As of November 7th, the total U.S. public debt outstanding reached an astonishing $13.7 trillion. This means that although Congress just raised the debt ceiling to $14.3 trillion back in February, the new Congress will face another debt ceiling vote almost immediately next year. Otherwise, the Treasury will not be able to continue issuing debt to fund government operations.
The upcoming vote will provide an interesting litmus test for the new Republican congressional majority, especially those new members closely identified with Tea Party voters. The debt ceiling law, passed in 1917, enables Congress to place a statutory cap on the total amount of government debt rather than having to approve each individual Treasury bond offering. It also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing.
If the new Congress gives in to establishment pressure and media alarmism about “shutting down the government” by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that Congress, despite the rhetoric of the midterm elections, is doing business as usual. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude.
Of course congressional leaders – now Republicans – will tell America that they plan on balancing the budget soon, but they just need some time. After all, we have to keep the government open, right? We can’t have an “emergency” shutdown of vital government services. But somehow Congress always finds money for emergency spending, in the form of supplemental appropriations bills for TARP bailouts, troop surges, and the like. Why is there never an emergency that justifies less spending???
Surely we are facing an emergency debt spiral, as evidenced by the Federal Reserve’s recent commitment to buy another round of Treasury debt. It’s now quite obvious that the U.S. government plans to inflate its way out of debt, and the world is fleeing our dollar in response. Just 7 years ago Congress raised the debt ceiling to $6.4 trillion, which means the federal government had doubled its indebtedness in less than a decade. Annual deficits for 2011 and beyond are projected to be at least $1 trillion. By contrast, the entire federal debt amassed from the founding of our nation until President Reagan took office in 1981 – a period of roughly 200 years – was $1 trillion. So it’s no exaggeration to state that federal debt is growing exponentially.
I have two simple proposals when the new Congress convenes in January. First, refuse to raise the debt ceiling. Find a way, month by month, for Congress to spend only what the Treasury raises in revenue. Second, start over from scratch with the 13 appropriations bills that fund the federal government. Reject any talk of baseline budgets or discretionary spending. It is all discretionary, and members of both parties should vote against any 2012 appropriation bill that is not at least 10% smaller – in nominal dollars – than its 2011 counterpart.
A motivated Congress could begin to slow the tide of debt by taking the simple step of cutting federal spending by 10% across the board for the next few years. Let’s hope it does not take the complete collapse of the U.S. dollar to provide this motivation.
By Ron Paul November 30, 2010
Tuesday, November 30, 2010
Pajamas Media » EPA Fraud: Chevy Volt, Nissan Leaf Actually Get Only 23, 25 MPG
Pajamas Media » EPA Fraud: Chevy Volt, Nissan Leaf Actually Get Only 23, 25 MPG
So there you have it. The Government Motors Corporation has lied to everyone about it's new flagship fiasco.
So there you have it. The Government Motors Corporation has lied to everyone about it's new flagship fiasco.
Decline the TSA Gate Rape and find yourself Blacklisted
According to the Canada Free Press, the TSA is now compiling "Blacklists" of everyone that decides the 4th Amendment trumps the rules of the TSA.
It does not surprise me that the Obama Administration responds to the backlash against the unconstitutional fourth amendment violating TSA screening measures by blacklisting air travelers who object to the over reaching intrusive searches at the airports. They are trying to send a chilling effect not to protest the TSA groping and body scanners that has the public in an uproar.
Will they add them to a list were you can not buy a new car .apply for employment or do business.Will people be put on this list that will make life hard to function because the government has blackballed people who objected to the abusive TSA.These secretive list shows the abusive executive branch bypassing the courts and due process blacklisting their political enemies and opposition.
It does not surprise me that the Obama Administration responds to the backlash against the unconstitutional fourth amendment violating TSA screening measures by blacklisting air travelers who object to the over reaching intrusive searches at the airports. They are trying to send a chilling effect not to protest the TSA groping and body scanners that has the public in an uproar.
Will they add them to a list were you can not buy a new car .apply for employment or do business.Will people be put on this list that will make life hard to function because the government has blackballed people who objected to the abusive TSA.These secretive list shows the abusive executive branch bypassing the courts and due process blacklisting their political enemies and opposition.
Monday, November 29, 2010
Supreme Court Rejects Hearing About Obama Citizenship
Look, let's get this straight, I'm a constitutional innocent until proven guilty, everyone deserves equal protection under the law kind of guy. I have no evidence that Barack Obama was or wasn't born in the United States and is therefore eligable to be President of the United States of America, and apparently neither does anyone else.
There are however many reasons to think we should at least explore the issue and have the Supreme Court of The United States put the issue to bed. Today the SCOTUS rejected yet another hearing.
My question today is the same as it ever was: Why, if he is indeed a citizen, has Barack Obama spent so much money squelching opposition? No one knows the real figure. Why was Justice Kagan his nominee?
What does the president have to hide in his past that he has sealed his education records? Wayne Allen Root, former Libertarian candidate for vice president, put up $1Million dollars as a challenge for those records to be released.....who couldn't use a million dollars?
If he was such a rock star at Harvard Law and edited the Harvard Law Review, why didn't he ever get an article published? "As president of the Harvard Law Review and a law professor in Chicago, Senator Barack Obama refined his legal thinking, but left a scant paper trail. His name doesn't appear on any legal scholarship."
There are however many reasons to think we should at least explore the issue and have the Supreme Court of The United States put the issue to bed. Today the SCOTUS rejected yet another hearing.
My question today is the same as it ever was: Why, if he is indeed a citizen, has Barack Obama spent so much money squelching opposition? No one knows the real figure. Why was Justice Kagan his nominee?
What does the president have to hide in his past that he has sealed his education records? Wayne Allen Root, former Libertarian candidate for vice president, put up $1Million dollars as a challenge for those records to be released.....who couldn't use a million dollars?
If he was such a rock star at Harvard Law and edited the Harvard Law Review, why didn't he ever get an article published? "As president of the Harvard Law Review and a law professor in Chicago, Senator Barack Obama refined his legal thinking, but left a scant paper trail. His name doesn't appear on any legal scholarship."
The questions are too numerous not to be answered. Like I said, the burden of proof, beyond a reasonable doubt, is on the accuser. I think there is reasonable doubt.
We Are Being Systematically Silenced, This Is Our Time
Ladies and Gentlemen,
I stand here before you in the city of Copenhagen in the year 2010. This is widely considered to be an enlightened country in the heart of an enlightened continent.
Our basic freedoms have long been guaranteed — first by the Universal Declaration of Human Rights as passed by the United Nations in 1948, and then buttressed by the Council of Europe in 1950 through the European Convention of Human Rights, which was later affirmed by the European Union. Our individual countries have additionally codified the same basic rights in their own constitutions.
These rights include the freedom of individual conscience, the right to assemble peaceably, and the right to practice our religion freely, or to have no religion at all. And, perhaps most importantly of all, they include the right to voice our opinions freely and to publish them without hindrance.
Yet freedom of speech is under attack today here in Denmark, as it is in my own country Austria, and indeed all across Europe. Today, in 21st century Western Europe, our right to free speech is being shut down quietly and systematically with an effectiveness that the commissars in the old Soviet Union could only dream of.
Read the Rest Here
I stand here before you in the city of Copenhagen in the year 2010. This is widely considered to be an enlightened country in the heart of an enlightened continent.
Our basic freedoms have long been guaranteed — first by the Universal Declaration of Human Rights as passed by the United Nations in 1948, and then buttressed by the Council of Europe in 1950 through the European Convention of Human Rights, which was later affirmed by the European Union. Our individual countries have additionally codified the same basic rights in their own constitutions.
These rights include the freedom of individual conscience, the right to assemble peaceably, and the right to practice our religion freely, or to have no religion at all. And, perhaps most importantly of all, they include the right to voice our opinions freely and to publish them without hindrance.
Yet freedom of speech is under attack today here in Denmark, as it is in my own country Austria, and indeed all across Europe. Today, in 21st century Western Europe, our right to free speech is being shut down quietly and systematically with an effectiveness that the commissars in the old Soviet Union could only dream of.
Read the Rest Here
Tuesday, November 23, 2010
Fed leverages ownership.....of the United States?
Since the "financial crisis" started, the Fed has kept interest rates at Zero or near zero, to no avail. They increased the supply of money in the system, Quantitative Easing, now along the order of $3trillion over 2.5 years, effectively decreasing the purchasing power of the dollar by 25% over the same time period. (They already decreased the value of the dollar by 97% since the inception of the Fed in 1913)
Now, the Fed is buying Treasury Bonds like they are going out of style.
I wonder, why? Since the Fed has already siphoned off nearly all of the wealth of the USA through inflation, wouldn't it make sense that they are just stealing the entire country, all of it's assets, and all of your future labor through debt?
Now, the Fed is buying Treasury Bonds like they are going out of style.
I wonder, why? Since the Fed has already siphoned off nearly all of the wealth of the USA through inflation, wouldn't it make sense that they are just stealing the entire country, all of it's assets, and all of your future labor through debt?
Minimum Wager Earners Have More Disposable Income Than Someone Earning $60K
Got Cloward?
Tonight’s stunning financial piece de resistance comes from Wyatt Emerich of The Cleveland Current. In what is sure to inspire some serious ire among all those who once believed Ronald Reagan that it was the USSR that was the “Evil Empire”, Emmerich analyzes disposable income and economic benefits among several key income classes and comes to the stunning (and verifiable) conclusion that “a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year.” And that excludes benefits from Supplemental Security Income disability checks...America is now a country which punishes those middle-class people who not only try to work hard, but avoid scamming the system. Not surprisingly, it is not only the richest and most audacious thieves that prosper – it is also the penny scammers at the very bottom of the economic ladder that rip off the middle class each and every day, courtesy of the world’s most generous entitlement system...You can do as well working one week a month at minimum wage as you can working $60,000-a-year, full-time, high-stress job.First outlined by Columbia Professors Cloward and Piven in their blueprint for the destruction of American capitalism, the Democrat Party's dual policies of limitless welfare and open borders have finally succeeded. America stands on the brink of economic catastrophe. The 2010 elections were a hopeful beginning, but only a beginning. We must unwind the treasonous policies of the progressive left and leave them no more a political force than the Whigs.
Tonight’s stunning financial piece de resistance comes from Wyatt Emerich of The Cleveland Current. In what is sure to inspire some serious ire among all those who once believed Ronald Reagan that it was the USSR that was the “Evil Empire”, Emmerich analyzes disposable income and economic benefits among several key income classes and comes to the stunning (and verifiable) conclusion that “a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year.” And that excludes benefits from Supplemental Security Income disability checks...America is now a country which punishes those middle-class people who not only try to work hard, but avoid scamming the system. Not surprisingly, it is not only the richest and most audacious thieves that prosper – it is also the penny scammers at the very bottom of the economic ladder that rip off the middle class each and every day, courtesy of the world’s most generous entitlement system...You can do as well working one week a month at minimum wage as you can working $60,000-a-year, full-time, high-stress job.First outlined by Columbia Professors Cloward and Piven in their blueprint for the destruction of American capitalism, the Democrat Party's dual policies of limitless welfare and open borders have finally succeeded. America stands on the brink of economic catastrophe. The 2010 elections were a hopeful beginning, but only a beginning. We must unwind the treasonous policies of the progressive left and leave them no more a political force than the Whigs.
Free Market Solution To The Naked Body Scanners - Updated
My original post about Free Market Solution To The Naked Body Scanners seems to have gotten attention from some big players. Rep. Dr. Ron Paul, R-TX (although mostly Libertarian) has picked up on my idea and has called for a boycott of the airlines until this stuff stops.
Dr. Paul, you can thank me later. I just hope it works.
Dr. Paul, you can thank me later. I just hope it works.
Obama Now Favorable To Only 39%
According to the latest Zogby Poll, only 39% of Americans now have a favorable opinion of President Obama. This is his lowest approval rating since his election. I expect the recent departures from the White House staff of people like Rahm Emanuel and David Axelrod have nothing to do with rats and ships, but I could be wrong.
Ron Paul to be new head of Monetary Policy
The times, they are a-changin’. Unthinkable only a year or two ago, the prospect that Congressman Ron Paul may actually receive the long-deserved chairmanship of a House subcommittee grows brighter by the day. And Paul’s longtime nemesis, Federal Reserve Chairman Ben Bernanke, may soon find his chief congressional detractor in a position to do a good deal more than mere finger-wagging.
By all accounts, the congressman from Texas, who, as expected, handily won re-election earlier this month, is in line to chair the House Domestic Monetary Policy and Technology subcommittee. In recent years, the subcommittee has, in Dr. Paul’s words, “basically been a committee that deals with commemorative coins,” its members too cowed by the majesty of the Fed to actually contemplate delving into serious monetary reforms. But if Dr. Paul is permitted by House party leadership to ascend to the chairmanship, there is little doubt that he will soon be using his new platform to push for more transparency at the Fed, more congressional oversight of the central bank, and a phased-in return to the gold standard. (Given the ferocity of the Tea Party insurgency, it is hard, although not impossible, to imagine that they would risk alienating the movement by dissing its founding father.)
Read The Rest Here
By all accounts, the congressman from Texas, who, as expected, handily won re-election earlier this month, is in line to chair the House Domestic Monetary Policy and Technology subcommittee. In recent years, the subcommittee has, in Dr. Paul’s words, “basically been a committee that deals with commemorative coins,” its members too cowed by the majesty of the Fed to actually contemplate delving into serious monetary reforms. But if Dr. Paul is permitted by House party leadership to ascend to the chairmanship, there is little doubt that he will soon be using his new platform to push for more transparency at the Fed, more congressional oversight of the central bank, and a phased-in return to the gold standard. (Given the ferocity of the Tea Party insurgency, it is hard, although not impossible, to imagine that they would risk alienating the movement by dissing its founding father.)
Read The Rest Here
Monday, November 22, 2010
So Long Dave, We Hardly Knew Ya
Libertarian Party founder David Nolan passed away yesterday. David was the creator of the world famous "Nolan Chart" also know as the "World's smallest political quiz". Some people ask, what's the fascination with that damned quiz? Well, it points people, without defined political allegences, toward an idea, or for that matter an ideal of a society based in Liberty, personal responsibility and the firm belief in "the sovereign self", that they never knew existed in themselves.
I look forward to meeting you, Dave, on the other side.
My pal Shane Bruce, Libertarian Stalwart, showing off the Nolan Chart in Athens, GA at a festival full of folks that didn't know they might be Libertarians!
That's how it works, kids. Thanks again Dave.
Legalization does not mean advocation
I like to post videos of Milton Friedman, but this one is owned by Sony and they are not happy that I posted it here. So, you can see it HERE
Friday, November 19, 2010
Surrender Your Rights To The TSA, Or Stay Home
"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." - For those unfamiliar, the above statement is the 4th Amendment to The Constitution of The United States of America. No one, including a government agency, may infringe upon that right without facing Federal Criminal Prosecution.
NO ONE.
Unless, of course, you are the TSA.
"Nobody likes having their Fourth Amendment [rights] violated going through a security line, but the truth of the matter is, we're gonna have to do it." — Mo McGowan, former Director of TSA Security Operations
I'm sorry, Mr. McGowan, you are incorrect and as such can kiss my ass. The Constitution is the Supreme Law of The Land, but I suppose you, like most of the current administration, are unfamiliar with that particular document.
Just in case you haven't read it: Article VI, Section 2, of the U.S. Constitution is known as the Supremacy Clause because it provides that the "Constitution, and the Laws of the United States … shall be the supreme Law of the Land."
Here it is in it's entirety:
Article VI (That's 6 in case you don't understand Roman Numerals)
Clause 2: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
NO ONE.
Unless, of course, you are the TSA.
"Nobody likes having their Fourth Amendment [rights] violated going through a security line, but the truth of the matter is, we're gonna have to do it." — Mo McGowan, former Director of TSA Security Operations
I'm sorry, Mr. McGowan, you are incorrect and as such can kiss my ass. The Constitution is the Supreme Law of The Land, but I suppose you, like most of the current administration, are unfamiliar with that particular document.
Just in case you haven't read it: Article VI, Section 2, of the U.S. Constitution is known as the Supremacy Clause because it provides that the "Constitution, and the Laws of the United States … shall be the supreme Law of the Land."
Here it is in it's entirety:
Article VI (That's 6 in case you don't understand Roman Numerals)
Clause 2: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
Web Censorship Bill Sails Through Senate Committee | Epicenter | Wired.com
Web Censorship Bill Sails Through Senate Committee Epicenter Wired.com
How nice it is when the senate gets to vote on limiting free speech. I feel fairly certain that in short order this blog will be shut down. Kind of like Lincoln having the military burn down opposition newspapers during the civil war.
How nice it is when the senate gets to vote on limiting free speech. I feel fairly certain that in short order this blog will be shut down. Kind of like Lincoln having the military burn down opposition newspapers during the civil war.
Thursday, November 18, 2010
Sanford Airport to opt out of TSA screening - WDBO Local News on wdbo.com
Sanford Airport to opt out of TSA screening - WDBO Local News on wdbo.com
Free Market Forces are pushing the TSA out of airports.
Free Market Forces are pushing the TSA out of airports.
Wednesday, November 17, 2010
Free Market Solution To The Naked Body Scanners
Are you tired of having some minimum wage TSA agent violate your rights as protected under the 4th Amendment to US Constitution? Tired of the abnormal amounts of radiation and groping of yours and your children's genitals? Don't complain to the TSA - They Don't Care.
Complain to the airline that you frequent and let their UNION employees make the calls to the government. After all, if the airlines aren't making any money, they will go bankrupt and then even the union workers will have to find a job.
Use the handy links below to contact your favorite airlines and let them know WHY you won't be buying a ticket from them and will drive or take a bus or train instead:
US Airways
American Airlines
Delta Airlines
Frontier Airlines
United Airlines
Spirit Airlines
Continental Airlines
Airtran Airways
Southwest Airlines
Jet Blue
Or if it's not listed look for your favorite airline here:
Airline Contact Info Page
Try the following as a sample "cut and paste" for your e-mail, especially if you are a frequent flyer on a specific airline:
Dear sir or madame,
It is with great sadness that I have to inform you that I have decided to sever my allegiance to your fine company. I have travelled with you for many years and many hundreds of thousands of miles. You have always had the best of service and safety while I have flown with you, but I am left with little choice.
You see, your company, along with scores of others has stood idly by while the rights of the travelling public are being violated by the Federal Government. We have, since the Patriot Act, endured more and more infringement on our civil rights, especially our right to privacy as defined by the 4th Amendment to The US Constitution. Now, the Transportation Security Agency and Department of Homeland Security have gone too far.
Recently, it has become a condition of travel on your airline to give up my Civil Rights as guaranteed by the Constitution, be sexually molested or threatened with Civil Litigation if I refuse the first two activities. Apparently this is a policy that you approve of, since I have seen no indication that you are in any way pushing back against the totalitarian policies of our government.
Since my Liberties are more important to me, my family and the future of my country than an on time departure, I will from this point onward until this failure of policy is rectified, be seeking alternative transportation.
Sincerely,
The Bitter Patriot
Complain to the airline that you frequent and let their UNION employees make the calls to the government. After all, if the airlines aren't making any money, they will go bankrupt and then even the union workers will have to find a job.
Use the handy links below to contact your favorite airlines and let them know WHY you won't be buying a ticket from them and will drive or take a bus or train instead:
US Airways
American Airlines
Delta Airlines
Frontier Airlines
United Airlines
Spirit Airlines
Continental Airlines
Airtran Airways
Southwest Airlines
Jet Blue
Or if it's not listed look for your favorite airline here:
Airline Contact Info Page
Try the following as a sample "cut and paste" for your e-mail, especially if you are a frequent flyer on a specific airline:
Dear sir or madame,
It is with great sadness that I have to inform you that I have decided to sever my allegiance to your fine company. I have travelled with you for many years and many hundreds of thousands of miles. You have always had the best of service and safety while I have flown with you, but I am left with little choice.
You see, your company, along with scores of others has stood idly by while the rights of the travelling public are being violated by the Federal Government. We have, since the Patriot Act, endured more and more infringement on our civil rights, especially our right to privacy as defined by the 4th Amendment to The US Constitution. Now, the Transportation Security Agency and Department of Homeland Security have gone too far.
Recently, it has become a condition of travel on your airline to give up my Civil Rights as guaranteed by the Constitution, be sexually molested or threatened with Civil Litigation if I refuse the first two activities. Apparently this is a policy that you approve of, since I have seen no indication that you are in any way pushing back against the totalitarian policies of our government.
Since my Liberties are more important to me, my family and the future of my country than an on time departure, I will from this point onward until this failure of policy is rectified, be seeking alternative transportation.
Sincerely,
The Bitter Patriot
George Soros also profiting off controversial new TSA scanners | Washington Examiner
George Soros also profiting off controversial new TSA scanners Washington Examiner
Isn't that interesting? George Soros owns 11,300 shares of the Rapiscan company and former DHS chief Michael Chertoff is making millions on the sale of the naked body scanners by selling them to DHS.
Isn't that interesting? George Soros owns 11,300 shares of the Rapiscan company and former DHS chief Michael Chertoff is making millions on the sale of the naked body scanners by selling them to DHS.
Congressman John Duncan Blasts TSA On House Floor
WASHINGTON – Congressman John J. Duncan, Jr. (R-Tenn.) blasted the Transportation Security Administration Wednesday during a speech on the floor of the House of Representatives for invasive “pat-downs” of U.S. citizens and the role lucrative government contracts played in the use of body scanning machines at airport checkpoints.Duncan, former Chairman of the House Aviation Subcommittee and the current top Republican on the House Subcommittee on Highways and Transit, said: “Unfortunately, for the traveling public, big brother never makes a mistake, so I am not surprised they are trying to defend the purchase of these scanners.”The text of Rep. Duncan’s speech is copied below:
Mr. Speaker:A nationwide revolt is developing over the body scanners at the airports, and it should. Hundreds of thousands of frequent fliers who fly each week are upset about getting these frequent doses of radiation. Parents are upset about being forced to have their children radiated or being touched inappropriately by an unrelated adult. There is already plenty of security at the airport, but now we are going to spend up to $300 million to install 1,000 scanners. This is much more about money than it is about security. The former Secretary of Homeland Security, Michael Chertoff, represents Rapiscan, the company which is selling these scanners to his former department. Far too many federal contracts are sweetheart, insider deals.
Companies hire former high ranking federal officials, and then magically, those companies get hugely profitable federal contracts.The American people should not have to choose between having full-body radiation or a very embarrassing, intrusive pat-down every time they fly, as if they were criminals.We need a little more balance and common sense on this.
VIDEO
Mr. Speaker:A nationwide revolt is developing over the body scanners at the airports, and it should. Hundreds of thousands of frequent fliers who fly each week are upset about getting these frequent doses of radiation. Parents are upset about being forced to have their children radiated or being touched inappropriately by an unrelated adult. There is already plenty of security at the airport, but now we are going to spend up to $300 million to install 1,000 scanners. This is much more about money than it is about security. The former Secretary of Homeland Security, Michael Chertoff, represents Rapiscan, the company which is selling these scanners to his former department. Far too many federal contracts are sweetheart, insider deals.
Companies hire former high ranking federal officials, and then magically, those companies get hugely profitable federal contracts.The American people should not have to choose between having full-body radiation or a very embarrassing, intrusive pat-down every time they fly, as if they were criminals.We need a little more balance and common sense on this.
VIDEO
Tuesday, November 16, 2010
TSA to investigate body scan resister
Well of course they will investigate anyone who stands up to the abuse of power being perpetrated by the Federal Government. If you don't want to be bombarded with a dose of radiation that several scientists say is unhealthy, and you don't want to have the TSA sexually assault you in order to board a plane, then there must be something criminally wrong with you.
The manual searches being conducted by the TSA are not "pat downs" they are the same sort of search that you would receive if you were being arrested.
The manual searches being conducted by the TSA are not "pat downs" they are the same sort of search that you would receive if you were being arrested.
Monday, November 15, 2010
Analysis: Europe is next test for weakened Obama | Reuters
Analysis: Europe is next test for weakened Obama Reuters
Kind of difficult to lead a country if you are never in it. Just saying.
Kind of difficult to lead a country if you are never in it. Just saying.
Write your Congressman - Abolish the TSA.
We live in a supposedly Free Society, but don't fool yourselves, it's anything but free. We are now being conditioned to accept whatever the government wants to do to our bodies under the guise of "public safety".
The Republicans control the House of Representatives and are bracing for a long battle over the President’s health care proposal. In the spirit of bipartisanship and sanity, I propose that the first thing on the chopping block should be an ineffective organization that wastes money, violates our rights, and encourages us to make decisions that imperil our safety. I’m talking about the Transportation Security Administration.
Bipartisan support should be immediate. For fiscal conservatives, it’s hard to come up with a more wasteful agency than the TSA. For privacy advocates, eliminating an organization that requires you to choose between a nude body scan or genital groping in order to board a plane should be a no-brainer.
But won’t that compromise safety? I doubt it. The airlines have enormous sums of money riding on passenger safety, and the notion that a government bureaucracy has better incentives to provide safe travels than airlines with billions of dollars worth of capital and goodwill on the line strains credibility. This might be beside the point: in 2003, William Anderson incisively argued that some of the steps that airlines (and passengers) would have needed to take to prevent the 9/11 disaster probably would have been illegal.
The odds of dying from a terrorist attack are much lower than the odds of dying from doing any of a number of incredibly mundane things we do every day. You are almost certainly more likely to die or be injured driving to the airport than you are to be injured by a terrorist once you’re in the air, even without a TSA. Indeed, once you have successfully made it to the airport, the most dangerous part of your trip is over. Until it’s time to drive home, that is.
Last week, I picked up a “TSA Customer Comment Card.” First, it’s important that we get one thing straight: I am not the TSA’s “customer.” The term “customer” denotes an honorable relationship in which I and a seller voluntarily trade value for value. There’s nothing voluntary about my relationship with the TSA.
A much more appropriate term for our relationship is “subject.” The TSA stands between me and those with whom I would like to trade, and I am not allowed to without their blessing.
Second, the TSA doesn’t provide security. It provides security theater, as Jeffrey Goldberg argues. The kid with the slushie in Tucson before the three-ounce-rule? The little girl in the princess costume at an airport I don’t remember? The countless grandmothers? I’m more likely to be killed tripping over my own two feet while I’m distracted by the lunacy of it all than I am to be killed by one of them in a terrorist attack. The moral cost of all this is considerable, as James Otteson and Bradley Birzer argue.
For even more theater of the absurd, consider that the TSA screens pilots. If a pilot wants to bring a plane down, he or she can probably do it with bare hands, and certainly without weapons. It’s also not entirely crazy to think that an airline will take measures to keep their pilots from turning their multi-million dollar planes into flying bombs. Through the index funds in my retirement portfolio, I’m pretty sure I own stock in at least one airline, and I’m pretty sure airline managers know that cutting corners on security isn’t in my best interests as a shareholder.
And the items being confiscated? Are nailclippers and aftershave the tools of terrorists? What about the plastic cup of water I was told to dispose of because “it could be acid” (I quote the TSA screener) in New Orleans before the three-ounce rule? What about the can of Coke I was relieved of after a flight from Copenhagen to Atlanta a few months ago? I would be more scared of someone giving a can of Coke to a child and contributing to the onset of juvenile diabetes than of using it to hide something that could compromise the safety of an aircraft.
And finally, most screening devices are ineffective because anyone who is serious about getting contraband on an airplane can smuggle it in a body cavity or a surgical implant. The scanners the TSA uses aren’t going to stop them.
Over the next few years, we’re headed for a bitter, partisan clash over legislative priorities. Before the battle starts, let’s reach for that low-hanging, bipartisan fruit. Let’s abolish the TSA.
The Republicans control the House of Representatives and are bracing for a long battle over the President’s health care proposal. In the spirit of bipartisanship and sanity, I propose that the first thing on the chopping block should be an ineffective organization that wastes money, violates our rights, and encourages us to make decisions that imperil our safety. I’m talking about the Transportation Security Administration.
Bipartisan support should be immediate. For fiscal conservatives, it’s hard to come up with a more wasteful agency than the TSA. For privacy advocates, eliminating an organization that requires you to choose between a nude body scan or genital groping in order to board a plane should be a no-brainer.
But won’t that compromise safety? I doubt it. The airlines have enormous sums of money riding on passenger safety, and the notion that a government bureaucracy has better incentives to provide safe travels than airlines with billions of dollars worth of capital and goodwill on the line strains credibility. This might be beside the point: in 2003, William Anderson incisively argued that some of the steps that airlines (and passengers) would have needed to take to prevent the 9/11 disaster probably would have been illegal.
The odds of dying from a terrorist attack are much lower than the odds of dying from doing any of a number of incredibly mundane things we do every day. You are almost certainly more likely to die or be injured driving to the airport than you are to be injured by a terrorist once you’re in the air, even without a TSA. Indeed, once you have successfully made it to the airport, the most dangerous part of your trip is over. Until it’s time to drive home, that is.
Last week, I picked up a “TSA Customer Comment Card.” First, it’s important that we get one thing straight: I am not the TSA’s “customer.” The term “customer” denotes an honorable relationship in which I and a seller voluntarily trade value for value. There’s nothing voluntary about my relationship with the TSA.
A much more appropriate term for our relationship is “subject.” The TSA stands between me and those with whom I would like to trade, and I am not allowed to without their blessing.
Second, the TSA doesn’t provide security. It provides security theater, as Jeffrey Goldberg argues. The kid with the slushie in Tucson before the three-ounce-rule? The little girl in the princess costume at an airport I don’t remember? The countless grandmothers? I’m more likely to be killed tripping over my own two feet while I’m distracted by the lunacy of it all than I am to be killed by one of them in a terrorist attack. The moral cost of all this is considerable, as James Otteson and Bradley Birzer argue.
For even more theater of the absurd, consider that the TSA screens pilots. If a pilot wants to bring a plane down, he or she can probably do it with bare hands, and certainly without weapons. It’s also not entirely crazy to think that an airline will take measures to keep their pilots from turning their multi-million dollar planes into flying bombs. Through the index funds in my retirement portfolio, I’m pretty sure I own stock in at least one airline, and I’m pretty sure airline managers know that cutting corners on security isn’t in my best interests as a shareholder.
And the items being confiscated? Are nailclippers and aftershave the tools of terrorists? What about the plastic cup of water I was told to dispose of because “it could be acid” (I quote the TSA screener) in New Orleans before the three-ounce rule? What about the can of Coke I was relieved of after a flight from Copenhagen to Atlanta a few months ago? I would be more scared of someone giving a can of Coke to a child and contributing to the onset of juvenile diabetes than of using it to hide something that could compromise the safety of an aircraft.
And finally, most screening devices are ineffective because anyone who is serious about getting contraband on an airplane can smuggle it in a body cavity or a surgical implant. The scanners the TSA uses aren’t going to stop them.
Over the next few years, we’re headed for a bitter, partisan clash over legislative priorities. Before the battle starts, let’s reach for that low-hanging, bipartisan fruit. Let’s abolish the TSA.
Sunday, November 14, 2010
Saturday, November 13, 2010
Friday, November 12, 2010
Alert: QE II Has Lit the Fuse
For a very long time I have been calling for, expecting and otherwise anticipating the day that the Federal Reserve would begin openly monetizing government debt. I knew the day would come intellectually, but in my heart I hoped it wouldn't. But with the Fed's recent decision to directly monetize the next 8 months of federal deficit spending, that day has finally arrived. I have to confess, while my prediction has proven accurate, I’m still stunned the Fed actually did it.
In this report I examine the risks that this new path presents, what match(es) may finally ignite the decades-old pile of dry fuel, what the outcomes are likely to be, and what we can and should be doing in preparation.
Read the Rest Here
In this report I examine the risks that this new path presents, what match(es) may finally ignite the decades-old pile of dry fuel, what the outcomes are likely to be, and what we can and should be doing in preparation.
Read the Rest Here
We Must Stop TSA Tyranny Now
Washington, DC—Airline security has always been dysfunctional from the day the FAA took over that responsibility. They began by getting a poorly thought out mandate that all passengers be screened by people we would not trust to walk our dogs.The FAA disarmed any pilots that were permitted by local laws to carry guns. Likewise they disarmed vetted, trained cops flying on our airplanes. That was because of the personal gun rights hating philosophy of these political patronage appointees.Criminals, illegal aliens and those with minimal mental capacity were hired to inspect the personal property and possessions of travelers. It was never intended to be real security but a pretend effort to fool passengers into thinking they were somehow safe.That unforgettable attack of September 11, 2001 and the FAA policies enabled the murders of nearly 3,000 and damages in the hundreds of billions. The pilots were unarmed and defenseless and two off duty cops on two of the four planes were also disarmed and helpless. Had the pilots and off-duty cops been armed, 9/11 would have been just another day.Not one FAA official or government bureaucrat was even criticized for creating the perfect conditions for the Muslim terrorists.
READ THE REST HERE
READ THE REST HERE
Thursday, November 11, 2010
Of missiles & money
A person of normal sensibilities would have to be intellectually numb, overly medicated or otherwise too preoccupied with keeping food on the table and the proverbial wolves from their door not to realize that there is something very, very wrong going on today. By now, most Americans have heard about the sighting of what appears to be a missile, and a big one at that, apparently being launched from a location about 35 miles off the coast of Los Angeles near sunset last evening. Video of the incident was taken from a KCBS news helicopter flying over the mainland at the time
Read the Rest Here
Read the Rest Here
Wednesday, November 10, 2010
Unless something changes, I may never fly again.
I have made a living over the last 25 years, travelling extensively around the world as part of my job. I am in a machinery manufacturing business, and we have zero local customers. Everyone we do business with requires our technicians, sales and field engineers to travel. That is the nature of building production machinery.
After 9/11, most of us looked the other way and didn't complain too much when we had to start taking off shoes, belts, opening laptops, subjecting our luggage to bomb sniffing and x-rays, throwing away our pen knives (I lost one my grandfather gave me, priceless), no more nail clippers, no tools of any kind ( I lost a set of digital vernier calipers, valued at $200, to the TSA), and after the famous Michael Vick incident and someone with a suspected "liquid explosive", you may no longer have any liquids - over 3 ounces- taken through the security screening area.
More recently all travellers are required to have an exact match of your name on your "government issued identification" on your ticket. If it's misspelled, you don't fly.
The last straw, in my mind, is the new backscatter full body radar scans, a device of questionable safety. If you want to opt out of the radiation, you may, but be prepared for a cavity search.
After 9/11, most of us looked the other way and didn't complain too much when we had to start taking off shoes, belts, opening laptops, subjecting our luggage to bomb sniffing and x-rays, throwing away our pen knives (I lost one my grandfather gave me, priceless), no more nail clippers, no tools of any kind ( I lost a set of digital vernier calipers, valued at $200, to the TSA), and after the famous Michael Vick incident and someone with a suspected "liquid explosive", you may no longer have any liquids - over 3 ounces- taken through the security screening area.
More recently all travellers are required to have an exact match of your name on your "government issued identification" on your ticket. If it's misspelled, you don't fly.
The last straw, in my mind, is the new backscatter full body radar scans, a device of questionable safety. If you want to opt out of the radiation, you may, but be prepared for a cavity search.
Clueless Ben
Before reading this report, please watch this video.
The familiar slogan of investing is this: "Timing is everything." If true, then Ben Bernanke had a bad week. Calling it a bad week barely does justice to it.
On November 2, the American people went to the polls in the greatest numbers in history for a mid-term election and threw out Democrats in the House of Representatives. If the Senators had all been up for re-election, the Democrats would have lost their majority. It was the largest reversal in the House since 1938, when Roosevelt's Supreme Court-packing scheme led to a huge veto at the polls by Republicans – an event not mentioned in the (universally) pro-Roosevelt history textbooks. The textbooks do admit that Roosevelt knew that he had gone too far. He never mentioned the plan again. It was the only major defeat of his Presidency.
The political signal on November 2 was clear. Obama had the good sense to back off the next day, calling for bipartisanship. That is what Presidents do when they are hammered at the polls in full public view. "Let's work together, so that I can get at least part of my agenda enacted" replaces, "Sit there and take it, losers! I've got the votes." He no longer has the votes.
On November 3, Bernanke announced a $600 billion program to buy mid-range Treasury bonds in order to lower the interest rate on these bonds. Yet these bonds have been holding at their lowest rate in the post-World War II era.
On November 4, he defended himself in the Washington Post in an op-ed piece. This is the first time I recall a FED Chairman going directly to the government employees who inhabit the Washington Beltway in order to defend a policy change on the day after the change.
On November 5, word came from central bankers around the world that this move was a huge mistake. The finance minister of Germany called the decision "clueless." I have followed Federal Reserve affairs for over four decades. I never recall language this harsh aimed at a Federal Reserve Chairman by any senior foreign public official. The German official was not alone. Central bankers from around the world protested.
On November 5–6, Federal Reserve officials held a conference on Jekyll Island: the 100th anniversary of the secret meeting at which the conspiracy to create the FED drew up the final plans. Their penance was to be forced to listen to insufferably boring academic papers on utterly useless historical topics.
On November 6, Bernanke spoke at this meeting in defense of his decision to inject $600 billion into the economy. His speech was not posted on the FED's site as of the morning of November 8. The Web staffers were at home over the weekend. The media therefore could not find out what he said, or even that he had spoken.
On November 6, President Obama arrived in India as part of his attendance at the G-20 meeting of finance ministers and central bankers in South Korea this week. He will walk into a firestorm of resentment over Bernanke's announcement.
All in all, it was a remarkable week for Bernanke.
LOW, STABLE INFLATION
Bernanke is facing a slowing economy. All those green shoots he said he could see in 2009 have begun to die. Unemployment remains high. It shows no sign of coming down. But consumer prices have been flat, which allows him some breathing room. The adjusted monetary base in early November was no higher than it had been in early November 2009. The FED had at long last achieved a semi-stable-money environment. But, like a dog and its vomit, Bernanke could not stay away from monetary inflation.
In his Washington Post article he was his usual Keynesian self.
The Federal Reserve's objectives – its dual mandate, set by Congress – are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills. When, exactly, was the Federal Reserve System told by the government to produce "low, stable inflation"? Here is the Wikipedia summary of the Employment Act of 1978, the famous Humphrey-Hawkins Act.
The Act set specific numerical goals for the President to attain. By 1983, unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over, and inflation rates should not be over 4%. By 1988, inflation rates should be 0%. The Act allows Congress to revise these goals as time progresses.
So, has Congress recently mandated "low, stable inflation"? I am unaware of this. Bernanke did not mention the declaration in which Congress mandated this. I can tell you this much: the Congress of 2011 will not mandate low, stable inflation.
The goal of low, stable price inflation is the goal of all Keynesians. Whenever price inflation falls much below 2% per annum – a doubling of prices every 36 years – Keynesians begin to get nervous. They think that anything approaching stable prices is a harbinger of economic stagnation or even recession. Their motto is: "Better a little inflation than high unemployment."
This is why Bernanke persuaded nine other FOMC members to accept his program of monetary inflation. Only Thomas Hoenig protested – the lone vote against him for months. When the FED's program fails to bring either economic growth or low, stable inflation, Hoenig will be the obvious choice to replace Bernanke in 2014. Only his age (64 today) may disqualify him.
The assumption of all Keynesians is that price deflation is always accompanied by economic recession. They do not recognize that a stable money supply produces slowly falling prices in an economy marked by increasing output. Put another way, this scenario is "more goods chasing the same amount of money." Like falling computer prices, most prices tend in the direction of decline when the money supply is stable.
PRICE DECLINES AND INCREASING OUTPUT
The idea that falling prices accompany recession is the result of historical circumstances. Prices fell in the Great Depression because fractionally reserved small banks went bankrupt, 1930–34, thereby shrinking the money supply. Consumer prices fell because the money supply fell. The stable monetary base of the Federal Reserve in these years was offset by failing banks.
The Federal Reserve System was set up to protect big banks from bank runs under the gold coin standard. All central banks exist in order to protect the interests of the big banks. The Federal Reserve carefully intervened to protect big banks, 1930–33. Over 9,000 small banks went under until the FDIC was created in 1934 in order to protect depositors' interests. After that, the bank runs ceased. Depositors stopped worrying about the solvency of the banks.
Consumer prices fell in the United States for a generation after the restoration of the gold coin standard in 1879. Western economic output increased dramatically in the 19th century – the first sustained period of economic growth in recorded history.
The idea that falling consumer prices are an indicator of economic stagnation is widespread today. But stable prices and increasing output can go together. They have in Japan over the last two decades. Yet Japan is the favorite bogeyman for Keynesians. We are told of deflation in Japan, which in fact has not taken place over the last 17 years. In real estate, yes. The bubble popped in 1990. But consumer prices have been flat. At the same time, output per worker has increased steadily, year after year. The recessions of 1997 and 2009 were the only exceptions.
The Federal Reserve is Keynesian. It is sitting on top of a mountain of reserves, yet prices are stable. The commercial banks are not lending. The result has been a sharp reduction in the M1 multiplier until recent months.
PUSHING ON A STRING
With the new injection of fiat money – an increase in the monetary base by about 30% – under normal circumstances, Federal Reserve forecasters would expect a comparable increase in consumer prices. Yet Bernanke assured us that he does not believe that prices will rise much above a 2% rate. In his defense of the decision, he wrote:
Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run.
He does not expect rising prices. Why not? He described the current situation – excess capacity – but he offered no explanation.
Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating.
Why is there excess capacity? Because economic plans that were based on Keynesian economics did not see the 2008–9 recession. Entrepreneurs kept building plants. Then the bottom fell out.
Today, excess bank reserves are the cause of excess capacity. Businesses don't borrow, and banks don't lend.
Bernanke never used the words, "excess reserves." But he did describe their effect.
Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation.
In other words, he really believes that, because the FED got away with more than doubling the monetary base in 2008–9, it can get away with this again.
He offered an explanation for his belief that this new policy will be effective: lower mortgage rates.
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance.
Mortgage rates are already the lowest they have been in the post-World War II era. The idea that demand for homes will increase because the FED pushed down 10-year Treasury rates is indeed clueless. Mortgage rates are more likely to follow the 30-year Treasury bond rate, but most observers think the FED will not be buying these long maturity bonds. On November 3, the 30-year T-bond rate was 4.09. On November 5, it was 4.12. Rates for all other maturities fell slightly.
When the policy works, he promised us, the FED will then reverse it.
We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable. But if it will take a 30% increase in the monetary base, on top of what was added in 2008–9, to get this economy rolling again, how will the FED be able to unwind these positions – i.e., sell Treasury debt – without pushing the economy back into recession?
The FED added to the monetary base at an unprecedented rate in 2008–9, yet the recovery is already fading. He thinks another 30% increase will get the job done in the job market. That will reverse the looming decline. Why? For how long?
THE FAILED RECOVERY, 1934–40
The dual Keynesian solution of Federal deficits and central bank inflation has barely had an affect on the economy. He is now doubling down the bet. He and his colleagues are risking the decline of the dollar in international currency markets. For what? A couple of percentage points fall in the unemployment rate? There is no way that there is going to be any more than this, given the inability of a more than doubled monetary base to push the rate down.
The policy-makers at the FED are facing something the FED has not faced since 1934: an economy that does not respond to a dramatic increase in the monetary base. The bankers are thwarting the FED's policy. We have seen this before: 1934 to 1939. The FDIC contained the bank runs. The number of banks stabilized. At the same time, the FED increased the monetary base by 100%. The money supply increased by 50%.
Despite this sharp increase, the economy fell back into recession in 1937. It did not get out of the Great Depression until 1940, when British orders for weapons began hitting the economy. Then the mass inflation of the war years, coupled with price controls and rationing, converted the inability of Americans to afford to buy consumer goods because of joblessness into the inability to buy consumer goods because of shortages. This was regarded by bright young Keynesians as a great victory for the New Deal. It still is.
CONCLUSION
The FED's policy of stable money, November 2009 to November 2010, did not crash the economy. There was some growth. The consumer price index approached zero percent, which has been a great gift to American consumers – one not experienced for over five decades. But the temptation to inflate was too great for Bernanke and his Keynesian peers.
They have announced to foreign holders on Treasury debt that they don't care if there is some decline in the dollar's value. Maybe they think that the other central banks will follow suit. But will those banks continue to buy Treasury debt? If they do, they are committed to mercantilism to a degree not seen in the past. They will be saying to the FED, "You called our bluff. We will race you to the bottom. We will still buy T-bonds in order to keep our currencies low." If they do this, the world is headed for a currency war, pure and simple.
The G-20 nations' representatives will huff and puff. That is for public consumption back home. The test will be their willingness to back up their rhetoric with action: no more Treasury debt purchases. Maybe even the sale of some dollar reserves.
If they take the path of business as usual, which I think they will, this will be bullish for commodities and bearish for corporate bonds.
The familiar slogan of investing is this: "Timing is everything." If true, then Ben Bernanke had a bad week. Calling it a bad week barely does justice to it.
On November 2, the American people went to the polls in the greatest numbers in history for a mid-term election and threw out Democrats in the House of Representatives. If the Senators had all been up for re-election, the Democrats would have lost their majority. It was the largest reversal in the House since 1938, when Roosevelt's Supreme Court-packing scheme led to a huge veto at the polls by Republicans – an event not mentioned in the (universally) pro-Roosevelt history textbooks. The textbooks do admit that Roosevelt knew that he had gone too far. He never mentioned the plan again. It was the only major defeat of his Presidency.
The political signal on November 2 was clear. Obama had the good sense to back off the next day, calling for bipartisanship. That is what Presidents do when they are hammered at the polls in full public view. "Let's work together, so that I can get at least part of my agenda enacted" replaces, "Sit there and take it, losers! I've got the votes." He no longer has the votes.
On November 3, Bernanke announced a $600 billion program to buy mid-range Treasury bonds in order to lower the interest rate on these bonds. Yet these bonds have been holding at their lowest rate in the post-World War II era.
On November 4, he defended himself in the Washington Post in an op-ed piece. This is the first time I recall a FED Chairman going directly to the government employees who inhabit the Washington Beltway in order to defend a policy change on the day after the change.
On November 5, word came from central bankers around the world that this move was a huge mistake. The finance minister of Germany called the decision "clueless." I have followed Federal Reserve affairs for over four decades. I never recall language this harsh aimed at a Federal Reserve Chairman by any senior foreign public official. The German official was not alone. Central bankers from around the world protested.
On November 5–6, Federal Reserve officials held a conference on Jekyll Island: the 100th anniversary of the secret meeting at which the conspiracy to create the FED drew up the final plans. Their penance was to be forced to listen to insufferably boring academic papers on utterly useless historical topics.
On November 6, Bernanke spoke at this meeting in defense of his decision to inject $600 billion into the economy. His speech was not posted on the FED's site as of the morning of November 8. The Web staffers were at home over the weekend. The media therefore could not find out what he said, or even that he had spoken.
On November 6, President Obama arrived in India as part of his attendance at the G-20 meeting of finance ministers and central bankers in South Korea this week. He will walk into a firestorm of resentment over Bernanke's announcement.
All in all, it was a remarkable week for Bernanke.
LOW, STABLE INFLATION
Bernanke is facing a slowing economy. All those green shoots he said he could see in 2009 have begun to die. Unemployment remains high. It shows no sign of coming down. But consumer prices have been flat, which allows him some breathing room. The adjusted monetary base in early November was no higher than it had been in early November 2009. The FED had at long last achieved a semi-stable-money environment. But, like a dog and its vomit, Bernanke could not stay away from monetary inflation.
In his Washington Post article he was his usual Keynesian self.
The Federal Reserve's objectives – its dual mandate, set by Congress – are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills. When, exactly, was the Federal Reserve System told by the government to produce "low, stable inflation"? Here is the Wikipedia summary of the Employment Act of 1978, the famous Humphrey-Hawkins Act.
The Act set specific numerical goals for the President to attain. By 1983, unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over, and inflation rates should not be over 4%. By 1988, inflation rates should be 0%. The Act allows Congress to revise these goals as time progresses.
So, has Congress recently mandated "low, stable inflation"? I am unaware of this. Bernanke did not mention the declaration in which Congress mandated this. I can tell you this much: the Congress of 2011 will not mandate low, stable inflation.
The goal of low, stable price inflation is the goal of all Keynesians. Whenever price inflation falls much below 2% per annum – a doubling of prices every 36 years – Keynesians begin to get nervous. They think that anything approaching stable prices is a harbinger of economic stagnation or even recession. Their motto is: "Better a little inflation than high unemployment."
This is why Bernanke persuaded nine other FOMC members to accept his program of monetary inflation. Only Thomas Hoenig protested – the lone vote against him for months. When the FED's program fails to bring either economic growth or low, stable inflation, Hoenig will be the obvious choice to replace Bernanke in 2014. Only his age (64 today) may disqualify him.
The assumption of all Keynesians is that price deflation is always accompanied by economic recession. They do not recognize that a stable money supply produces slowly falling prices in an economy marked by increasing output. Put another way, this scenario is "more goods chasing the same amount of money." Like falling computer prices, most prices tend in the direction of decline when the money supply is stable.
PRICE DECLINES AND INCREASING OUTPUT
The idea that falling prices accompany recession is the result of historical circumstances. Prices fell in the Great Depression because fractionally reserved small banks went bankrupt, 1930–34, thereby shrinking the money supply. Consumer prices fell because the money supply fell. The stable monetary base of the Federal Reserve in these years was offset by failing banks.
The Federal Reserve System was set up to protect big banks from bank runs under the gold coin standard. All central banks exist in order to protect the interests of the big banks. The Federal Reserve carefully intervened to protect big banks, 1930–33. Over 9,000 small banks went under until the FDIC was created in 1934 in order to protect depositors' interests. After that, the bank runs ceased. Depositors stopped worrying about the solvency of the banks.
Consumer prices fell in the United States for a generation after the restoration of the gold coin standard in 1879. Western economic output increased dramatically in the 19th century – the first sustained period of economic growth in recorded history.
The idea that falling consumer prices are an indicator of economic stagnation is widespread today. But stable prices and increasing output can go together. They have in Japan over the last two decades. Yet Japan is the favorite bogeyman for Keynesians. We are told of deflation in Japan, which in fact has not taken place over the last 17 years. In real estate, yes. The bubble popped in 1990. But consumer prices have been flat. At the same time, output per worker has increased steadily, year after year. The recessions of 1997 and 2009 were the only exceptions.
The Federal Reserve is Keynesian. It is sitting on top of a mountain of reserves, yet prices are stable. The commercial banks are not lending. The result has been a sharp reduction in the M1 multiplier until recent months.
PUSHING ON A STRING
With the new injection of fiat money – an increase in the monetary base by about 30% – under normal circumstances, Federal Reserve forecasters would expect a comparable increase in consumer prices. Yet Bernanke assured us that he does not believe that prices will rise much above a 2% rate. In his defense of the decision, he wrote:
Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run.
He does not expect rising prices. Why not? He described the current situation – excess capacity – but he offered no explanation.
Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating.
Why is there excess capacity? Because economic plans that were based on Keynesian economics did not see the 2008–9 recession. Entrepreneurs kept building plants. Then the bottom fell out.
Today, excess bank reserves are the cause of excess capacity. Businesses don't borrow, and banks don't lend.
Bernanke never used the words, "excess reserves." But he did describe their effect.
Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation.
In other words, he really believes that, because the FED got away with more than doubling the monetary base in 2008–9, it can get away with this again.
He offered an explanation for his belief that this new policy will be effective: lower mortgage rates.
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance.
Mortgage rates are already the lowest they have been in the post-World War II era. The idea that demand for homes will increase because the FED pushed down 10-year Treasury rates is indeed clueless. Mortgage rates are more likely to follow the 30-year Treasury bond rate, but most observers think the FED will not be buying these long maturity bonds. On November 3, the 30-year T-bond rate was 4.09. On November 5, it was 4.12. Rates for all other maturities fell slightly.
When the policy works, he promised us, the FED will then reverse it.
We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable. But if it will take a 30% increase in the monetary base, on top of what was added in 2008–9, to get this economy rolling again, how will the FED be able to unwind these positions – i.e., sell Treasury debt – without pushing the economy back into recession?
The FED added to the monetary base at an unprecedented rate in 2008–9, yet the recovery is already fading. He thinks another 30% increase will get the job done in the job market. That will reverse the looming decline. Why? For how long?
THE FAILED RECOVERY, 1934–40
The dual Keynesian solution of Federal deficits and central bank inflation has barely had an affect on the economy. He is now doubling down the bet. He and his colleagues are risking the decline of the dollar in international currency markets. For what? A couple of percentage points fall in the unemployment rate? There is no way that there is going to be any more than this, given the inability of a more than doubled monetary base to push the rate down.
The policy-makers at the FED are facing something the FED has not faced since 1934: an economy that does not respond to a dramatic increase in the monetary base. The bankers are thwarting the FED's policy. We have seen this before: 1934 to 1939. The FDIC contained the bank runs. The number of banks stabilized. At the same time, the FED increased the monetary base by 100%. The money supply increased by 50%.
Despite this sharp increase, the economy fell back into recession in 1937. It did not get out of the Great Depression until 1940, when British orders for weapons began hitting the economy. Then the mass inflation of the war years, coupled with price controls and rationing, converted the inability of Americans to afford to buy consumer goods because of joblessness into the inability to buy consumer goods because of shortages. This was regarded by bright young Keynesians as a great victory for the New Deal. It still is.
CONCLUSION
The FED's policy of stable money, November 2009 to November 2010, did not crash the economy. There was some growth. The consumer price index approached zero percent, which has been a great gift to American consumers – one not experienced for over five decades. But the temptation to inflate was too great for Bernanke and his Keynesian peers.
They have announced to foreign holders on Treasury debt that they don't care if there is some decline in the dollar's value. Maybe they think that the other central banks will follow suit. But will those banks continue to buy Treasury debt? If they do, they are committed to mercantilism to a degree not seen in the past. They will be saying to the FED, "You called our bluff. We will race you to the bottom. We will still buy T-bonds in order to keep our currencies low." If they do this, the world is headed for a currency war, pure and simple.
The G-20 nations' representatives will huff and puff. That is for public consumption back home. The test will be their willingness to back up their rhetoric with action: no more Treasury debt purchases. Maybe even the sale of some dollar reserves.
If they take the path of business as usual, which I think they will, this will be bullish for commodities and bearish for corporate bonds.
Tuesday, November 9, 2010
You might want to be sitting down when you read this economic news
Today the financial world was buzzing with excitement because there was one moderately good piece of news for the U.S. economy. U.S. employers added 151,000 jobs during the month of October and the unemployment rate remained unchanged at 9.6%. This is certainly welcome news, but these days it seems as though there are at least ten pieces of bad economic news for every hopeful economic signal. So don't get fooled when the U.S. economy takes one step forward, because it is about to take another dozen or so steps backwards. We are living in the middle of a nightmarish long-term economic decline that has been building for generations. The deindustrialization of the United States, the horrific trade deficit caused by globalization and the skyrocketing national debt are problems that have taken decades to develop. The Federal Reserve has been ripping the guts out of our financial system since 1913. These are not things that are going to be fixed overnight. In fact, there are some statistics that just keep getting worse and worse and worse as time goes by. We are heading straight for a devastating economic collapse and hopefully we can all warn as many people as possible while there is still time.
The more research that you do into our economic situation the more depressing it becomes. We are in big, big, big trouble. The following are 14 pieces of bad economic news that are so horrifying you might not want to read them standing up....
#1 More than 42 million Americans were on food stamps during the month of August. That is a new all-time record, and that number is 17 percent higher than it was one year earlier. In fact, the number of Americans on food stamps is up more than 58 percent since August 2007.
#2 The number of "persons not in the labor force" in the United States has set another new all-time record. The United States has not had such an extended bout of mass unemployment since the Great Depression. The "official" unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
#3 More than 1000 people now live in the 200 miles of flood tunnels that exist under the city of Las Vegas. Once one of the most prosperous cities in the United States, Las Vegas is now little more than a shiny, glittering corpse that it rapidly decaying.
#4 Poverty is absolutely exploding and it is hitting those who are the most vulnerable the hardest. According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.
#5 In the past 60 days alone, the price of cotton is up 54%, the price of corn is up 29%, the price of soybeans is up 22%, the price of orange juice is up 17%, and the price of sugar is up 51%.
#6 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.
#7 The American Bankruptcy Institute says that there will be about 1.6 million consumer bankruptcies in 2010. That would represent a huge increase over 2009.
#8 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.
#9 The individual U.S. states are mostly flat broke. For example, it is being reported that the 15 largest U.S. states spent on average over 220% of their tax receipts over the past decade. Clearly this is not even close to sustainable.
#10 The U.S. government is completely and totally broke. After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff concluded that the U.S. government is facing a "fiscal gap" of $202 trillion dollars.
#11 In an attempt to keep our financial system solvent, the U.S. Federal Reserve has announced plans to create $600 billion out of thin air and pump it into the U.S. economy. The Fed is calling this "quantitative easing," but what they should really be calling it is "cheating, debasing and inflating."
#12 Many of the major trading partners of the United States are expressing deep resentment regarding the new quantitative easing policy announced by the Fed. Ambrose Evans-Pritchard recently described the growing animosity this way....
Li Deshui from Beijing's Economic Commission said a string of Asian states share China's "deep bitterness" over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity.
#13 For many analysts, the economic collapse of the United States comes down to cold, hard math. For example, the former CEO of the tenth largest bank in the United States says that it is a "mathematical certainty" that the U.S. government will eventually go bankrupt.
#14 According to a recent article on CNBC, the financial world is already buzzing about QE3....
"They're already talking about QE3," said Dave Rovelli, managing director of US equity trading for Canaccord Adams. "Eventually we're going to be printing so much money the dollar is going to really go down and everybody's going to try to deflate their currency against us. I just don't know how this could end well."?
So is that all the Federal Reserve has left?
Are they just going to keep pouring bags of money into the economy until things get back to "normal"?
Are we going to have "Quantitative Easing 3," "Quantitative Easing 4," and "Quantitative Easing 5"?
It has been a long-running joke, but perhaps by the end of this thing Ben Bernanke will literally go up in a helicopter and start shoveling out huge piles of cash over the countryside.
The era of great prosperity that we have all enjoyed for so long is coming to an end. It would be advisable to use the remaining period of economic stability that we still have to prepare for what is ahead.
These economic problems could have been fixed decades ago if people would have actually listened and would have followed sound economic principles on an individual and on a corporate level, but that did not happen.
Now we are up to our eyeballs in debt and the greatest economic machine in history is rotting all around us.
We are in deep, deep, deep trouble and denying it is not going to make it go away.
Reprinted with permission from the Economic Collapse Blog.
The more research that you do into our economic situation the more depressing it becomes. We are in big, big, big trouble. The following are 14 pieces of bad economic news that are so horrifying you might not want to read them standing up....
#1 More than 42 million Americans were on food stamps during the month of August. That is a new all-time record, and that number is 17 percent higher than it was one year earlier. In fact, the number of Americans on food stamps is up more than 58 percent since August 2007.
#2 The number of "persons not in the labor force" in the United States has set another new all-time record. The United States has not had such an extended bout of mass unemployment since the Great Depression. The "official" unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
#3 More than 1000 people now live in the 200 miles of flood tunnels that exist under the city of Las Vegas. Once one of the most prosperous cities in the United States, Las Vegas is now little more than a shiny, glittering corpse that it rapidly decaying.
#4 Poverty is absolutely exploding and it is hitting those who are the most vulnerable the hardest. According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.
#5 In the past 60 days alone, the price of cotton is up 54%, the price of corn is up 29%, the price of soybeans is up 22%, the price of orange juice is up 17%, and the price of sugar is up 51%.
#6 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.
#7 The American Bankruptcy Institute says that there will be about 1.6 million consumer bankruptcies in 2010. That would represent a huge increase over 2009.
#8 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.
#9 The individual U.S. states are mostly flat broke. For example, it is being reported that the 15 largest U.S. states spent on average over 220% of their tax receipts over the past decade. Clearly this is not even close to sustainable.
#10 The U.S. government is completely and totally broke. After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff concluded that the U.S. government is facing a "fiscal gap" of $202 trillion dollars.
#11 In an attempt to keep our financial system solvent, the U.S. Federal Reserve has announced plans to create $600 billion out of thin air and pump it into the U.S. economy. The Fed is calling this "quantitative easing," but what they should really be calling it is "cheating, debasing and inflating."
#12 Many of the major trading partners of the United States are expressing deep resentment regarding the new quantitative easing policy announced by the Fed. Ambrose Evans-Pritchard recently described the growing animosity this way....
Li Deshui from Beijing's Economic Commission said a string of Asian states share China's "deep bitterness" over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity.
#13 For many analysts, the economic collapse of the United States comes down to cold, hard math. For example, the former CEO of the tenth largest bank in the United States says that it is a "mathematical certainty" that the U.S. government will eventually go bankrupt.
#14 According to a recent article on CNBC, the financial world is already buzzing about QE3....
"They're already talking about QE3," said Dave Rovelli, managing director of US equity trading for Canaccord Adams. "Eventually we're going to be printing so much money the dollar is going to really go down and everybody's going to try to deflate their currency against us. I just don't know how this could end well."?
So is that all the Federal Reserve has left?
Are they just going to keep pouring bags of money into the economy until things get back to "normal"?
Are we going to have "Quantitative Easing 3," "Quantitative Easing 4," and "Quantitative Easing 5"?
It has been a long-running joke, but perhaps by the end of this thing Ben Bernanke will literally go up in a helicopter and start shoveling out huge piles of cash over the countryside.
The era of great prosperity that we have all enjoyed for so long is coming to an end. It would be advisable to use the remaining period of economic stability that we still have to prepare for what is ahead.
These economic problems could have been fixed decades ago if people would have actually listened and would have followed sound economic principles on an individual and on a corporate level, but that did not happen.
Now we are up to our eyeballs in debt and the greatest economic machine in history is rotting all around us.
We are in deep, deep, deep trouble and denying it is not going to make it go away.
Reprinted with permission from the Economic Collapse Blog.
Downgraded Credit Rating From China
The Dagong Global Credit Rating Co., the Chinese rating company that was recently rejected in its bid to be an officially recognized bond rater in the U.S., just downgraded the entire U.S. as was reported this morning in the Wall Street Journal.
Gold is above $1400, making strong gains, Silver is over $29 - a near 20% gain in 4 days- both new record highs compared to the dollar.
Oil is knocking on $90 / barrel.
So, what does the Obama administration and the Fed think we should do? Print more money.
These are the stupidest people ever to be in charge of anything. I wouldn't allow them to operate a lemonaid stand.
Gold is above $1400, making strong gains, Silver is over $29 - a near 20% gain in 4 days- both new record highs compared to the dollar.
Oil is knocking on $90 / barrel.
So, what does the Obama administration and the Fed think we should do? Print more money.
These are the stupidest people ever to be in charge of anything. I wouldn't allow them to operate a lemonaid stand.
Friday, November 5, 2010
Is Freedom a Radical Idea?
Campaign For Liberty — Is Freedom a Radical Idea? by Sheldon Richman
The answer to the question "Is freedom a radical idea" is: no and yes. Let me explain.
Starting with the "no": Most children grow up learning the libertarian, or nonaggression, ethic. Parents say: "Don't hit, don't take other kids' stuff without asking, and don't break your promises." Nothing radical -- in the sense of out of the mainstream -- there. It neatly translates into: Respect life, liberty, and property, and honor your contracts.
Read the rest here
The answer to the question "Is freedom a radical idea" is: no and yes. Let me explain.
Starting with the "no": Most children grow up learning the libertarian, or nonaggression, ethic. Parents say: "Don't hit, don't take other kids' stuff without asking, and don't break your promises." Nothing radical -- in the sense of out of the mainstream -- there. It neatly translates into: Respect life, liberty, and property, and honor your contracts.
Read the rest here
Thursday, November 4, 2010
The Fed is Celebrating 100 Years of Screwing Up Our Economy and Your Money
The Federal Reserve is going back to Jekyll Island to celebrate the 100-year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve. The title of this conference is "A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve," and it will be held on November 5th and 6th in the exact same building where the original 1910 meeting occurred. In November 1910, the original gathering at Jekyll Island included U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and many representatives from the upper crust of the U.S. banking establishment. That meeting was held in an environment of absolute and total secrecy. 100 years later, Federal Reserve bureaucrats will return to Jekyll Island once again to "celebrate" the history and the future of the Federal Reserve.
Sadly, most Americans have no idea how the Federal Reserve came into being. Forbes magazine founder Bertie Charles Forbes was perhaps the first writer to describe the secretive nature of the original gathering on Jekyll Island in a national publication....
Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written... The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York's ubiquitous reporters had been foiled... Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry... Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality.
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It was a system that was designed by the bankers and for the bankers. Now, the bureaucrats running the system are returning to Jekyll Island to congratulate themselves. Those attending the conference on November 5th and 6th include Federal Reserve Chairman Ben Bernanke, former Fed Chairman Alan Greenspan, Goldman Sachs managing director E. Gerald Corrigan and the heads of the various regional Federal Reserve banks. You can view the entire agenda of the conference right here. It looks like that there will be plenty of hors d'oeuvres to go around, but should the Federal Reserve really be celebrating their accomplishments at a time when the U.S. economy is literally falling to pieces?
Today, 63 percent of Americans do not think that they will be able to maintain their current standard of living. 1.47 million Americans have been unemployed for more than 99 weeks. We are facing a complete and total economic disaster.
Today, the Federal Reserve has more power over the economy than any other single institution in the United States. It is the Fed that primarily determines if we will see high inflation or low inflation, whether the money supply with expand or contract and whether we will have high interest rates or low interest rates. The President and the U.S. Congress have far less power to influence the economy than the Federal Reserve does.
As this election has demonstrated, the American people are absolutely furious about the state of the U.S. economy, but American voters have been mostly blaming our politicians. They just don't understand that it is actually the Federal Reserve that has the most control over the performance of the economy.
It would be hard to understate how powerful the U.S. Federal Reserve really is in 2010. U.S. Representative Ron Paul recently told MSNBC that he believes that the Federal Reserve is actually more powerful than Congress.....
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"The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress."
So how has the Federal Reserve performed over the years?
Well, since 1913 inflation has been on a relentless march upwards, U.S. government debt has increased exponentially and the U.S. dollar has lost over 96 percent of its value.
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That is not a record to be celebrating.
The truth is that the Federal Reserve was created to enslave the United States government in an endlessly expanding spiral of debt from which it would never be able to escape. As I wrote about yesterday, that is exactly what has happened. The U.S. government debt is escalating at an exponential rate. It is a trap from which the U.S. government will never be able to get out of under our current system.
Now many at the Federal Reserve are touting more "quantitative easing" as the solution to our economic problems. But anyone with a brain should be able to see that creating a gigantic pile of paper money out of thin air and dumping it into the economy is only going to make our long-term problems even worse.
But the Federal Reserve system was never designed to benefit the American people. It was designed to make massive amounts of money for the banking establishment. As I wrote about in "11 Reasons Why The Federal Reserve Is Bad," the Federal Reserve was created to transfer wealth from the American people to the U.S. government and from the U.S. government to the super wealthy.
The sad truth is that the Federal Reserve is at the very core of our economic and financial problems, and that is nothing to celebrate.
Commodities on the rise
World oil prices hit fresh six-month peaks on Thursday as the dollar slumped on the back of the US Federal Reserve's new huge stimulus package aimed at boosting the American economy.
Brent North Sea crude for delivery in December delivery rallied as high as 87.59 dollars, reaching a level last seen on May 4. It later stood at 87.46, up 1.08 dollars from Wednesday's close.
New York's main contract, light sweet crude for December, surged to a similar high point at 86.05 dollars, before pulling back to 85.88, up 1.19 dollars.
GA_googleFillSlot("news_story_instory");
The dollar tumbled on Thursday after the Fed announced that it would launch a new asset-buying plan, or quantitative easing (QE), worth 600 billion dollars, to bolster the nation's sluggish economic recovery.
In reaction, the European single currency soared to 1.4264 dollars, reaching the highest level since January 20, as traders fretted that the Fed policy could water down the value of the US unit.
"The Fed announced yesterday evening that it would be buying up more US treasuries. The much weaker US dollar as a result is now giving impetus to commodity prices," said Commerzbank analyst Carsten Fritsch.
A weak greenback makes dollar-priced crude cheaper for buyings using stronger currencies. In turn, that tends to stimulate oil demand and prices.
Crude futures had already surged in New York on Wednesday after the Fed unveiled the plans that have been dubbed QE2 by traders.
"The additional liquidity could also flow into commodity markets and lead to excessive oil prices on a more permanent basis," Fritsch added.
The US government's Department of Energy meanwhile published a weekly snapshot of crude oil inventories, detailing its stockpiles for the week ending October 29.
The DoE said on Wednesday that US crude stockpiles rose by two million barrels to 368.2 million last week. Analysts had forecast a smaller gain of 800,000 barrels.
"The lower implied demand for oil does suggest ... that the fundamental situation on the oil market is still weak," added Fritsch.
"But this is only likely to dampen the rise in prices at the moment and not halt it entirely."
Brent North Sea crude for delivery in December delivery rallied as high as 87.59 dollars, reaching a level last seen on May 4. It later stood at 87.46, up 1.08 dollars from Wednesday's close.
New York's main contract, light sweet crude for December, surged to a similar high point at 86.05 dollars, before pulling back to 85.88, up 1.19 dollars.
GA_googleFillSlot("news_story_instory");
The dollar tumbled on Thursday after the Fed announced that it would launch a new asset-buying plan, or quantitative easing (QE), worth 600 billion dollars, to bolster the nation's sluggish economic recovery.
In reaction, the European single currency soared to 1.4264 dollars, reaching the highest level since January 20, as traders fretted that the Fed policy could water down the value of the US unit.
"The Fed announced yesterday evening that it would be buying up more US treasuries. The much weaker US dollar as a result is now giving impetus to commodity prices," said Commerzbank analyst Carsten Fritsch.
A weak greenback makes dollar-priced crude cheaper for buyings using stronger currencies. In turn, that tends to stimulate oil demand and prices.
Crude futures had already surged in New York on Wednesday after the Fed unveiled the plans that have been dubbed QE2 by traders.
"The additional liquidity could also flow into commodity markets and lead to excessive oil prices on a more permanent basis," Fritsch added.
The US government's Department of Energy meanwhile published a weekly snapshot of crude oil inventories, detailing its stockpiles for the week ending October 29.
The DoE said on Wednesday that US crude stockpiles rose by two million barrels to 368.2 million last week. Analysts had forecast a smaller gain of 800,000 barrels.
"The lower implied demand for oil does suggest ... that the fundamental situation on the oil market is still weak," added Fritsch.
"But this is only likely to dampen the rise in prices at the moment and not halt it entirely."
There should be a test to vote.
So for the next two years, the voting public is going back to Dancing with The Stars and GLEE.
Wow, glad you got out and did your part. How many of you even knew who or what you were voting for?
Wow, glad you got out and did your part. How many of you even knew who or what you were voting for?
Wednesday, November 3, 2010
Fed to Spend $600 Billion More To Help Boost US Economy - CNBC
Fed to Spend $600 Billion More To Help Boost US Economy - CNBC
Debt Monetization. This will only be good for the FED. The rest of us are screwed.
Debt Monetization. This will only be good for the FED. The rest of us are screwed.
The Calm Before The Storm
An eerie calm has descended upon world financial markets as they await perhaps the two most important financial events of the year this week. On Tuesday, investors will be eagerly awaiting the results of one of the most anticipated midterm elections in U.S. history. On Wednesday, the Federal Reserve is expected to end months of speculation by formally announcing the details of a new round of quantitative easing. If either the election or the meeting of the Federal Reserve open market committee delivers a highly unexpected result, it could have a dramatic impact on world financial markets. In fact, many are looking at this week as a potential turning point for the U.S. economy. The decisions that are made or not made this week could set us down a road from which the U.S. economy may never recover.
At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.
There are many in the financial world who already consider Barack Obama to be the most "anti-business" president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street. Barack Obama's decline in popularity since he was elected has been absolutely stunning. According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low. In fact, Obama's average approval rating has fallen during every single quarter since he took office. Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination.
However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood.
If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits. Some state governments are already anticipating this and are making preparations. For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana. It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if Congress does not authorize another emergency extension of benefits by the end of November. If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.
But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.
Either way, the unfortunate truth is that this election is not going to change much.
Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.
This time will be a little different of course, but not that much different. The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.
However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.
Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.
The Federal Reserve controls the money supply. The Federal Reserve controls our interest rates. If the U.S. government wants more money it has to go get it from the Federal Reserve. It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a "reasonable" level.
But these days, Federal Reserve officials don't really seem to be that concerned about the dangers of inflation. In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually "too low" right now.
In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy. In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.
And these are the people running our economy?
Are we all caught in an episode of The Twilight Zone?
Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish. As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.
But if the price of oil shoots up, isn't that going to cause significant inflationary pressure on the prices of thousands of other goods and services?
Of course.
Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.
In fact, now even the IMF is publicly proclaiming that the U.S. dollar is "overvalued."
What a mess.
But there is another aspect of a new round of "quantitative easing" that the American people really wouldn't like if they could actually figure out what is going on.
You see, the truth is that "quantitative easing" is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.
In a previous article, I described how this works....
1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.
2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these "toxic assets" at significantly above market price.
3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets. The public is told that all of this "quantitative easing" is necessary to stimulate the U.S. economy.
4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.
Now how do you think the American people would feel about "quantitative easing" if they really understood all this?
But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.
Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn't going to do much to really change our economic problems.
The American people desperately need to be educated about how our financial system really works. But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.
Reprinted with permission from the Economic Collapse Blog.
Copyright © 2010 Economic Collapse Blog
At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.
There are many in the financial world who already consider Barack Obama to be the most "anti-business" president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street. Barack Obama's decline in popularity since he was elected has been absolutely stunning. According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low. In fact, Obama's average approval rating has fallen during every single quarter since he took office. Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination.
However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood.
If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits. Some state governments are already anticipating this and are making preparations. For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana. It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if Congress does not authorize another emergency extension of benefits by the end of November. If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.
But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.
Either way, the unfortunate truth is that this election is not going to change much.
Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.
This time will be a little different of course, but not that much different. The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.
However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.
Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.
The Federal Reserve controls the money supply. The Federal Reserve controls our interest rates. If the U.S. government wants more money it has to go get it from the Federal Reserve. It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a "reasonable" level.
But these days, Federal Reserve officials don't really seem to be that concerned about the dangers of inflation. In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually "too low" right now.
In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy. In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.
And these are the people running our economy?
Are we all caught in an episode of The Twilight Zone?
Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish. As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.
But if the price of oil shoots up, isn't that going to cause significant inflationary pressure on the prices of thousands of other goods and services?
Of course.
Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.
In fact, now even the IMF is publicly proclaiming that the U.S. dollar is "overvalued."
What a mess.
But there is another aspect of a new round of "quantitative easing" that the American people really wouldn't like if they could actually figure out what is going on.
You see, the truth is that "quantitative easing" is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.
In a previous article, I described how this works....
1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.
2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these "toxic assets" at significantly above market price.
3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets. The public is told that all of this "quantitative easing" is necessary to stimulate the U.S. economy.
4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.
Now how do you think the American people would feel about "quantitative easing" if they really understood all this?
But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.
Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn't going to do much to really change our economic problems.
The American people desperately need to be educated about how our financial system really works. But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.
Reprinted with permission from the Economic Collapse Blog.
Copyright © 2010 Economic Collapse Blog
Tuesday, November 2, 2010
How High Can Silver Go?
Legendary commodity investor and hedge fund manager Jim Rogers recently pointed out that silver prices are 50% below all time highs.
He’s talking about the brief momentary highs of nearly $50 an ounce back in 1980. With silver currently selling for less than $24 an ounce, Mr. Rogers is technically correct. But priced in 2010 dollars, the inflation adjusted high for silver would be closer to $124.
So if you believe that silver prices will make new inflation adjusted highs, then you’re expecting to see a five-fold increase in the price of silver.
Silver has already trounced just about every other asset so far this year - it’s up 40% since January 1st.
He’s talking about the brief momentary highs of nearly $50 an ounce back in 1980. With silver currently selling for less than $24 an ounce, Mr. Rogers is technically correct. But priced in 2010 dollars, the inflation adjusted high for silver would be closer to $124.
So if you believe that silver prices will make new inflation adjusted highs, then you’re expecting to see a five-fold increase in the price of silver.
Silver has already trounced just about every other asset so far this year - it’s up 40% since January 1st.
US to spend $200 mn a day on Obama's Mumbai visit
US to spend $200 mn a day on Obama's Mumbai visit
Nothing but the best for Zeroman. I cannot fathom the arrogance required in this economy to spend $200 Million Dollars per day on what will essentially turn into a vacation for the President and his family in India.
High Crimes and Misdemeanors. These are all that is required for bringing impeachment proceedings to the Senate.
Nothing but the best for Zeroman. I cannot fathom the arrogance required in this economy to spend $200 Million Dollars per day on what will essentially turn into a vacation for the President and his family in India.
High Crimes and Misdemeanors. These are all that is required for bringing impeachment proceedings to the Senate.
Fed Set To Destroy 20% Of Dollar Value
The dollar is in danger of losing 20 percent of its value over the next few years if the Federal Reserve continues unconventional monetary easing, Bill Gross, the manager of the world's largest mutual fund, said on Monday.
"I think a 20 percent decline in the dollar is possible," Gross said, adding the pace of the currency's decline was also an important consideration for investors.
"When a central bank prints trillions of dollars of checks, which is not necessarily what (a second round of quantitative easing) will do in terms of the amount, but if it gets into that territory—that is a debasement of the dollar in terms of the supply of dollars on a global basis," Gross told Reuters in an interview at his PIMCO headquarters.
Read More Here
"I think a 20 percent decline in the dollar is possible," Gross said, adding the pace of the currency's decline was also an important consideration for investors.
"When a central bank prints trillions of dollars of checks, which is not necessarily what (a second round of quantitative easing) will do in terms of the amount, but if it gets into that territory—that is a debasement of the dollar in terms of the supply of dollars on a global basis," Gross told Reuters in an interview at his PIMCO headquarters.
Read More Here
Monday, November 1, 2010
For the First Time, the TSA Meets Resistance
This past Wednesday, I showed up at Baltimore-Washington International for a flight to Providence, R.I. I had a choice of two TSA screening checkpoints. I picked mine based on the number of people waiting in line, not because I am impatient, but because the coiled, closely packed lines at TSA screening sites are the most dangerous places in airports, completely unprotected from a terrorist attack -- a terrorist attack that would serve the same purpose (shutting down air travel) as an attack on board an aircraft.
Agents were funneling every passenger at this particular checkpoint through a newly installed back-scatter body imaging device, which allows the agency's security officers to, in essence, see under your clothing. The machine captures an image of your naked self, including your genitals, and sends the image to an agent in a separate room. I don't object to stringent security (as you will soon see), but I do object to meaningless security theater (Bruce Schneier's phrase), and I believe that we would be better off if the TSA focused its attentions on learning the identity and background of each passenger, rather than on checking whether passengers are carrying contraband (as I suggested in this article, it is possible for a moderately clever person to move contraband through TSA screenings with a fair amount of ease, even with this new technology).
In part because of the back-scatter imager's invasiveness (a TSA employee in Miami was arrested recently after he physically assaulted a colleague who had mocked his modestly sized penis, which was fully apparent in a captured back-scatter image), the TSA is allowing passengers to opt-out of the back-scatter and choose instead a pat-down. I've complained about TSA pat-downs in the past, because they, too, were more security theater than anything else. They are, as I would learn, becoming more serious, as well.
At BWI, I told the officer who directed me to the back-scatter that I preferred a pat-down. I did this in order to see how effective the manual search would be. When I made this request, a number of TSA officers, to my surprise, began laughing. I asked why. One of them -- the one who would eventually conduct my pat-down -- said that the rules were changing shortly, and that I would soon understand why the back-scatter was preferable to the manual search. I asked him if the new guidelines included a cavity search. "No way. You think Congress would allow that?"
I answered, "If you're a terrorist, you're going to hide your weapons in your anus or your vagina." He blushed when I said "vagina."
"Yes, but starting tomorrow, we're going to start searching your crotchal area" -- this is the word he used, "crotchal" -- and you're not going to like it."
"What am I not going to like?" I asked.
"We have to search up your thighs and between your legs until we meet resistance," he explained.
"Resistance?" I asked.
"Your testicles," he explained.
'That's funny," I said, "because 'The Resistance' is the actual name I've given to my testicles."
He answered, "Like 'The Situation,' that guy from 'Jersey Shore?'"
Yes, exactly, I said. (I used to call my testicles "The Insurgency," but those assholes in Iraq ruined the term.)
I pointed out to the security officer that 50 percent of the American population has no balls (90 percent in Washington, D.C., where I live), so what is going to happen when the pat-down officer meets no resistance in the crotchal area of women? "If there's no resistance, then there's nothing there."
"But what about people who hide weapons in their cavities? I asked. I actually said "vagina" again, just to see him blush. "We're just not going there," he reiterated.
I asked him if he was looking forward to conducting the full-on pat-downs. "Nobody's going to do it," he said, "once they find out that we're going to do."
In other words, people, when faced with a choice, will inevitably choose the Dick-Measuring Device over molestation? "That's what we're hoping for. We're trying to get everyone into the machine." He called over a colleague. "Tell him what you call the back-scatter," he said. "The Dick-Measuring Device," I said. "That's the truth," the other officer responded.
The pat-down at BWI was fairly vigorous, by the usual tame standards of the TSA, but it was nothing like the one I received the next day at T.F. Green in Providence. Apparently, I was the very first passenger to ask to opt-out of back-scatter imaging. Several TSA officers heard me choose the pat-down, and they reacted in a way meant to make the ordinary passenger feel very badly about his decision. One officer said to a colleague who was obviously going to be assigned to me, "Get new gloves, man, you're going to need them where you're going."
The agent snapped on his blue gloves, and patiently explained exactly where he was going to touch me. I felt like a sophomore at Oberlin.
"I'm going to run my hands up your thighs, and then feel your buttocks, then I'm going to reach under you until I meet --"
"Resistance?" I interrupted.
"Yes, resistance. Do you want to go into a private room?" he asked.
"Are you asking me into a private room?" I said. He looked confused. I said, "No, here is fine."
He felt me up good, but not great. It was not in any way the best pat-down I've ever received. The most thorough search I've ever experienced was in the Bekaa Valley, by Hezbollah security officers. That took quite awhile, and the Resistance really manhandled my Resistance. There was no cavity search, of course -- no magazine story, even one about Hezbollah terrorism -- is worth that. But it was the fairly full Monty.
I draw three lessons from this week's experience: The pat-down, while more effective than previous pat-downs, will not stop dedicated and clever terrorists from smuggling on board small weapons or explosives. When I served as a military policeman in an Israeli army prison, many of the prisoners "bangled" contraband up their asses. I know this not because I checked, but because eventually they told me this when I asked.
The second lesson is that the effectiveness of pat-downs does not matter very much, because the obvious goal of the TSA is to make the pat-down embarrassing enough for the average passenger that the vast majority of people will choose high-tech humiliation over the low-tech ball check.
The third lesson remains constant: By the time terrorist plotters make it to the airport, it is, generally speaking, too late to stop them. Plots must be broken up long before the plotters reach the target. If they are smart enough to make it to the airport without arrest, it is almost axiomatically true that they will be smart enough to figure out a way to bring weapons aboard a plane.
UPDATE: Many people are asking me if I actually named my testicles "The Resistance." Of course not. I was just messing with the guy from TSA. My testicles are actually named "Tzipi" and "Bibi."
UPDATE 2: The sequel to "the Resistance"
2010: - Jeffrey Goldberg is a national correspondent for The Atlantic. Author of the book Prisoners: A Story of Friendship and Terror, he has reported from the Middle East and Africa. He also writes the magazine's advice column.
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