November 5th, 2010 LAIGLESFORUM Posted in Banking and Finance, Economics,Socialism | 1 Comment » from FedUpUSA Buckle up and hold on – a new round of quantitative easing is here and things could start getting very ugly in the financial world over the coming months. The truth is that many economists fear that an out of control Federal Reserve is “crossing the Rubicon” by announcing another wave of quantitative easing. Have we now reached a point where the Federal Reserve is simply going to fire up the printing presses and shower massive wads of cash into the financial system whenever the U.S. economy is not growing fast enough? If so, what does the mean for inflation, the stability of the world financial system and the future of the U.S. dollar? The Fed says that the plan is to purchase $600 billion of U.S. Treasury securities by the middle of 2011. In addition, the Federal Reserve has announced that it will be “reinvesting” an additional $250 billion to $300 billion from the proceeds of its mortgage portfolio in U.S. Treasury securities over the same time period. So that is a total injection of about $900 billion. Perhaps the Fed thought that number would sound a little less ominous than $1 trillion. In any event, the Federal Reserve seems convinced that quantitative easing is going to work this time. So should we believe the Federal Reserve? The truth is that the Federal Reserve has tried this before. In November 2008, the Federal Reserve announced a $600 billion quantitative easing program. Four months later the Fed felt that even more cash was necessary, so they upped the total to $1.8 trillion. So did quantitative easing work then? No, not really. It may have helped stabilize the economy in the short-term, but unemployment is still staggeringly high. Monthly U.S. home sales continue to come in at close to record low levels. Businesses are borrowing less money. Individuals are borrowing less money. Stores are closing left and right. More: http://fedupusa.org/2010/11/04/9-reasons-why-quantitative-easing-is-bad-for-the-u-s-economy/ November 5th, 2010 LAIGLESFORUM Posted in Banking and Finance, Economics,Socialism | No Comments » The Business Cycle: Krugman vs. Austrian Economic Theory by Thomas E. Brewton The Keynesian black-box doesn’t work, because the reality of independent actions by millions of individuals is ignored in order to achieve a simplistic representation of the economy in computer models. Read More… Read David Gordon’s commentary on THE HANGOVER THEORY by Paul Krugman. Keynesians gloss over the human factors of uncertainty about keeping a job or losing a home, millions of different consumer preferences, and the chilling effect on businessmen of punitive government taxes and regulations, along with continual threats of more of the same. Keynes’s feeble gesture in that direction was allowing that “animal spirits,” a kind of gambling instinct, played some role in businessmen’s decision processes. From the Keynesian perspective, businessmen don’t make rational decisions. They, like the rest of the public, don’t know what is best for them. As with Pavlov’s dogs, they are expected to exhibit a conditioned response to the stimuli administered by intellectual theorists. Paul Krugman’s simplistic view of the economy, among other things, ignores the fact that government stimulus handouts usually are targeted by Congress to favored special-interest groups. Most people without jobs and in danger of losing their homes will never receive a dime of the stimulus funds. Private businesses, the engines of the economy, are not among the favored interest groups. Keynesian theory ignores the fact that money is not real wealth. Economic well being and improved living conditions can come only from increased production of goods and services that people freely choose. Phony money earmarked for green jobs, wastefully expensive battery-powered automobiles, and environmental scams such as ethanol won’t cut it. Keynes himself set the tone, asserting that government expenditures on anything would rejuvenate the economy. His suggestion: pay men to bury fiat paper money in bottles and pay other men to find the bottles and dig them up. Increasing production, when businessmen perceive possibilities for profit in doing so, is the only real source of income for consumers. Moreover, increased business payments to suppliers and workers is non-inflationary, because the volume of available goods and services rises as incomes increase. Government stimulus spending is inflationary, because the money supply increases long before production increases. If one takes Keynes literally, inflation is a good thing. Think of Federal Reserve chairman Ben Bernanke’s assertion that the Fed seeks to promote inflation at approximately a 2% annual rate. Add to it the forthcoming QE2, designed to raise the rate of inflation. Keynes acknowledged that deficit spending with fiat money, created by bookkeeping entries at the Federal Reserve banks, would have inflationary consequences. But, he opined, workers and others wouldn’t notice its effects in the short run. Having more fiat money via government handouts, with no increase in actual production of goods and services, would fool the public. Believing that prosperity had returned, people would stop saving and paying down debt and would add to their debts to resume consumption spending at the pre-recession rate. Consumer spending is touted by Keynesians as the be-all and end-all. In their paradigm, spending on consumer goods alone has the economic pulling power to gain what Paul Krugman calls “traction.” Yes, consumer spending is about two thirds of cash flow in the economy, but only if you view it as an application of funds. The underlying source of all that consumer spending is business production that necessitates payments to suppliers of materials and wages to workers. Stimulus payments to consumers is analogous to dumping frosting onto a cake mix, before the ingredients have been mixed and baked. All elements of the economy, from raw materials, to intermediate goods, to consumer goods, must return to a supply-demand balance before the economy can gain Krugman’s “traction.” That necessarily takes time, because mining companies and other producers of basic raw materials have time scales for increased output and employment that are very different from the time scales of intermediate goods producers and consumer goods manufacturers. Deficit spending, ballooning Federal debt, and a Fed dumping money, along with the prospect of higher taxes and unknowable impacts of multifarious new regulations, breeds fear among business decision makers that impedes the re-balancing process. In the 1930s, such actions under Herbert Hoover and Franklin Roosevelt prolonged what should have been a two-year recession into twelve years of Depression misery. President Obama’s similar Keynesian policies are repeating the Depression mistakes, giving us a flattened economy, with unemployment projected to remain in the 9% (really 17%) range for several more years. Despite Paul Krugman’s assertions, Austrian economists don’t advocate higher unemployment and deflation, nor do they want to punish credit profligacy. They simply want to eliminate the Federal Reserve’s ability to fund speculative booms with excessive easy money (low interest rates). Since the end of World War I, shortly after the Federal Reserve came into being, every inflationary boom and recession has been preceded by the Fed’s pumping excessive reserves into the banking system. Artificially easy money and low interest rates lead businessmen and consumers to believe that there is unlimited demand for products of the latest bubble element of the economy. Without excessive money creation, from 1987 onwards, there would have been no dot.com boom-and-bust, and no housing bubble that corrupted the banking system. Rather than unemployment, as Paul Krugman apparently believes, Austrians advocate price flexibility, including wages. It is labor unions and their government supporters who indirectly promote higher unemployment. Before the New Deal’s 1935 Wagner Act gave labor unions power to bludgeon employers, businesses were able to minimize layoffs by temporarily reducing wages to bring their costs into line with their reduced selling prices for goods. Better for all workers to have lower pay temporarily than for many of them to lose their jobs. Wage reductions spread the hit over the entire work force. In the Depression, labor unions, with the full weight of the Federal government behind them, demanded higher wages in the face of high double-digit unemployment. To compensate, huge numbers of non-union labor had to be laid off, leaving them, not with lower wages, but with no wages at all. Our parents and grandparents paid for the extortionate power of labor unions with lowered living standards. We see a repeat of this Marxist class warfare today in New York, California, and other strongholds of the Democrat/Socialist Party. Public employee unions not only are unwilling to consider reductions in their gold-plated benefits packages to avert state bankruptcy. They demand new wage and benefit raises at a time of high unemployment and skyrocketing taxes for everyone else. Labor unions thus block job creation. With regard to deflation, which Krugman ascribes to Austrians’ wish list, most prices naturally decline (unless artificially propped up by the government) when demand lessens or supply increases. Demand lessens when big-employment industries like housing construction overbuild, and buyers no longer can support their bloated personal debt. Demand lessens further when a bubble-bust causes banks to tighten credit for everyone, while they liquidate over-valued collateral on defaulted loans to bring balance sheet ratios back into line with regulatory requirements. Prices are bound to decline (deflation to some extent, in some sectors of the economy) when excessive inventories (housing, for example) are dumped into the market by lenders. Analogously, people have garage sales when they have accumulated too many things or things that they no longer need. Nobody in his right mind would expect buyers to pay original retail prices. If garage sellers want to clear out their stuff, they have to cut prices, often to a small fraction of original prices. That’s deflation, yes, but it gets rid of the excess, puts some money into sellers’ pockets, and opens space for new purchases. Austrians don’t advocate deflation. They seek to forestall speculative bubbles that lead to deflationary recessions. Austrians note the statistical fact, in every economic recession since the Fed’s legislative enactment in 1913, that financial bubbles and recessions have followed over-creation of money by the Fed and its support for excessive credit expansion by the banking industry. Those bubbles are accompanied by price run-ups unsupported by underlying, long-term real demand. They also note that long-lasting, non-inflationary business upswings can occur only when the Fed buts out and businesses are allowed to sink or swim while liquidating excess inventories and over-built production facilities. Only under Fed chairman Paul Volcker in the early 1980s has the Fed followed that policy to deal with a recession. The result was a severe downturn for nearly two years, followed by sharply reduced inflation and one of the longest and strongest economic revivals in history. Had the Fed under Volcker’s predecessors not flooded the economy with easy credit, the punishing rigors unleashed by Volcker would have been unnecessary. Thomas E. Brewton is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets. His weblog is THE VIEW FROM 1776 Email comments to viewfrom1776@thomasbrewton.com November 4th, 2010 LAIGLESFORUM Posted in elections | 5 Comments » The election should make me happy, but it doesn’t Anthony Horvath The election results are still being processed but it can safely be said that the Republicans did a bang up job, taking some 65 additional seats in the House, and giving them control. There were some great victories and some annoying losses, but on balance, I suppose I should be happy. Well, from a near term point of view, I am happy. A lot of terrible policies are not going to be implemented now and we might roll back some of the ridiculous ones that Obama managed to get through. This will stave off certain unpleasantness, no doubt. Perhaps I would feel better if the victories had been more impressive, on the scale of 65-70% versus 25-30%. By and large, the spread was much narrower. Where a million and a half people voted for the GOP a million and a quarter voted against him or her. This means that there are still an awful lot of people who just don’t get it. A lot of people. Read more: http://sntjohnny.com/front/the-election-should-make-me-happy-but-it-doesnt/1178.html Speaking of how Americans don’t get it Don Hank The below-linked video shows what happens when you believe in Keynesian economics and you vote for it. Notice how the interviewers and the interviewees avoid talking about how “stimulus” didn’t work and in fact just got the US in greater debt. Also note how the banks are blamed for not lending to businesses that are laying off employees and not selling product. The Obama voters STILL seem to think it’s the banks’ fault and not the government-backed Ponzi schemes that induced banks to give mortgages to people they knew wouldn’t pay back. (The CRA did not explicitly state that they had to go this far in issuing mortgages to the insolvent, but banks knew they had tacit permission and the greediest went for it, and then securitized and sold the mortgages knowing they were trash). Even the tea party candidates didn’t talk much about this. America will just keep sliding further and further into recession as long as no one wants to return to the adult banking and economic policies that made our country successful. These interviewees just look like they think the government let them down by not giving them enough, not forcing banks to lend more money to losing businesses, instead of by not getting out of the way and letting the free market work. If they keep thinking like that, they are doomed. That’s why I agree with Anthony Horvath’s assessment in his above-linked column. We weren’t allowed to hit bottom and we won’t figure it out until we do. We’ll just bounce back and forth between the two corrupt parties until the final collapse. The video: http://www.cbsnews.com/video/watch/?id=7009215n The election results eclipsed this really bad news: Don Hank Further reading on the Fed: http://www.businessinsider.com/fed-jekyll-island-club-2010-11 October 30th, 2010 LAIGLESFORUM Posted in Banking and Finance, Economics | 2 Comments » By Don Hank What the below-linked article by Steph Jasky boils down to is that the government is lying to us (some think Bush and Obama both lied – well, maybe they were just naive) about the magnitude of the bank crisis. They also neglected to tell us (because they believed their lying advisors — who were NOT naive) that the banks needed restructuring if we are to ever emerge from this crisis. The banks don’t have the assets to do business as usual and need to shrink in size. BTW, I am proud to say my part of this column is intentionally written from both a conservative and a progressive viewpoint. It should not be offensive to either group. Or more correctly, it should be equally offensive to both. To read the article, most readers will need some help with terms that by now, all Americans should know. QE, Quantitative Easing: I am not an economist, but the definition for dummies is that the government fires up the printing press and prints gobs of money. This has the advantage that they can temporarily hold off the townspeople with the lanterns and pitch forks this way. It has the disadvantage that our money loses its value and inflation gets worse. And then we grab for the pitch forks anyway. (BTW, when you hear a politician talking about quantitative easing, he means “bend over and grab your ankles, Sucker.”) Structural Deficit: Essentially, this is a deficit in public (government) spending that arises not through cyclical (short-term) events but rather through the implementation of bad spending policies. Unless these policies are changed, it is in fact a permanent deficit. We now have such a deficit and unless someone in power grows the backbone to admit that and rewrite our spending policies accordingly, jobs will keep going away. Why does it take backbone to do that, you ask? Ok, have you watched the news and seen those rioters in Greece a while back and the ones in France more recently? I wouldn’t want to be in Sarkozy’s shoes right now. The rioters set fire to things and sometimes to people, and break things. They’re mad because the government cut their pensions, salaries, vacations, etc. They thought they were entitled to be paid money that is not there. C’est stupide, non? FASB: Financial Accounting Standards Board. These people write the standards for reporting what banks are making and spending and how much they hold in assets. They are being forced by government to write new standards making bad books look good. Now you should be intellectually ready to read and understand the below-linked article. If you’re like me, though, you will never be emotionally ready. Reading it can cause anxiety, anger and anguish and may raise your blood pressure. (Where did I put that aspirin?). On the other hand, if enough of you read it and act upon it, we may eventually stop electing spineless idiots to public offices and start approaching economic issues, such as job creation and capital growth, like adults again. (“Stimulus” is definitely kid stuff. Anyone with 2 eyes can see that by now). In fact, what about this idea: We elect people who have run a business and understand finance? Having said that, I now turn to my leftwing readers with this caveat: Just kidding. I know that would never work. We need Chicago style breaka-you-leg gangsters and slick fast-talking politicians steeped in Marxist lore who can tell us about sharing the wealth and make us feel proud to be useful idiots again. Here’s Steph’s article: http://fedupusa.org/2010/10/29/how-youre-going-to-get-cornholed-thanks-to-obama/ October 29th, 2010 LAIGLESFORUM Posted in Immigration, dhimmitude | 3 Comments » By Don Hank The slow but sure Islamization of Europe, illustrated in the below-linked video, is headed this way. Dearborn Michigan is a showcase example, where Christians are forbidden to hand out tracts in many places where Muslisms would be offended. Europe and the US are in the same basic set of hands: PLCSDs (progressives/ liberals/ communists/ socialists/ Democrats) who rule the West by controlling the media, education, film and the arts, the universities, much of the political world, etc. The Fabian socialists started in London in the early 1880s. Karl Marx’s sister was one of them. Their avowed goal: To spread socialism and eliminate Christianity from Western culture. How are they doing so far? Their influence spread and spun off other like-minded groups (the Frankfurt School, the UN, the CFR, the Bilderbergs, the Trilateral Commission, the ACLU, People for the American Way, the Democrat and Socialist Parties in the US, socialist parties in Europe, Common Purpose in the UK), which spread the virus. Their goal in Europe is being achieved in part by importing large numbers of Muslims from Africa and the Middle East to dilute the already waning Christian influence there. The result is a growing state of anarchy in the street and an untenable, often desperate social situation, for example, in many European schools, where European students are bullied mercilessly by Muslim kids. On this side of the Atlantic, their goal is being promoted by supranational government schemes like NAFTA, the SPP (Security and Prosperity Partnership of North America, and the Trans-Texas Corridor), all of which aim to obliterate borders toward the short-term goal of achieving an EU-style borderless America with a single central government that dictates to what is left of national governments (to be reduced to puppets that only harmonize central legislation). The longer-term goal is a one-world government such that no nation or region has any significant power over its own destiny. The huge influx of illegal aliens you see all around you is part of that plan. They are portrayed as victims, ie, the “poor,” in the media but a growing percentage have ties to the cartels that have made life unlivable and short in Mexico. They are creating crime-filled ghettos in our cities in their quest for a “better way of life.” I guarantee that the useful idiots who lend themselves to the implementation of this scheme to help illegal aliens gain increasing privileges in our nation, including — now — the right to vote in our elections, will some day rue the day they were duped into becoming pawns in this evil game. Here is a foretaste: Post left at another LF column by a lady living in Germany: Couldn’t agree more. Thanks for speaking the truth again, Don. Perhaps I should add that I live in Germany, and we see the encroaching creep of Islamism here without a doubt. I think of a church in Reutlingen in the south of Germany, who have spoken up against the way the Lutheran Church in the town has (I use the singular intentionally) been in recent, close fellowship with the Turkish nationalistic, fascist youth organisation, the ‘Grey Wolves’, who, any search in Google will show, are murderers and assassins, and with whom even the CIA are linked. The Lutherans had allowed them on to the church board, allowed them access to their premises, church hall, etc, all ‘in the name of dialogue’ with Muslims, in order to help them to integrate into German society. It beats me that the ‘Pfarrer’ didn’t have the wisdom to find out for himself what sort of people these are, but perhaps he in his mistaken, humanistic, naive way, thought that he could turn them from their Jihadist thinking. If so, then he was wrong. A video was made of a Grey Wolves meeting in the Lutheran church hall, presumably by one of the partaking group, with the Cross and other Christian symbols covered up, showing the Grey Wolves members saluting, (very similar to the Hitler salute, forbidden in Germany). The video was put on You Tube and caused a furore when the local press got hold of it. The Lutheran church then accused the free church of being religious intolerant fundamentalists, and even said that they had filmed the meeting, which any common logic would make clear, was a ridiculous accusation. They then ostracised, cold-shouldered and slandered the free church. The sad thing is that other churches in town did the same, pandering to the fear of the Grey Wolves, who hold even other Muslims in terror, unwilling to take a stand for the truth. They said that the free church was destroying the town’s ‘Christian unity’. If that’s Christian unity then I’m the Pope.9 Reasons why quantitative easing doesn’t work
Why Keynesian (Obama’s) economics doesn’t work
Keynesian economics, as expounded by New York Times columnist Paul Krugman, is essentially a black box theory. Stand on the outside of the economic box and dump into it endless baskets of inflationary fiat money, and things supposedly just happen automatically inside the black box to produce permanent prosperity and near zero unemployment.
http://www.thomasbrewton.com/We’re not there yet, not even close
The bank crisis for dummies
Islamization and Mexicanization — two designs, same architects
http://downloads.cbn.com/cbnnewsplayer/cbnplayer.swf?aid=17933
Wednesday, 10 November 2010
The Weimar Republic is on the way — famous for images of Germans taking their salaries to the bank in a wheelbarrow. The mark wasn’t worth much because the government just printed up money without anything of value to back it up.
The Fed is firing up the printing presses for QE-2 (quantitative easing — printing money with no backing, second time around). They will print 600 billion dollars with nothing to back it up. Create it out of thin air.
Here’s how that works out:
If America has, say, 500 billion dollars in circulation now and the government prints up 500 billion more with nothing to back it up (out of thin air), your dollar is eventually going to be worth 50 cents at the most. It loses value in proportion to the amount printed without backing. It is like letting the air out of your tires. Eventually you will be riding on the rims. And then what?
They tried the bailouts. That didn’t help the economy.
They tried the stimulus. That didn’t help the economy.
They tried the first printing (QE-1). That didn’t help the economy.
They’re out of ideas, so they’re trying MORE of the failed money printing. Does anyone think it will work this time?
George Soros, a Marxist who hates America, thinks we are too rich and influential and need a come-uppance, once said we should devalue our currency. He said that would be good. He didn’t mean for us, he meant it would be good for him and his obscenely rich buds who can double their money on us suckers.
Friends, as Beck says, this has never been tried before. It’s sort of like the atom bomb the first time it was tried. No one knew what to expect.
One thing we can’t expect is that our country will get stronger or more secure. And the dollar? Eventually, people will no longer want it. What is the dollar? The only thing that America manufactures any more.
Once it’s gone, that is the end of the ride.
Mad yet?
As Beck pointed out, the elections, which made you feel good, were a puppet show that took your mind off the underlying problems that none of the new congress people talked much about (probably because most don’t understand it):
Oh, I almost forgot to mention. The Weimar Republic didn’t last long. A poverty-stricken and abysmally ignorant populace replaced it with a regime known as the Third Reich. Pray, for delivrance, Folks!
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