Posts Tagged ‘economy’
The Economy Tanks, The Fed Makes Off Like a Bandit
Posted by Benjamin J. Thompson | Filed under Economics, News
While Main Street starves, the Fed feeds Wall Street what’s left of America’s wealth.
The Washington Post reports that the Federal Reserve pulled in $45 billion in 2009. In 96 years of operation, the Fed never made so much money in a single year.
From the article:
Wall Street firms aren’t the only banks that had a banner year. The Federal Reserve made record profits in 2009, as its unconventional efforts to prop up the economy created a windfall for the government.
With unemployment climbing to Great Depression levels, businesses shuttering and too-big-to-fail getting by only by government life support, exactly what was the Fed doing that was such a grand profit center?
It might have something to do with this:
This hockey stick graph should concern you a lot more than Al Gore’s. Federal Reserve loans to banks have jumped astronomically. It would be crazy if the Fed didn’t rake in monstrous profits. The Federal Reserve has the unique privilege of not only originating the money, but also of collecting interest on loaning it out.
That is the source of the “record profits,” which are not so much profits as they are stolen property. Neil Irwin, who wrote the article at MSNBC.com, got it wrong when he said that “The Fed, unlike most government agencies, funds itself from its own operations and returns its profits to the Treasury.” It does indeed give money to the treasury, but the way it makes its money is not fundamentally different from tax-funded agencies. The arbitrary printing of money is just a stealthier tax. It’s a tool of wealth redistribution that simply debases the dollars rather than taking them directly out of your paycheck. When the government bailed out AIG, FNM and FRE, when they bailed out Citigroup, Bank of America, GM and Chrysler, it was all with stolen funds. Conservatives are fond of saying our children and grandchildren will have to pay that debt, but we also pay it right now. The economy could have recovered by now, but instead, the resources that would have gone toward recovery were shifted without our permission to the most worst-performing businesses in the market. Those companies should have simply taken their losses, declared bankruptcy, and let the rest of us get on with life.
Since the Fed spent 2009 redistributing your hard-earned wealth and mine into the balance sheets of the Wall Street gang, collecting a hefty fee along the way, of course both of them are going to have “a banner year.” Enron had a banner year in 1999.
Zimbabwe Ben Bernanke’s “green shoots” fallacy
Posted by Benjamin J. Thompson | Filed under Economics, Essays, Liberty, News
Just focusing on the movements of a graph really doesn't help you see the big picture.
If there’s one thing I’ve learned from watching the financial markets for the last five years, it’s that eight weeks is nowhere near long enough to pronounce a conclusive change in the winds. Relying solely on post-hoc technical analysis of a graph is a sure-fire way to get yourself pantsed by the market.
When guys like Peter Schiff were foretelling the implosion of the housing market, it took over a year and a half for their predictions to manifest. Shiff, Ron Paul, Lew Rockwell, Tom Woods, and the rest of the scholars at the Ludwig von Mises Institute were right on the money, not because they were good at analyzing graphs, but because they understood immutable economic laws.
Yet during all that time, it was exactly Bernanke, Paulson, Krugman and the ones with the biggest megaphones on the mainstream news who said all was well, and the doomsayers were off their rockers. Now those people expect us to believe them when they say 8 weeks of non-carnage is an economic turnaround? There’s been no fundamental change!
An eight-week-long upturn in … stock markets since March 10th has sparked a wave of optimistic commentaries in the financial media…
It’s largely the new “mark-to-make-believe” fraudulent accounting rules that’ve permitted the banks’ financials to look so good — or at least look not so bad.
We need to keep in mind that the Fed and the government have been stirring the pot of economic chaos even more aggressively than we previously thought, and we have yet to see all the unintended consequences.
Just because the Wall Street numbers turn up for a couple of months doesn’t mean the general economy is out of the woods yet. The Great Depression lasted for about 15 years, and since our government’s chasing the same Hooverian/Rooseveltian policies so far, we should expect the same until they decide to do an about-face on their policies.
It’s not that I don’t want to see the economy recover, or that I dislike Obama so much I don’t want to see his policies bring about a recovery. This is a matter of economic laws that governments can’t suppress. Their policies have been aimed at all the symptoms but never the underlying problem. They’ve shot us up with enough pain killers to make it feel OK, but the bones are still broken. Any real recovery will be in spite of these policies. Once this bear-market rally runs its course, these facts will become obvious, at least until they find some new free market bogeyman to blame.
To go forward, America must look back: G.K. Chesterton, Ron Paul and Republican Renewal
Posted by Benjamin J. Thompson | Filed under Essays, Liberty, Thoughts
One of the first things that are wrong is this: the deep and silent modern assumption that past things have become impossible. There is one metaphor of which the moderns are very fond; they are always saying, “You can’t put the clock back.” The simple and obvious answer is “You can.” A clock, being a piece of human construction, can be restored by the human finger to any figure or hour. In the same way society, being a piece of human construction, can be reconstructed upon any plan that has ever existed.
-G.K. Chesterton, What’s Wrong with the World
Ron Paul and his supporters are frequently derided as clinging to the 19th century, as lovers of anachronisms and “disproven” ideas. They love the barbaric relic of gold, and want to take us back to the age of robber barons and child labor. No matter how Ron Paul’s enemies choose to mischaracterize his agenda, his platform does indeed take much inspiration from the past. My contention, however, is that looking to the past constitutes a strength, not a weakness. In fact, the past is now the only route to a decent future.
Every election promises the same things: new ideas, a new direction, leadership that looks to the future. But what is so very wrong with the old ideas, the old directions or leadership that consults the past? There has to be something useful about the past! Do all the ideas of our predecessors become obsolete every four years?
This need to “look to the future” with “new ideas” and “progressive” thought is not just infatuation with the new, and it isn’t just the “progressive” left that does this. The gubernatorial campaign of the incumbent Republican governor in Indiana, Mitch Daniels, uses this vocabulary in profusion. I am convinced this language represents a fear of the past. And why shouldn’t our politicians be afraid of the past? The great statesmen of previous generations tower over today’s petty politics. Thomas Paine wrote Common Sense and moved a continent. When a modern politician writes a book, it is a stack of mass market chum published to boost campaign visibility.
The familiar turn of phrase, standing on the shoulders of giants, does not apply to modern America. She has not only climbed down from those sturdy shoulders, but is so intimidated by the giants she runs the other way.
The future is a blank wall on which every man can write his own name as large as he likes; the past I find already covered with illegible scribbles, such as Plato, Isaiah, Shakespeare, Michael Angelo, Napoleon. I can make the future as narrow as myself; the past is obliged to be as broad and turbulent as humanity. And the upshot of this modern attitude is really this: that men invent new ideals because they dare not attempt old ideals. They look forward with enthusiasm, because they are afraid to look back.
-G.K. Chesterton, What’s Wrong with the World
If we avoid looking at the past, we are spared the task of living up to it. The blank slate of the future allows us to scribble our ambitions as if they were grand new ideas. It has not already been painted on by the great masters from the past.
This is what makes Ron Paul’s version of change wholly unique in the presidential field. He was brave enough to look to the past, and find the ideas that already did us well, even if America gave up on them. The gold standard was not disproven just because it was abandoned. In fact, it is this abandonment of hard money that has caused the present-day credit crisis! Laizzes-faire was not disproven just because government chose to intervene. Constitutionalism is not disproven just because the current government is too far out of its bounds. It is exactly because we gave up on these ideas that they are worth trying again. We’ve been trying “new” things for so long, a true change would be to try something old! And that is what Ron Paul’s campaign offered.
The term “conservative” at least suggests a respect for the past, which is why I find myself working in the Republican Party in order to affect some positive political change in this country. I believe a lot of other people have made the same decision, now that they have discovered Constitutionalism and the ideals that most consider “libertarian.” Hopefully there is room in this Party for more than one Ron Paul. I don’t see any new blood coming into the GOP from other sources, so there had better be, or Republicans are going to go share their fate with the Dodo, and for the same reasons.
When America observed strict Constitutionalism, exercised a more laizzes-faire policy than today, and stuck to a hard money standard, she enjoyed steady and sustainable economic growth that dwarfs even today’s booming Asia. For some reason, those ideas were given up on, because some people feared the inconveniences of too much freedom, and instead preferred the obstacles accompanying too little freedom. We have tried the welfare-warfare state for nearly a century. We have endlessly chased the new, and have not avoided what I can only describe as a brewing economic meltdown. In the present crisis, is it still too soon to look back and try the ideas that worked?