Category Archives: Inflation

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.

Republicans Already Teed Off With Tea Party

Classical Liberalism, Conservatism, Federal Reserve Bank, Inflation, libertarianism, Political Economy, Republicans, Ron Paul

Well of course the Republicans will back Rep. Jeb Hensarling (R-Texas) for the post of GOP conference chair, “the fourth-highest House leadership position,” in the new Congress, over “Rep. Michele Bachmann (R-Minn.), a ‘Tea Party heroine.'”

If the Daily Beast, run by airhead Tina Brown—“the author of a gossipy, somewhat obese book about the anorexic dolt, Diana Spencer”—and the life-style libertarians at Reason Magazine (which calls the former outfit an “indefatigable friend”), both favor an establishment Republican over Michelle Bachmann—take it to the bank that Bachmann is the better bet.

Jacob Sallum, a master at sweating the smaller, safer stuff, has concluded that Bachmann, one of the few people in Congress who understands and protests monetary policy, is a philosophical spender because of the “agricultural subsidies her family farm has [allegedly] received.”

Sallum’s case is not worth a straw. I am sure one can find occasions when Ron Paul has fallen short on such minor (albeit important) matters. But when it comes to the big issues—monetary policy (around which the girls at Reason cannot wrap their heads)—he more than makes up for it. Ditto Michelle Bachmann, who joined Ron Paul to do battle against Ben Bernanke.

Of course, the “High Priests Of Pomposity” at Reason panned Ron Paul too.

Reason is famous for its “35 Heroes of Freedom,” which established their criteria for “cool and cosmopolitan”: William Burroughs, a drug addled, Beat-Generation wife killer, whose “work is mostly gibberish and his literary influence baleful,” was included, as well as Larry Flynt, Madonna, Martina Navratilova and Dennis Rodman.

Madonna Reason has exalted for, as they put it, leading “MTV’s glorious parade of freaks, gender-benders, and weirdos who helped broaden the palette of acceptable cultural identities and destroy whatever vestiges of repressive mainstream sensibilities still remained.” This sounds like the unscrambled, strange dialect spoken by a professor of Women’s and Gender Studies.”

I mean “Womyn’s Studies.”

If you lost the post’s thread, here’s the gist: Bachmann understands monetary policy and grasps its importance. Republican leaders, who don’t, are choosing to back their boy over Bachmann for the position of GOP conference chair. Beltway libertarians are backing the boy and his masters.

UPDATED: More Stimulus By Stealth (Bachmann The Brave)

Debt, Economy, Federal Reserve Bank, Inflation

As we warned you over these pixelated pages, QE2 was set to sail again, although this was no maiden voyage.

Quantitative Easing; a nicety for the Fed’s ballooning of the money supply, causing inflation, a devaluation of the dollar, and a diminution of its purchasing powers. In the offing I see hyperinflation. A stimulus sans the pomp and circumstance. Via Bloomberg.com:

The Federal Reserve will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation.

Policy makers, who said new purchases will be about $75 billion a month, “will adjust the program as needed to best foster maximum employment and price stability,” the Fed’s Open Market Committee said in a statement in Washington. The central bank retained its pledge to keep interest rates low for an “extended period.”

Chairman Ben S. Bernanke is trying to boost growth after near-zero interest rates and $1.7 trillion in securities purchases helped pull the economy out of recession without bringing down joblessness close to a 26-year high. He’s risking a strategy that may either fail or fuel inflation and asset bubbles, said Scott Pardee, a former New York Fed official who now teaches at Middlebury College in Vermont. …

MORE.

UPDATE (Nov. 4): BACHMANN The Brave. Via WND.COM:

“Fresh from her victory in last night’s election, U.S. Rep. Michele Bachmann says she begged the Federal Reserve not to go ahead with controversial plans to monetize the national debt, and is calling its purchase of hundreds of billions of dollars in Treasury bonds ‘a disaster’ for America. .. In her Oct. 14 letter, the Minnesota Republican told Bernanke the policy move was ‘clearly less preferable than improving our nation’s economy through responsible fiscal policy that consists of decreased government spending and lower rates of taxation and a constrained regulatory regime that operates within the boundaries of prudence and reasoned self-restraint.”

This woman has all the brain power poor Sarah is without.

FedAir

Federal Reserve Bank, Inflation

Writes Rep. Ron Paul: “Official core inflation for the US is only 1.14%, but that excludes such crucial day-to-day goods such as food and energy. Real inflation certainly is higher, maybe much higher. John Williams of Shadow Government Statistics calculates true inflation at a whopping 8.48%! But manipulated inflation statistics give the government cover when they again deny seniors a cost of living increase in their social security checks. They also serve to convince the public that further expansion of the money supply will boost the economy without causing any real pain, which has essentially been the core argument of Greenspan-Bernanke fed policy for the last 20 years.”

All the while “[t]he Federal Reserve continues to insist that inflation is too low, even while the monetary base remains at record levels, and food and gas prices continue to climb.”

And, “As the Fed continues to drive down the value of the dollar, the government accuses China of deliberately devaluing its currency, and the House has passed legislation aimed at punishing China for this alleged devaluation.”