Friday, November 5, 2010
Bernanke: Fed Will Not Monetize Debt
QE 2, quantitative easing, is monetization of the federal debt (h/t Glenda McGee). Keynesian economics is founded on lyng. The liars, i.e., the Fed, the economics profession, the federal government and the media, have bamboozled the public for nearly 80 years. Keynesian economics is based on wage reduction and transfer of wealth to asset holders at the expense of wage earners. This is accomplished using welfare as a smoke screen. Transfer the lion's share to asset holders, a small percentage to welfare recipients, then claim that the wealth is being transferred to welfare recipients. This trick was first devised by Augustus Caesar and it has worked beautifully in the United States. Part of the plan is an education system that numbs minds and teaches that the Keynesian plan is all that works. Keynesian economics is based on lying because saying openly that the economics establishment, Wall Street, the federal government and the media plan to make you poorer to subsidize the stock market will not fly in a democracy. You voted the Keynesians in and they have been ruling over you for 80 years. Enjoy the results.
Wednesday, November 3, 2010
Americans for Limited Government on QE2
I just received this message from Americans for Limited Government's Robert Romano.
ALG Statement on Fed Purchase of $600 Billion of Treasuries
November 3rd, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today issued the following statement condemning the Federal Reserve's planned purchase of $600 billion of treasuries over the next eight months:
"The Federal Reserve's reckless program to purchase $600 billion of treasuries over the next eight months is taking the U.S. into uncharted waters, where the nation's central bank will be the largest holder of the national debt in the entire world next year. The Fed already holds $834 billion of treasuries, and was already on pace to have over $1 trillion in treasuries by August, 2011, more than China, Japan, or any other foreign creditor.
"With another $600 billion on top of the Fed's expected trillion-dollar stake in the debt, the signal we are sending to the world is that to pay for our obligations is to print a ton of new money. In the next three years alone, $5.2 trillion of debt will be coming due. In addition, the Obama Administration plans on increasing the debt another $3.6 trillion over that same period. That means that the Treasury has to sell $8.8 trillion of debt over three years, or $2.93 trillion every year.
"$2.93 trillion a year is more than the Treasury has ever had to sell. Approximately $630 billion more than it has ever sold. So it is little surprise that now the Fed is coming out saying it is buying another $600 billion of treasuries. This action by the Fed has nothing to do with 'a stronger pace of economic recovery,' as the central bank claims. It has everything to do with the fact that we are broke, and we're printing money to pay the bills.
"It is up to the newly elected Congress to rein in Washington's unsustainable fiscal trajectory so that the possibility is eliminated of further Fed purchases of the debt. Otherwise, they will be signing up to have the U.S. triple-A credit rating downgraded, and will preside over the decline of the nation as an economic superpower. Spending must be cut, and the Fed has to be reined in and audited. The very solvency of the Treasury is in danger, and only Congress can reverse course and begin to pay down the debt, before it is too late."
ALG Statement on Fed Purchase of $600 Billion of Treasuries
November 3rd, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today issued the following statement condemning the Federal Reserve's planned purchase of $600 billion of treasuries over the next eight months:
"The Federal Reserve's reckless program to purchase $600 billion of treasuries over the next eight months is taking the U.S. into uncharted waters, where the nation's central bank will be the largest holder of the national debt in the entire world next year. The Fed already holds $834 billion of treasuries, and was already on pace to have over $1 trillion in treasuries by August, 2011, more than China, Japan, or any other foreign creditor.
"With another $600 billion on top of the Fed's expected trillion-dollar stake in the debt, the signal we are sending to the world is that to pay for our obligations is to print a ton of new money. In the next three years alone, $5.2 trillion of debt will be coming due. In addition, the Obama Administration plans on increasing the debt another $3.6 trillion over that same period. That means that the Treasury has to sell $8.8 trillion of debt over three years, or $2.93 trillion every year.
"$2.93 trillion a year is more than the Treasury has ever had to sell. Approximately $630 billion more than it has ever sold. So it is little surprise that now the Fed is coming out saying it is buying another $600 billion of treasuries. This action by the Fed has nothing to do with 'a stronger pace of economic recovery,' as the central bank claims. It has everything to do with the fact that we are broke, and we're printing money to pay the bills.
"It is up to the newly elected Congress to rein in Washington's unsustainable fiscal trajectory so that the possibility is eliminated of further Fed purchases of the debt. Otherwise, they will be signing up to have the U.S. triple-A credit rating downgraded, and will preside over the decline of the nation as an economic superpower. Spending must be cut, and the Fed has to be reined in and audited. The very solvency of the Treasury is in danger, and only Congress can reverse course and begin to pay down the debt, before it is too late."
What Are the Effects of QE 2 and the Fed's Loose Monetary Policy?
Jim's Question Re QE2: How much of our GDP growth is a reflection of the Fed pumping money? In other words, is the growth not really growth in output/resources/capital, but growth brought on by infusion of money (liquidity)? In other words. not growth at all. I bet a whole big bunch, but I am unsure.--JJC
Answer: Jim, the American economy is entirely distorted by the printing of money. This is something that the Keynesian economists either do not get or pretend does not exist. Most of the real estate development in the past decade would not have occurred in a non-managed economy and it does not reflect underlying consumer demand. The economy is as a result extremely unstable and in order to function requires massive and increasing injections of counterfeit money. This results in ongoing reallocation of wealth to those receiving the new money, mainly commercial banks, Wall Street and other financial institutions (hedge funds) as well as other borrowers. Thus, the government, specifically the Obama and Bush administrations and Congress, is directly causing income inequality. This has been going on since the establishment of the Fed but it has intensified since 2000. Obama is intensifying Bush's intensification. In other words, to correct the misallocation of wealth in our society will require a cataclysm because virtually all assets are over-valued. Hopefully this won't occur in our lifetimes, but it could happen any time. There is no reason why Manhattan real estate should have gone up in value 20 to 40 fold since 1975. The demand is a function of counterfeit money.
Both parties support the intoxicating Keynesian drug of counterfeit money because it benefits those who finance them--Wall Street, commercial banks, real estate interests, corporate interests and insurance companies. Those holding real estate have benefited at the expense of those not holding real estate. That is not because of the economic function of speculation but because of subsidies from the Fed. The Fed steals from the poor and productive and aids the rich and unproductive. Since no assets are valued at their true market value in our economy there is massive distortion of investment. This has caused jobs to leave, firms to invest overseas, excessive development of farmland, etc., etc.
No one knows what the specific effects are, but they are vast. We are not in a market economy. Rather, we are in a fantasy economy dreamed by Wall Street, the rich and politically powerful. Naturally, the ones doing the dreaming are the ones who benefit. The ones who do not play ball with them, blue collar males, are the ones who have been hurt. There will be a return to reality because economic actors do not want the products of Fed and banking policy--the McMansions and subprime real estate; the overvalued stocks and bonds.
The response of the Fed will be continued printing of money because it cannot withstand the political pressure from its Whig constituents. This is not partisan because the United States is dominated by a single Whig Party that reflects financial interests. The end result will be a collapse of the dollar. The alternative, a stock market crash, is unacceptable to the people capable of grasping what I just wrote. In other words, the majority of Americans have lost the ability to think about this question, an ability that they had until World War I when they were not subjected to education.
Answer: Jim, the American economy is entirely distorted by the printing of money. This is something that the Keynesian economists either do not get or pretend does not exist. Most of the real estate development in the past decade would not have occurred in a non-managed economy and it does not reflect underlying consumer demand. The economy is as a result extremely unstable and in order to function requires massive and increasing injections of counterfeit money. This results in ongoing reallocation of wealth to those receiving the new money, mainly commercial banks, Wall Street and other financial institutions (hedge funds) as well as other borrowers. Thus, the government, specifically the Obama and Bush administrations and Congress, is directly causing income inequality. This has been going on since the establishment of the Fed but it has intensified since 2000. Obama is intensifying Bush's intensification. In other words, to correct the misallocation of wealth in our society will require a cataclysm because virtually all assets are over-valued. Hopefully this won't occur in our lifetimes, but it could happen any time. There is no reason why Manhattan real estate should have gone up in value 20 to 40 fold since 1975. The demand is a function of counterfeit money.
Both parties support the intoxicating Keynesian drug of counterfeit money because it benefits those who finance them--Wall Street, commercial banks, real estate interests, corporate interests and insurance companies. Those holding real estate have benefited at the expense of those not holding real estate. That is not because of the economic function of speculation but because of subsidies from the Fed. The Fed steals from the poor and productive and aids the rich and unproductive. Since no assets are valued at their true market value in our economy there is massive distortion of investment. This has caused jobs to leave, firms to invest overseas, excessive development of farmland, etc., etc.
No one knows what the specific effects are, but they are vast. We are not in a market economy. Rather, we are in a fantasy economy dreamed by Wall Street, the rich and politically powerful. Naturally, the ones doing the dreaming are the ones who benefit. The ones who do not play ball with them, blue collar males, are the ones who have been hurt. There will be a return to reality because economic actors do not want the products of Fed and banking policy--the McMansions and subprime real estate; the overvalued stocks and bonds.
The response of the Fed will be continued printing of money because it cannot withstand the political pressure from its Whig constituents. This is not partisan because the United States is dominated by a single Whig Party that reflects financial interests. The end result will be a collapse of the dollar. The alternative, a stock market crash, is unacceptable to the people capable of grasping what I just wrote. In other words, the majority of Americans have lost the ability to think about this question, an ability that they had until World War I when they were not subjected to education.
Government by Simpleton
The United States government is now in the hands of corrupt simpletons. Mr. Obama, a community organizer who believes that the health care plan that he devised might actually work, is the political incarnation of Jack Madoff. His partisan colleague in the Senate, Harry Reid, believes that the only problem with the United States government is that Democrats and Republicans are not nice to each other. It is frightening to me that the simpletons have incurred debts of nearly $14 trillion. I had always thought that the mentally incompetent are not permitted to incur debts.
The US government cannot manage health care. It cannot manage a post office. It cannot manage a court system. It seems to me that excessive concern with the opinions of America's political leaders is absurd, akin to excessive concern with the beliefs of mental patients. As I was growing up in the 1950s and 1960s America's government had serious problems such as McCarthyism, but it was still the best government in the world. Today, America's government has failed and ought to be dissolved.
The US government cannot manage health care. It cannot manage a post office. It cannot manage a court system. It seems to me that excessive concern with the opinions of America's political leaders is absurd, akin to excessive concern with the beliefs of mental patients. As I was growing up in the 1950s and 1960s America's government had serious problems such as McCarthyism, but it was still the best government in the world. Today, America's government has failed and ought to be dissolved.
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