Category Archives: Debt

‘Economic Circus’

Operating on a fractional reserve basis, the Federal Reserve Bank is empowered to create money on its own credit. Or, out of thin air.

Janet Yellen, the woman in charge of the larder and the laundering, has opted to keep “its interest-rate guidance intact on Wednesday, passing up an opportunity to inch closer to exiting its ultra easy monetary policy,” reported the Wall Street Journal.

“An economic circus,” counters Ron Paul: one person determines the money supply and the interests rates which affect us all in what is a crisis of debt.

Audit the Fed, a Paul initiative, has just passed in Congress, but other than shine some light on the “shenanigans”—the monkeying with the money done by the Fed—any initiative by a corrupt legislature is likely futile in the long run.

Abolish both Fed and Congress.

Stock Exchange A Laughing Stock

Debt, Economy, Federal Reserve Bank, Inflation

“An increase in the price of an item is not the same as an appreciation in its value.” Consequently, it’s hard to understand the happy hyperventilating over the Dow having broken through 17,000 for the first time. Keeping the printing presses roaring, as the Federal Reserve has done, will result in a rise in prices, stocks included. Homes too.

A cleareyed look ahead to “a very serious bond-market crisis” is more appropriate.

Warns David Stockman, author The Great Deformation: The Corruption of Capitalism in America:

If you allow a $17 trillion debt to be financed at $250 billion a year when it really should be $700 billion or $800 billion under normal interest rates, then politicians are gonna take the easy way out. They’re not going to fall on the sword. They’re not going to lay out the real painful choices to the public. They’re not going to vote against the squeaky wheels and the powerful constituents when the Fed is printing the money and doing the job of financing the debt for them.
So I think that’s where the crisis comes. When the Fed finally reaches the point where the entire monetary system is threatened – and I think it would be if it had continued at $85 billion a month – we come to the juncture where the Fed can no longer keep its big fat thumb in the market buying up the monthly and weekly issue of Treasury debt. At that point, we are going to see the rubber meet the road, so to speak. We’re gonna have the day of reckoning, because there isn’t demand out in the real marketplace among real investors for massive amounts of additional Treasury debt at these sub-economic interest rates. And when interest rates normalize, Katy, bar the door, because the carry cost on the federal debt— which will by then be $20 trillion— will soar by half a trillion a year. The politicians will finally panic, but I’m afraid by then it might be too late—- that we’ll be in a very serious bond-market crisis.

Happy Meal Time For Miseducated Millennials

Debt, Education, Socialism, Welfare

The Ass With Ears intends to continue to keep loan rates for students artificially low, passing the cost of additional subsidies to the groaning taxpayer, and, in all, keeping the trillion-dollar education bubble afloat.

In his weekly address, President Barack Obama promised “to expand a program known as ‘Pay as You Earn.’ The plan allows borrowers to make payments on student loans equivalent to 10% of their discretionary income and then have any balance forgiven after 20 years – or 10 years for public-sector workers.” (WSJ)

“The federal government played a key role in helping create the more than $1 trillion in student loan debt currently being carried in the U.S,” reports Reason.com. “In 2012 the Cato Institute’s Neal McCluskey highlighted a report from the House Committee on Education and the Workforce, ‘The College Cost Crisis,’ which managed to identify that nearly 50 years of federal subsidies for higher education (beginning with the Higher Education Act of 1965) have helped along tuition inflation.”

… the “Pay As You Earn” program … caps their loan repayment at 10 percent of their income for 20 years after which the remainder is written off. (For professions such as nursing it takes only 10 years to get the write off.) In other words, students take loans according to their needs, and repay them according to their ability and hit taxpayers for the rest. The president wants to expand this socialist prescription to all students who receive federal loans.

(Via Reason.com)

Read about this “federally insured entitlement,” or loan socialism, here.

The Dynamics And Domino Effect Of The CBOaf

Debt, Economy, Healthcare, Welfare

OK. We don’t expect that parasitical hag Nancy Pelosi and the rest of the political retards in Washington to grasp Bastiat’s What-Is-Seen-and-What-Is-Not-Seen principle. But left off last night from Fox News’ corner of the idiot’s lantern, where looking for enlightenment is as hopeless, was the following pesky detail: Zero Care’s total of $1 trillion in tax increases and $2 trillion in subsidies for low-income individuals come from someone. Some workers are carrying this load. (Some of them live in China, where the money fairy resides.)

In fact, fewer and fewer of these workers are working harder and harder to support more and more.

The context? The latest immoral utterance to issue from the Obama White House, in the person of Press Secretary Jay Carney, and to be repeated across the liberal media: The “2.5 million Americans leaving the workforce was a good thing, because they would no longer be ‘trapped in a job.’”

Clarified by the WaPo’s occasionally factual Fact Checker, “the CBO said ACA, a.k.a Obamacare, would reduce the number of hours worked by the equivalent of 2.5 million full-time workers by 2025. That means that workers will decide to reduce their hours, not that employers are reducing the number of jobs.”

Writes ObamaHead Dana Milbank: “The CBO predicted the law would have a “substantially larger” impact on the labor market than it had previously expected: The law would reduce the workforce in 2021 by the equivalent of 2.3 million full-time workers, well more than the 800,000 originally anticipated. This will inevitably be a drag on economic growth, as more people decide government handouts are more attractive than working more and paying higher taxes.”

Incidentally, the mandate of the CBOafs (The Congressional Budget Oafs) is this: First they confirm government predictions of the great saving that are to be had from all government spending on welfare programs. Later, when it’s safer, they adjust their oafish and outlandish lies, so that the TV and radio mouths can continue muttering about their great authority, “Oh, the impartial CBO says this; oh, the independent CBO says that.”

* An example of a recent CBOaf nerd joke-cum-lie is this factoid: “The federal budget deficit will shrink to $514 billion in 2014, or 3 percent of GDP, CBO projects.”

Older ones include:

“CBO Confirms Families Will Save Money Under Health Reform.”

“CBO Update Shows Lower Costs for the New Health Care Law.”

“CBO Confirms: The Health Care Law Reduces the Deficit.”

That little derisive snicker made by the adorable Sheldon Cooper is in order on each account. (And this column snickers aplenty.)