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Author Topic: Money, the Fed, Banking, Monetary Policy, Dollar & other currencies, Gold/Silver  (Read 98862 times)
objectivist1
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« Reply #800 on: March 09, 2015, 10:09:45 AM »

As Katrina approaches, it's a brilliant sunny day in New Orleans.  How could anything go wrong?  Why - the birds are singing, the sun is shining, all those Chicken Littles predicting a devastating storm of epic proportions sure are idiots, aren't they?  Let's go party in the French Quarter!

We know how that ended.
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"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
DougMacG
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« Reply #801 on: March 10, 2015, 10:14:51 AM »

What did we predict?  From my point of view, we predicted a high risk of inflation AFTER demand and velocity return to the economy.  But that hasn't happened.  We predict that that it will difficult to phase out years of monetary insanity.  That has proved true.  Even Krugman expresses fear of returning interest rates to normal after all this phenomenal, artificial growth.  What specifically did we predict?  That pouring more gas in the tank won't repair the three flat tires we are riding on, nor get us where we wish to go.  What else?  That low interest rates helps one side while obliterating the other, namely savings and new investment in the economy.  We were right on that!

What did Krugman, who knows better, omit?

We now have the worst workforce participation rate since women widely entered the workforce.  It is the worst workforce participation rate EVER for men, since before caveman days.  And now the lowest workforce participation for women in modern time.  Obama-Krugman policies also caused the worst startup rate in our lifetimes for businesses with the capability of growing to employ future generations, leaving behind economic expectations on a par with the Soviet Union in its last decade - if we don't change course.

By the end of the Obama era, to put a number on it, 100 million adults in the US won't work, out of 244 million.  That is 41% real unemployment as the intentionally deceitful Nobel prize winner tells you we are now hitting full employment.  http://rt.com/usa/jobs-us-employment-welfare-749/

If the economy really was back on rock-solid footing, why would an award winning economist want interest rates held artificially lower even longer yet?  That makes no sense.

Nothing is holding up this economy and holding down overall price levels more than the fracking revolution that all these leftists still vehemently oppose.  Yet they blabber on about their successes.

The economic issue they ran on when they took political power was to address and correct income inequality, not to fight against 1-2% inflation.  So they stepped on economic growth in the pursuit of fairness.  But everything they did made the disparities grow even wider.  Go figure.
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Crafty_Dog
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« Reply #802 on: March 10, 2015, 12:02:29 PM »

Pretty good Doug  grin

but , , , I have come to think Scott Grannis has it right and that I (ahem, we?) did not.  What we saw as vast printing of money was not and that important elements of our hypothesis may have been wrong.

Of course I get the declining work force participation rate, but OTOH there is this:

http://blogs.wsj.com/economics/2015/03/10/job-openings-rise-to-the-highest-level-in-14-years/?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth
« Last Edit: March 10, 2015, 12:26:21 PM by Crafty_Dog » Logged
Crafty_Dog
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« Reply #803 on: March 13, 2015, 12:18:41 PM »

________________________________________
The Producer Price Index Declined 0.5% in February To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 3/13/2015

The Producer Price Index (PPI) declined 0.5% in February, coming in below the consensus expected gain of 0.3%. Producer prices are down 0.7% versus a year ago.
Food prices fell 1.6% in February while energy prices were unchanged. Producer prices excluding food and energy declined 0.5% in February, led by service prices.
In the past year, prices for services are up 1.3%, while prices for goods are down 4.3%. Private capital equipment prices declined 0.3% in February but are up 0.7% in the past year.

Prices for intermediate processed goods declined 0.6% in February, and are down 6.5% versus a year ago. Prices for intermediate unprocessed goods fell 3.9% in February, and are down 25.0% versus a year ago.

Implications: If you’re looking for inflation, you’re not going to find it in producer prices, at least not yet. Producer prices fell 0.5% in February following a 0.8% drop in January. As a result, producer prices are down 0.7% from a year ago. The huge drop in energy prices since mid-2014 is the key reason producer prices are down in the past year. Energy prices are down 22.4% from a year ago, while everything excluding energy is up 1%. This suggests that when oil prices stabilize for a prolonged period of time that the overall producer price index will start rising again. However, that didn’t happen in February as prices for services fell 0.5%, the largest one-month decline since the new series began in 2009. The decline in services was led by trade services, which measure changes in the margins received by wholesalers and retailers. Prices for goods also fell in February, and have now declined for eight consecutive months. Most of the decline in goods prices in February can be attributed to food, which fell 1.6%. The new version of the producer prices index, which includes services, appears to be much more volatile than the old one, which suggests analysts and investors should not reach conclusions based on short-term gyrations in the numbers, including the fact that overall prices are now down from a year ago. Monetary policy remains loose and will continue to be loose even when the Federal Reserve starts raising rates this June. For this reason, these rate hikes will not hurt the economy. Fed policy will not become tight for at least a few years. Counter-intuitively, higher short term rates may boost lending as potential borrowers hurry up their plans to avoid even higher interest rates further down the road. In other words, the Plow Horse economy won’t stop when the Fed shifts gears. As a result, we believe producer price inflation will soon go positive again and then gradually move higher from there. In the meantime, prices further up the production pipeline remain subdued. Prices for intermediate processed goods are down 6.5% in the past year while prices for unprocessed goods are down 25%. Regardless, with the labor market improving, we still believe the Fed is on track to start raising rates in June.
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objectivist1
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« Reply #804 on: March 22, 2015, 09:14:34 PM »

One Last Look At The Real Economy Before It Implodes - Part 3

Wednesday, 18 March 2015    Brandon Smith  www.alt-market.com


In the previous installments of this series, we discussed the hidden and often unspoken crisis brewing within the employment market, as well as in personal debt. The primary consequence being a collapse in overall consumer demand, something which we are at this very moment witnessing in the macro-picture of the fiscal situation around the world. Lack of real production and lack of sustainable employment options result in a lack of savings, an over-dependency on debt and welfare, the destruction of grass-roots entrepreneurship, a conflated and disingenuous representation of gross domestic product, and ultimately an economic system devoid of structural integrity — a hollow shell of a system, vulnerable to even the slightest shocks.

This lack of structural integrity and stability is hidden from the general public quite deliberately by way of central bank money creation that enables government debt spending, which is counted toward GDP despite the fact that it is NOT true production (debt creation is a negation of true production and historically results in a degradation of the overall economy as well as monetary buying power, rather than progress). Government debt spending also disguises the real state of poverty within a system through welfare and entitlements. The U.S. poverty level is at record highs, hitting previous records set 50 years ago during Lyndon Johnson’s administration. The record-breaking rise in poverty has also occurred despite 50 years of the so called “war on poverty,” a shift toward American socialism that was a continuation of the policies launched by Franklin D. Roosevelt’s 'New Deal'.

The shift toward a welfare state is the exact reason why, despite record poverty and a 23 percent true unemployment rate (as discussed here), we do not yet see the kind of soup lines and rampant indigence witnessed during the Great Depression. Today, EBT cards and other welfare programs hide modern soup lines in plain sight. It should be noted that the record 20 percent of U.S. households now on food stamps are still technically contributing to GDP. That’s because government statistics make no distinction between normal grocery consumption and consumption created artificially through debt-generated welfare.

This third installment of our economic series will be the most difficult.  We will examine the issue of government debt, including how true debt is disguised from the public and how this debt is a warning of a coming implosion in our overall structure.  National debt is perhaps one of the most manipulated fields of economics, and the layers surrounding what our country truly owes to foreign creditors and central banks are many.  I believe this confusing array of disinformation is designed to discourage average Americans from pursuing the facts.  Here are the facts all the same, for those who have the patience...

First, it is important to debunk the mainstream lies surrounding what constitutes national debt.

“Official” national debt as of 2015 is currently reported at more than $18 trillion. That means that under Barack Obama and with the aid of the private Federal Reserve, U.S. debt has nearly doubled since 2008 — quite an accomplishment in only seven years’ time. But this is not the whole picture.

Official GDP numbers published for mainstream consumption do NOT include annual liabilities generated by programs such as Social Security and Medicare. These liabilities are veiled through the efforts of the Congressional Budget Office (CBO), which reports on what it calls “debts” rather than on the true fiscal gap. Through the efforts of economists like Laurence Kotlikoff of Boston University, Alan J. Auerbach and Jagadeesh Gokhale, understanding of the fiscal gap (the difference between our government’s projected financial obligations and the present value of all projected future tax and other receipts) is slowly growing within more mainstream circles.

The debt created through the fiscal gap increases, for example, because of the Social Security program - since government taxes the population for Social Security but uses that tax money to fund other programs or to pay off other outstanding debts. In other words, the government collects "taxes" with the promise of paying them back in the future through Social Security, but it spends that money instead of saving it for the use it was supposedly intended.

The costs of such unfunded liabilities within programs like Social Security and Medicare accumulate as the government continues to kick the can down the road instead of changing policy to cover costs. This accumulation is reflected in the Alternative Financial Scenario analysis, which the CBO used to publish every year but for some reason stopped publishing in 2013. Here is a presentation on the AFS by the St. Louis branch of the Federal Reserve. Take note that the crowd laughs at the prospect of the government continuing to “can kick” economic policy changes in order to avoid handling current debt obligations, yet that is exactly what has happened over the past several years.

Using the AFS report, Kotlikoff and other more honest economists estimate real U.S. national debt to stand at about $205 trillion.

When the exposure of these numbers began to take hold in the mainstream, media pundits and establishment propagandists set in motion a campaign to spin public perception, claiming that the vast majority of this debt was actually “projected debt” to be paid over the course of 70 years or more and, thus, not important in terms of today’s debt concerns. While some estimates of national debt include future projections of unfunded liabilities in certain sectors this far ahead, the spin masters' fundamental argument is in fact a disingenuous redirection of the facts.

According to the calculations of economists like Chris Cox and Bill Archer, unfunded liabilities are adding about $8 trillion in total debt annually. That is $8 trillion dollars per year not accounted for in official national debt stats.  For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion of this amount.

Kotlikoff’s analysis shows that this annual hidden debt accumulation has resulted in a current total of $205 trillion. This amount is not the unfunded liabilities added up in all future years. This is the present value of the unfunded liabilities, discounted to today.

How is the U.S. currently covering such massive obligations on top of the already counted existing budget costs? It’s not.

Taxes collected yearly in the range of $3.7 trillion are nowhere near enough to cover the amount, and no amount of future taxes would make a dent either. This is why the Grace Commission, established during the Ronald Reagan presidency, found that not a single penny of your taxes collected by the Internal Revenue Service is going toward the funding of actual government programs. In fact, all new taxes are being used to pay off the ever increasing interest on current debts.

For those who argue that an increase in taxation is the cure, more than 102 million people are unemployed within the U.S. today. According to the Bureau of Labor Statistics and the Current Population Survey (CPS), 148 million are employed; about 20% of these are considered part-time workers (about 30 million people). Around 16 million full time workers are employed by state and local government (meaning they are a drain on the system whether they know it or not).  Only 43 percent of all U.S. households are considered “middle class,” the section of the public where most taxes are derived. In the best-case scenario, we have about 120 million people paying a majority of taxes toward U.S. debt obligations, while nearly as many are adding to those debt obligations through welfare programs or have the potential to add to those obligations in the near future if they do not find work due to the high unemployment rate that no one at the BLS wants to acknowledge.

Looking at reality, one finds a swiftly shrinking middle class paying for an ever larger welfare class.  Do the math, and an honest person will admit that no matter how much taxes increase, they will still never make up for the lack of adequate taxpayers.

Another dishonest argument given to dismiss concerns of national debt is the lie that Domestic Net Worth in the U.S. far outweighs our debts owed, and this somehow negates the issue. Domestic Net Worth is calculated using Gross Domestic Assets, public and private. It's interesting, however, that Domestic Net Worth counts 'Debt Capital' as an asset, just as GDP counts debt creation as production.  Debt Capital is the “capital” businesses and governments raise by taking out loans. This capital (debt) is then counted as an asset toward Domestic Net Worth.

Yes, that’s right, private and national debts are “assets.” And mainstream economists argue that these debts (errr… assets) offset our existing debts. This is the unicorn, Neverland, Care Bear magic of establishment economics, folks. It’s truly a magnificent thing to behold.

Ironically, debt capital, like the official national debt, does not include unfunded liabilities. If it did, mainstream talking heads could claim an even vaster supply of “assets” (debts) that offset our liabilities.

This situation is clearly unsustainable. The only people who seem to argue that it is sustainable are disinformation agents with something to gain (government favors and pay) and government cronies with something to lose (public trust and their positions of petty authority).

With overall Treasury investments static for some foreign central banks and dwindling in others, the only other options are to print indefinitely and at ever greater levels, or to default. For decades, the Federal Reserve has been printing in order to keep the game afloat, and the American public has little to no idea how much fiat and debt the private institution has conjured in the process. Certainly, the amount of debt we see just in annual unfunded liabilities helps to explain why the dollar has lost 97 percent of its purchasing power since the Fed was established. Covering that much debt in the short term requires a constant flow of fiat, digital and paper.  Not only does REAL debt threaten our credit standing as a nation, it also threatens the value and full faith in the dollar.

The small glimpse into Fed operations we received during the limited TARP audit was enough to warrant serious concern, as a full audit would likely result in the exposure of total debt fraud, the immediate abandonment of U.S. Treasury investment, and the destruction of the dollar. Of course, all of that will eventually happen anyway...

I will discuss why this will take place sooner rather than later through the issues of Treasury bonds and the dollar in the fourth installment of this series. In the fifth installment, I will examine the many reasons why a deliberate program of destructive debt bubbles and currency devaluations actually benefits certain international financiers and elites with aspirations of complete globalization. And in the sixth and final installment, I will delve into practical solutions - and practical solutions only. In the meantime, I would like everyone to consider this:

No society or culture has ever successfully survived by disengaging itself from its own financial responsibilities and dumping them on future generations without falling from historical grace. Not one. Does anyone with any sense really believe that the U.S. is somehow immune to this reality?
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"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
ccp
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« Reply #805 on: March 23, 2015, 09:01:28 AM »

Hi Objectivist.

Thanks for the article.

I see construction like crazy near me in NJ.  New shops stores etc.   The vast majority seem to be large chains and mega companies like Walmart, chipotles, dunken donuts, etc.  Many are manned by people with accents. 

It seems there are 2 economies.

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DougMacG
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« Reply #806 on: March 23, 2015, 11:11:04 AM »

The stock market success is NOT based on QE or our easy money policies, we are told, but when the Fed talks of ending the absurdity of zero interest rates, the market falls and when they talk of continuing it even longer, the market continues to rise. 
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