Category Archives: Federal Reserve Bank

UPDATED: Cui Bono QE4? (The ‘Tools’ @ The Fed)

Debt, Economy, Federal Reserve Bank

The title roughly translated: For whose benefit, Quantitative Easing # 4?

Incessant babbler Erin Burnett, host of CNN’s “Outfront,” is as thick as a brick. She directs the conversation concerning Ben Bernanke’s easy money monetary policies to whether history will prove Big Ben right; to outcome-based morality; to pure utilitarianism.

Burnett begins with the assumption that “Ben Bernanke’s Fed has injected [a mere] $2.3 trillion into our economy.” Actually, “$7.77 Trillion: That’s the amount of money the central bank, chaired by Ben S. Bernanke, ‘parceled out’ during ‘the bailout to America’s ‘Big Six,’ which, surely, also served to inflate the money supply by “inflating” America’s fascistic banking system.

Babbles Burnett:

…that $2.3 trillion has worked and he said this is why. It has created two million private sector jobs. Those jobs created as a direct result of his easy money. Well, that’s pretty interesting because that’s an interesting link between jobs and how much he spent because that is not a cheap cost per job. In fact, it is more than a cool million dollars per job, $1.2 million to be exact. So let’s just repeat that because it did take a second to digest it. That’s $1.2 million per job. So for those who are keeping track, we are not counting the president’s extra two trillion or so dollars in stimulus in that money, just the Fed’s money divided by the number of jobs. … History, though, may prove Ben Bernanke is completely right.

All STEPHEN MOORE of the WAR STREET JOURNAL managed to muster in reply:

I’m not so sure that’s such a good bargain. I’m not so sure. I’m not as rosy as you are about his performance, Ben Bernanke and the Fed’s performance. …

Is that an argument?

UPDATE (9/1): THE TOOLS @ THE FED. From National Journal’s economics desk comes the same nonchalance about the “tools” at the Fed’s disposal. Like the blabbering Burnett, the correspondent has not been put on earth to question the ethicacy of interest-rate manipulation and quantitative easing. She does, at least, provide some useful definitions of … the TOOLS:

With short-term interest rates at or near zero, the Fed has turned to unconventional means, such as purchases of government debt securities known as “quantitative easing” or QE. Many economists think the Fed could well undertake a third round of bond buying—QE3—by the end of the year. Some see a possibility of action at the next Fed meeting, but other economists say the Fed might be more likely to wait.

Interest: Buffet’s Golden-Calf Investment Idol Shattered

Britain, Business, Capitalism, Conspiracy, Debt, Economy, Federal Reserve Bank, Feminism, Journalism, Media

American cable commentariat is dominated by horrible bimbos, sporting big hair, overbites, and grating voices that sound as though they’ve been squeezed from the other end of the woman’s anatomy (to use a Greg-Gutfeld analogy I’ve refined). That’s the ubiquitous TV tart’s better angle. Even when these females are kind-of on the right side of the issues, they are boring, second-handers, who spout mind-numbing banalities with great confidence. (I don’t know how a husband or boyfriend puts up with That “Creaky Voice.”)

Unlike the practically unknown Dominic Frisby, the teletart’s assets are not between her ears.

Introduced to American audiences by RT’s Max Keiser, Frisby is “resident gold bug at Moneyweek,” and author of the essay, “Why Gold Is The Currency Of The Free.”

Why can’t cable hosts be more like Max Keiser? Notwithstanding his program’s many idiosyncrasies—lefty nooks and crannies and conspiracy theories—RT’s Keiser Report always introduces its viewers to highly intelligent, often original, individuals who have a great deal to impart and add.

Twenty five minutes (and 49 seconds) into the latest broadcast, Frisby dealt an analytical blow to Warren Buffet’s claim that “gold is worthless as it pays no interest.” Since RT provides no transcript, I quote here from Frisby’s online column, “Gold pays no interest, has no use and no fundamental value – really?”:

“…gold pays no interest. True. But then, nor does cash – unless you lend it to people. The world needs to realise that by putting cash in the bank you are lending it. Gold can pay interest – if you lend it out. And lots of people do (though for what purpose I cannot say). But in this environment of negative real rates (when the central bank rate of interest is below the rate of inflation), who gives a hoot about interest anyway? 1 or 2% interest. Whoopee-do.”

[SNIP]

Exactly. You lose money by keeping cash. Anyone with some savings knows that you might as well not have them, if you are after the yield on your savings.

…Next, there’s this idea that “gold has no use”. Really?
Gold has very little industrial application, yes. It’s too expensive. But no use? Gold, unlike bubbles and government bonds, lasts forever. This makes it a highly effective form of money, as I’m about to explain.
But how can gold be money, runs the next argument, when you can’t go into a shop and buy stuff with it? Absolutely. You can’t.
Err … actually, you can. The gold sovereign is still legal tender. But it only has a face value of one pound, when it’s worth over £250. You’d be a plum if demanded that some poor shopkeeper accept it as payment. (And he’d be a plum if he refused it). But I’m splitting hairs.
As a day-to-day medium of exchange, gold has never found much use. A piece of gold the size of a penny (about £125 or $200 in today’s money) contains too much value for anything other than expensive transactions. Copper, nickel, silver, paper and now digital money have all found far more prolific use.
But to assert that you can’t buy stuff with it therefore it isn’t money, is a facile and ignorant argument. Money is more than just a medium of exchange. Indeed, this is just one of the three essential functions of money: it also has to act as a store of wealth and as a unit of account.
It is gold’s very inert, intrinsic, eternal uselessness – and we have Mother Nature to thank for that – that makes it such an effective form of money. It has no other function other than to be a store of wealth. Even its use in jewellery is an extension of that function – to store (and display) wealth.
Governments can’t print gold, they can’t ‘quantitatively ease’ it, they can’t loan it into existence. They can’t debase it the way they do their own currencies. It just stays there, unconsumed, forever. Which all means that gold is constant – and therefore an excellent unit of account, far better than government money.

Max Keiser stepped in to correct the record about Buffoon Buffest’s stock, which has been down 90% versus gold over the past 10 year.

A Good Country For Dead Beats

Business, Economy, Federal Reserve Bank, Law, Private Property, Rights, Socialism

Initially, every parasitical official seeking to renew or secure a grip on the public teat was demanding a halt to what are mostly perfectly legitimate foreclosures on delinquent homeowners. Now cities across the US are considering using eminent domain to seize underwater mortgages. One dreadful cur, Chicago Alderman Joe Moreno, claims that the effort will “boost a recovery of the housing market.”

Fox Business’ Melissa Francis hammered Moreno for his scheming.

“Chicago is threatening to undermine whole system,” blasted Ms. Francis. “If you seize these mortgages from the banks and you just rip them up, why would a bank ever lend money again?” Good for her. But why not use the words “contract” and “property rights”? Why use “system,” so vague and meaningless?

Public discourse never rises above the utilitarian: what works, what doesn’t. Rights be damned. Anything to get away from making a principled distinction between what is mine and what is thine. In a word, property rights.

It is almost always true that a necessary condition for a foreclosure is for the homeowner to have failed to make his mortgage payments. Some even “argue” for all-out sweetness and love for the foreclosed upon. They say that because the banks are embroiled in the fractional reserve system, they should suffer this fate.

That’s like saying that because a legal system is corrupt, murderers should go free; or because an owner who sells a parcel of land partakes in the property tax theft, the buyer should not have to pay him. Or because businesses often act like exuberant idiots during a phase of the business cycle—some as offenders; others as victims—their customers need not pay them. And on and on.

The Golden Jay Taylor

Debt, Economy, Federal Reserve Bank, Inflation, Political Economy

Canada is interested in what my friend Jay Taylor has to say about gold. Mr. Taylor is a New-York based investor and broadcaster who invests and broadcasts in the Austrian tradition (gold bug).

On the real price of gold:

“… An ounce of gold is an ounce of gold, but what is a dollar?”

Since there is no measure of the worth of the dollar, “Mr. Bernanke can create 2 trillion dollars more out of nothing, which is like taking an inch off a yardstick every year and still calling it a yardstick.”

What an ounce of gold buy, using the commodity based “Rogers International Raw Materials Fund, L.P.,” is rising steeply.

Gold’s real price has surged to “crisis levels,” retort Jay’s smart Canadian interviewer (whatever that phrase means). “The yardstick is getting shorter and shorter in dollar terms,” and the gold-mining sector is doing swell.

Jay predicts that gold could hit $2500 an ounce. An Austrian economics purist, Jay ventures that we are in deflationary times, thus the price of gold could fall, as its purchasing power rises.

You don’t have to convince me. “Gold Is A Girl’s Best Friend (& Bona Fide).”