Monthly Archives: November 2010

UPDATE V: The World Against Our Fed (Stock Market High On Fed Smack)

Barack Obama, Debt, Economy, Federal Reserve Bank, Inflation

This is remarkable. Federal Reserve Chairman Ben Bernanke thought that he could float another flotilla of fiat currency, QE2, without consequence. How buoyed am I that the world, or countries that matter, is up in arms about the US’s attempt to flood money markets with counterfeit currency. So as to get rid of the public debt, our government, via the Fed (which is an arm of the state), is debauching the dollar and all private savings. If Americans don’t kick back at this tax by stealth, let the world do so for us. This is the not-so-invisible hand of fiduciary self-interest in action.

The WSJ’s assertion that the Fed is “independent” is bellied by at least one fact: it inflates in perfect unison with the administrations it served:

Global controversy mounted over the Federal Reserve’s decision to pump billions of dollars into the U.S. economy, with President Barack Obama defending the move as China, Russia and the euro zone added to a chorus of criticism.

Mr. Obama returned fire in the growing confrontation over trade and currencies Monday in a joint news conference with Indian Prime Minister Manmohan Singh, taking the unusual step of publicly backing the Fed’s decision to buy $600 billion in U.S. Treasury bonds—a move that has come under withering international criticism for weakening the U.S. dollar.

The Fed is independent, and the White House by longstanding tradition has strained to avoid any appearance of collusion or conflict. Mr. Obama said the administration doesn’t comment on particular actions of the U.S. central bank, before adding: “I will say that the Fed’s mandate, my mandate, is to grow our economy. And that’s not just good for the United States, that’s good for the world as a whole.”

The prospects of the Fed flooding the financial system with money helped drive gold above $1,400 an ounce on Monday. The precious metal, which investors often buy as protection against inflation, settled at a record $1,402.80 per troy ounce. Other assets, such as U.S. stocks and oil, drifted back slightly on Monday after getting a big boost from the Fed’s announcement last week. The dollar fell against the yen, while rising against the euro as worries about Europe’s debt problems returned.

UPDATE I (Nov. 9): SEN. JIM DEMINT, R-S.C.: “Well, I don’t — can’t say I’m glad to hear bad things about our country from the rest of the world, Neil, but it’s clear that we are monetizing our debt. It’s something we have said we wouldn’t do. We know it is a precursor — at least it has been in history — to a lot of bad things that happens to currencies and economies.

What I don’t understand in the middle of all this is, why don’t we just follow good, basic economic rules? Let taxes stay lower, so that more money stays in the economy, rather than trying all this micromanagement that the president and the Federal Reserve have been trying to do.”

UPDATE II: “Is the Federal Reserve violating the U.S. Constitution’s separation of powers in its new purchases of $600 billion worth of U.S. Treasuries?,” asks Fox Businesses’ Elizabeth MacDonald. “Is the Fed engaging in an unconstitutional monetization of the U.S. Congress’ out of control spending spree that is really a bridge loan to fiscal insanity?”

“At minimum, should the Fed be avoiding these purchases until the fiscally debauched U.S. Congress, packed to the ceiling with fiscal dipsomaniacs, follows Great Britain’s lead in its fiscal abstinence that may ‘out Thatcher’ even Margaret Thatcher?”

[SNIP]

I’m just so grateful that at last someone in mainstream media is discussing economics sensibly and quite knowledgeably. Of course—and more fundamentally—it is the federal reserve banking scheme that should be probed. The Fed has been doing its dastardly deeds—manipulate interest rates and siphon wealth away by stealth—for quite some time and under Bush as much as under Fox News’ nemesis, Obama.

UPDATE III: I called her “Bush in a Bra,” but it seems that Palin, unlike Bush, has a learning curve. Is she learning from Ron Paul via Michelle Bachmann? Who cares. She’s tweeting QE (“Quantitative Easing”):

“What’s the end game here? Where will all this money printing on an unprecedented scale take us? Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually – inevitably – no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?”

UPDATE IV: STOCK MARKET HIGH ON FED SMACK, writes Charles Hugh Smith of the Business Insider. (via Vox Day):

The U.S. stock market is increasingly dependent on the Federal Reserve’s constant interventions to maintain the illusion of an organic demand for equities. The market’s impressive climb since September 1 is only a simulacrum of a healthy market; actual organic demand from individual investors is falling. The Fed’s destruction of the U.S. dollar, its relentless pumping of cash into banks’ trading desks via POMO (Permanent Open Market Operations) and its destruction of any yield on cash with zero interest rates has driven money into risk assets–emerging markets, commodities and the U.S. stock market.

The more the market comes to depend on Fed “smack” (credit and intervention) for its “animal spirits,” the more inevitable the crash becomes.

A healthy market is built by rising demand from millions of investors–a broad foundation. It is built on rising revenues, not just on heavily gamed “pro forma” earnings goosed by the dollar’s decline (all those sales in euros look fat indeed when converted into dollars).

The present market is more like an inverted pyramid: a single source of “demand,” the Fed, and months of declining volume.

As dependency on the sole source rises, then the addict (in this case, the stock market) clings ever tighter to the pusher; the addict becomes increasingly volatile, demanding and resentful

UPDATE V (Nov. 10): The “World”—or at least the working world; countries that shake-and-move markets—is accusing “the United States [of] deliberately weakening the dollar while trying to swing the G20 spotlight back onto global imbalances as world leaders gathered in Seoul on Wednesday.”

The “World” is right.

UPDATED: Poignant Crime-&-Punishment Comments From Dr. Petit

Crime, Criminal Injustice, GUNS, Individual Rights, Justice, Law, Private Property

“Closure is a term invented by imbeciles” was one. I offered a precis of this particularly heinous case of home invasion (“all burglars are home invaders”) in the post, “You’re The First Line Of Defense For Your Family.” Even better were the biblical, ten-commandments comments of Dr. Petit’s father-in-law, which are not yet online (please send them along if you find them).

UPDATE: “Jennifer Hawke-Petit’s father, Reverend Richard Hawke, told reporters, ‘There are just some people who do not deserve to live in God’s world,’ in reaction to the death penalty sentencing.” Via Inside Edition.

It would be a great blessing if one of the Petit relatives or friends took up self-defense and Second-Amendment activism. Someone very close to me in South Africa watched two men enter his home on a Sunday afternoon, when the family was beside the pool, relaxing. He saw his wife flee, as in slow-motion. He rushed to the safe, where the gun had been kept. Then aimed at the invaders and yelled, “Get the hell out of my home.” They fled like the cowards they were. From then on, this man has carried his piece on his ankle. (The family also needed therapy.)

The sadistic letter the Connecticut killer and rapist Joshua Komisarjevsky wrote from prison makes clear that this is just what he and his accomplice, Steven Hayes (placed on death row today), needed.

UPDATED: Poignant Crime-&-Punishment Comments From Dr. Petit

Crime, Criminal Injustice, GUNS, Individual Rights, Justice, Law, Private Property

“Closure is a term invented by imbeciles” was one. I offered a precis of this particularly heinous case of home invasion (“all burglars are home invaders”) in the post, “You’re The First Line Of Defense For Your Family.” Even better were the biblical, ten-commandments comments of Dr. Petit’s father-in-law, which are not yet online (please send them along if you find them).

UPDATE: “Jennifer Hawke-Petit’s father, Reverend Richard Hawke, told reporters, ‘There are just some people who do not deserve to live in God’s world,’ in reaction to the death penalty sentencing.” Via Inside Edition.

It would be a great blessing if one of the Petit relatives or friends took up self-defense and Second-Amendment activism. Someone very close to me in South Africa watched two men enter his home on a Sunday afternoon, when the family was beside the pool, relaxing. He saw his wife flee, as in slow-motion. He rushed to the safe, where the gun had been kept. Then aimed at the invaders and yelled, “Get the hell out of my home.” They fled like the cowards they were. From then on, this man has carried his piece on his ankle. (The family also needed therapy.)

The sadistic letter the Connecticut killer and rapist Joshua Komisarjevsky wrote from prison makes clear that this is just what he and his accomplice, Steven Hayes (placed on death row today), needed.

The Real Porker Programs (Yes To A State Shut-Down)

Debt, Democrats, Economy, Healthcare, John McCain, Military, Republicans, The State, Welfare

If the Republicans’ ideas on budget slashing is anything like McMoron’s, then, the months ahead will be filled with threats to cut National Public Radio loose, and to do away with earmarks—minuscule amounts which don’t cover a day’s interest payment on the national debt.

Even the Harvard Political Review, which now departs from the King of Keynesians, Paul Krugman, knows as much. The editors of the HPR-produced “Annual Report of the USA” include a Democrat and a Republican. The one writes:

“Despite public criticism of ‘pork barrel’ spending and foreign aid, these items constitute a minuscule portion of the federal budget. Instead, the area of greatest concern is spending on the major entitlements: Social Security, Medicare, and Medicaid. Spending on these programs is expected to skyrocket in the coming decades due to an aging population and the increasing cost of medical care. The long-term Social Security solvency problem can be avoided if Congress can muster the political will, but there is no obvious solution as to how to limit the growth of public health care spending. One of the major goals of the recent health care reform legislation was to reduce health spending over the long term, but achieving this will require a discerning and disciplined Congress in the years to come.”

“While the military budget is not growing nearly as rapidly as spending on entitlements, it represents nearly a fifth of total federal spending and is a perennial target of deficit hawks. While there is some waste in defense spending that could be eliminated without much consequence, more fundamental cuts will entail a sacrifice of military capabilities.”

[SNIP]

The deceptive issue of earmarks was raised by Rep. Eric Cantor, of Virginia. From Chris Wallace’s interview with Cantor, the “Presumptive House majority leader,” it transpires, moreover, that Republicans intend to demand “sizable” spending cuts (presumably other than earmarks or NPR) from Obama in return for agreeing to raise the debt-ceiling.

The debt ceiling should not be raised. Better that the government be forced into default. In that case, a government shut-down, as in 1995, would be most welcome.

To his credit, Cantor did not rule out such eventualities. Should they occur, he contended, Obama would be the one to blame for the fiscal crisis that brought about a default on the debt and a subsequent government shut-down.

If government shuts-down for long enough, we may find ourselves thanking Obama for delivering us from evil, indirectly, at least.