responded with strong and creative measures to help stabilize the financial system and the economy. Among the Fed's responses was a dramatic easing of monetary policy - reducing short-term interest rates nearly to zero. The Fed also purchased more than a trillion dollars' worth of Treasury securities and U.S.-backed mortgage-related securities, which helped reduce longer-term interest rates, such as those for mortgages and corporate bonds. These steps helped end the economic free fall and set the stage for a resumption of economic growth in mid-2009.
Notwithstanding the progress that has been made, when the Fed's monetary policymaking committee - the Federal Open Market Committee (FOMC) - met this week to review the economic situation, we could hardly be satisfied. The Federal Reserve's objectives - its dual mandate, set by Congress - are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills.
Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run. Although low inflation is generally good, inflation that is too low can pose risks to the economy - especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.
Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating. The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
While they have been used successfully in the United States and elsewhere, purchases of longer-term securities are a less familiar monetary policy tool than cutting short-term interest rates. That is one reason the FOMC has been cautious, balancing the costs and benefits before acting. We will review the purchase program regularly to ensure it is working as intended and to assess whether adjustments are needed as economic conditions change.
Although asset purchases are relatively unfamiliar as a tool of monetary policy, some concerns about this approach are overstated. Critics have, for example, worried that it will lead to excessive increases in the money supply and ultimately to significant increases in inflation.
Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable.
The Federal Reserve cannot solve all the economy's problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector. But the Federal Reserve has a particular obligation to help promote increased employment and sustain price stability. Steps taken this week should help us fulfill that obligation.
The writer is chairman of the Federal Reserve Board of Governors.
Republicans just took back a majority of Governorships. Interesting political point by Paul Mirengoff at Powerline regarding the Senate:
"Republicans have a natural majority in the Senate. In a "50-50" election, the presidential race goes to a recount while the House splits down the middle and ultimately goes to the party who has won the redistricting battles. But in the three cycles necessary to populate the Senate, "50-50" elections go to the Republicans due to the equal representation of small, mostly Red, states.
Yet, (red states) Arkansas and North Dakota have two Democratic Senators (until January), Montana has two, South Dakota has one, Nebraska has one, and Indiana has one (until January). Over the next two cycles, assuming Republicans can maintain something close to 50 percent status or better, the Senate should come to reflect its natural Republican majority." ----- (A simple majority in the Senate however is not enough to get business done.)