Of the sons of Issachar, men who understood the times, with knowledge of what Israel should do, their chiefs were two hundred; and all their kinsmen were at their command — 1 Chronicles 12:32
And I heard a voice from among the four living beings say, “A loaf of wheat bread or three loaves of barley will cost a day’s pay. And don’t waste the olive oil and wine.” — Revelation 6:6
According to Democrats, it is the Republicans who only care about the rich. And of course it is Republican policies that are disastrous for the poor and the middle class.
Of course, Democrats are liars without shame, without honor, without integrity and without decency. So you can pretty much roundfile their bullcrap. The facts prove the exact OPPOSITE.
What you find is that, after five years of Obama, we’ve gained less than half the wealth that was lost since 2007 (after Democrats blew up the economy and demagogued their sabotage). And what you find is of that 45% of wealth that was regained (let’s just forget the 55% of the wealth that Obama lost for America), fully two-thirds of it was recouped by the stock market. And what you find is that 80% of the stock market is owned by one-percenters.
Obama and his godawful Obamanomics crushed the poor into tiny bits of meat and spoon-fed that meat to über-rich like George Soros and Warren Buffet.
WASHINGTON — American households have rebuilt less than half of the wealth lost during the recession, leaving them without the spending power to fuel a robust economic recovery, according to a new analysis from the Federal Reserve.
From the peak of the boom to the bottom of the bust, households watched $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have been able to recapture only 45 percent of that amount on average, after adjusting for inflation and population growth, according to the St. Louis Fed report, released Thursday.
A separate Federal Reserve report in March calculated that Americans as a whole had regained 91 percent of their losses.
Household wealth plunged $16 trillion from the third quarter of 2007 through the first quarter of 2009. By the final three months of 2012, American households as a group had regained $14.7 trillion.
Yet once those figures are adjusted for inflation and averaged across the U.S. population, the picture doesn’t look so bright: The average household has recovered only 45 percent of its wealth, the St. Louis Fed concluded. That suggests that consumer spending could remain modest as many Americans try to rebuild their wealth by saving more and paying off debts.
The number of U.S. households grew by 3.8 million to 115 million from the third quarter of 2007 through the final three months of last year, the report said.
As a result, the rebound in wealth has been spread across more people, reducing the average for each household.
In addition, though inflation has averaged just 2 percent over the past five years, it has eroded some of the purchasing power of Americans’ regained wealth.
The report showed most of the improvement was due to stock market gains, which primarily benefit wealthy families. That means the recovery for other households has been even weaker
“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.
Fragile households
The study is part of a growing body of research on the role of household wealth — or its lack — in amplifying the impact of the recession and slowing the recovery. Traditionally, economists and policymakers have focused on the effects of employment and income. But the report from the St. Louis Fed argued that swings in household balance sheets — which include home values, stock prices, savings and debt — were critical in determining which families weathered the financial storm and which got swept away.
The report found that the most fragile households were less educated, relatively young, black or Hispanic, or some combination of those characteristics. Those families tended to have low savings combined with high debt and accrued much of their wealth through housing.
How those households respond to the changes in wealth is a critical component of the recovery. Top officials, including Fed Chairman Ben Bernanke, have pointed to the rebound in real estate and the soaring stock market as evidence of the success of the central bank’s policies.
The Fed is spending $85 billion a month to lower long-term interest rates and stimulate the economy. It has also kept short-term interest rates near zero. That has helped push stock markets to record highs, while home prices have jumped by the most in seven years. Consumer confidence is at its highest point since February 2008. Officials hope those factors will eventually result in more consumer spending power.
“I think we’re at an inflection point,” said Beth Ann Bovino, senior economist at Standard & Poor’s. “We’re seeing things turn around. And that’s where the optimism comes in among households.”
The fear factor
But research by noted economists Karl Case, John Quigley and Robert Shiller found the households were more powerfully affected by declines in wealth than increases.
An unexpected 1 percent drop in housing prices caused a permanent 0.1 percent decrease in spending, that study found.
But a similar 1 percent rise in housing prices boosted consumer spending by only 0.03 percent.
“Rising wealth is gratifying, but the loss of wealth is terrifying,” said Mark Zandi, chief economist at Moodys.com. “Households spend somewhat more freely as their nest eggs grow, but they slash their spending when their nest eggs shrink.”
William Emmons, chief economist at the St. Louis Fed’s new Center for Household Financial Stability, said that many of the most vulnerable households began to treat credit as another form of income during the boom. After the bust, they were forced to dramatically rethink their finances, resulting in more cautious spending.
Emmons said many families have not experienced any recovery — or are even still losing wealth. Young Americans, those with few skills or the unemployed may not have been able to rebuild any wealth.
Emmons noted that although the number of foreclosures has dropped significantly, it is still more than double the pre-crisis amount.
Meanwhile, he estimated that recent gains in the stock market mean the recovery of wealth is nearly complete for white and Asian households and older Americans.
Wealth accumulation affects not only families’ current financial status but also their prospects. The St. Louis Fed report points to studies that connect savings to the likelihood of attending and completing college and to economic mobility.
The average household had a net worth of $539,500 at the end of last year, according to a separate paper the St. Louis Fed released Thursday. That was up from $469,900 in the first quarter of 2009 but sharply below the peak of $641,000 in the first quarter of 2007.
And so what has happened? Obama has actually INCREASED the gulf between the rich and the poor, increased the gulf between blacks and whites and basically has made life harder and more difficult with fewer opportunities for all the very groups of people that Obama falsely promised he cared about and would help.
Democrats are dishonest. They are liars. They say one thing and then they do the exact opposite time and time again. They don’t give a flying DAMN about the poor or the middle class; they want more government power. They want to be able to decide – I’ll use the word “dictate” – who wins and who loses, who gets rewarded and who gets punished, who gets taxed and who gets exemptions, who gets a free ride and who pays out the wazoo, and even who lives and who dies as the same biased Obama IRS that targeted and punished conservative political and religious groups will begin doing the same thing as they sharpen their knives to cut into their role in the ObamaCare holocaust.
You can’t borrow and spend your way out of bankruptcy. You just can’t. You can’t keep printing money when you’re broke and never find yourself standing on the cliff that just fell away leaving you standing with your feet firmly planted in midair. You just can’t. You can’t allow the Democrats to keep parasitically taxing the producers to redistribute wealth to the slackers in exchange for their vote and not see a radical decline in America. You just can’t.
Friday will be an interesting day. That is the day that the job numbers come out for the month of May. Here’s what’s funny: if we have a good report and hear that the job market is opening up, the stock market will plunge. Why? Because the rich people who populate the stock market want to keep sucking on the Obama tit of endless Federal Reserve “stimulus” via quantitative easing, QE1, QE2, QE3, Operation Twist and now QE Forever. The Fed has indicated that if the economy is performing better that they will begin to look to get out of the massive purchase of American debt (where we literally create more money by adding zeroes to the Fed computers). That candy is ONLY available to the rich, and the poor be damned as their small fixed incomes become worth less and less as the mega-poor interest rates creates severe devaluation of the dollars they are desperately trying to save. As for the big businesses and the mega-rich who invest in those businesses, they want to continue receiving Obama’s “stimulus” in the form of super-low interest loans (that none of the rest of us can ever hope to get) that will allow them to keep making more and more and more money.
It’s right out of the economy that the Book of Revelation talks about. And it’s OBAMA’s economy.
If there was any debate whether the Fed’s policies have helped the economy or just the market (and specifically the Bernanke-targeted Russell 2000), the following two charts will end any and all debate. As the following chart from the St Louis Fed shows, as of the just completed quarter, US GDP “growth” since the “recovery” is now the worst in US history, having just dipped below the heretofore lowest on record.
Can we have the worst economy ever? Let’s ask some Democrats. What’s that they’re saying?
Here’s the more detailed version – which includes the quote above – provided by Tyler Durden at Zero Hedge:
If there was any debate whether the Fed’s policies have helped the economy or just the market (and specifically the Bernanke-targeted Russell 2000), the following two charts will end any and all debate. As the following chart from the St Louis Fed shows, as of the just completed quarter, US GDP “growth” since the “recovery” is now the worst in US history, having just dipped below the heretofore lowest on record.
A slightly prettier version of the same chart created by JPM’s Michael Cembalest, is presented below:
But fear not: it is only the worst recovery ever for anyone unlucky enough to still rely on such Old Normal concepts as the “economy” to feed, clothe and provide shelter for themselves.
For those lucky 1% of the US population whose entire wealth is in financial assets (and who once again managed to avoid a tax hike on carried interest or any actual financial assets), times have almost never been so good.
Well, it’s not the biggest surge in the market since the economic trough in history, but it is close. Which as Bernanke admitted some time ago (when discussing the level of the Russell 2000), is the only thing that actually matters to the Fed.
Yet oddly enough, the trickle down from the trillions in excess wealth created for those who hold financial assets, as a result of daily POMOs pumping some $85 billion, and soon more, into the stock market each month, has yet to materialize.
Oh well: just keep on doing more of what you are doing Uncle Ben, and if possible destroy the US economy even more than you already have – at this point, at least on a relative basis, you can’t destroy it more.
Well, that’s what the American people decided they wanted, and it is what they should get.
Conservatives – myself very definitely included – predicted categorically that Obama was going to take American in the wrong direction, and we have been documenting the miserable economy Obama has actually delivered in spite of all of his failed promises of Utopia ever since.
The funny thing is that historically, the worst the economic collapse the bigger, faster and sharper the recovery. Obama has given us the exact opposite.
And then there’s that giant black hole of depression that is just waiting to eat the American people alive like nothing ever has before. Because, again, we voted for it, and we should get what we voted for.
I used to think that the Antichrist would be an incredibly capable leader. I now realize I might very well be wrong. As I re-read the Book of Revelation, I never actually see real signs that the economy presided over by the Antichrist ever really improves; rather, he may be nothing more than an incredibly skilled demagogue who continues to sink the world deeper and deeper into debt and chaos while blaming his opponents for his failures and implementing policies that actually sink the world deeper and deeper into the mire of a failed economy as the world continues to worship him. Sort of like what is happening now with Obama, just on an even grander scale.
This is unbelievable: the only thing worse than the “Bush recession” – at least the recession that he gets all the blame for – has been the “Obama wreckovery.”
Stop and think about it: as much as Bush has been demagogued and demonized for the recession, household incomes only dropped by 2.6%. I say “only” because during this “recovery” that Obama has taken and received so much credit for, household incomes have lost nearly TWICE as much – a whopping 4.8%.
And if you’re black, you’re screwed: because Obama has gutted your household wealth since his “recovery” by a staggering 11.1%.
This is absolutely devastating news for Barack Obama’s reelection campaign – which is why the mainstream media has tried to bury it with the following WaPo story appearing on page A-10 by which point most people are flipping through the pages looking for the damn funnies:
Household income is down sharply since the recession ended three years ago, according to a report released Thursday, providing another sign of the stubborn weakness of the economic recovery.
From June 2009 to June 2012, inflation-adjusted median household income fell 4.8 percent, to $50,964, according to a report by Sentier Research, a firm headed by two former Census Bureau officials.
Incomes have dropped more since the beginning of the recovery than they did during the recession itself, when they declined 2.6 percent, according to the report, which analyzed data from the Census Bureau’s Current Population Survey. The recession, the most severe since the Great Depression, lasted from December 2007 to June 2009.
Overall, median income is 7.2 percent below its December 2007 level and 8.1 percent below where it stood in January 2000, when it was $55,470, according to the report.
The findings highlight the depth of the recession and the long road the nation has to traverse before it fully recovers. They also echo other reports detailing the financial carnage caused by the recession.
This summer, the Federal Reserve reported that the downturn eviscerated two decades of gains in Americans’ wealth. The central bank said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010, pushing that measure back to nearly 1992 levels.
Few analysts expect a quick bounce back even as the economy grows, if tepidly. The unemployment rate was 8.3 percent in July, marking 42 months that it has been above 8 percent. About 5.2 million people — 40 percent of the unemployed — had been out of work for more than six months. An additional 8.2 million were working part time because they could not get full-time work.
Corporate profits, meanwhile, have recovered. But with workers producing more on the job, the gains in economic output have not been matched by new hiring.
“The character of the recovery has been one that has benefited businesses more than it has workers,” said Gary Burtless, a Brookings Institution economist.
Although the new report does not take into account tax cuts enacted in recent years that have boosted take-home pay, it shows that a broad swath of Americans have lost some income.
Over the past three years, the inflation-adjusted median income of households headed by whites was down 5.2 percent, to $56,255. Households headed by blacks sustained a staggering 11.1 percent drop in median income. Hispanic-led households saw their real income decline by 4.1 percent over the same period, the report said.
Looking at the data by age, the researchers found that income has risen only for workers older than 65 during the recovery, which report co-author and Sentier partner Gordon Green attributes to the cost-of-living increases for Social Security recipients.
Households led by the self-employed saw their income drop 9.4 percent, to $66,752, the report said. Households headed by private-sector employees saw wages drop by 4.5 percent, to $63,800, and households led by government workers saw median income decline by 3.5 percent, to $77,998, the report said.
Government workers, on average, are better educated than private-sector workers, which could help explain their higher wage levels, Green said.
The report also concluded that the declines have been most dramatic in the West, where household income is down 8.5 percent over the past three years. By comparison, income was down 4.9 percent in the Northeast and the South, the report said, while incomes in the Midwest dropped by just 1.1 percent over the past three years.
As usual, Newsbusters actually does a better job reporting the actual news than mainstream media outlets. You can easily understand why that would be give the fact that the Washington Post which first reported on the story managed to bury it as deep in the bowels of the paper as possible. If this was Bush’s economy and disastrous news like this came out right before his damn convention, you can rest assured it would have been the main headline in giant letters on the front page.
Here’s Newsbuster’s article on this report on just how truly pathetic Obamanomics has been:
Yesterday a “report by Sentier Research, a firm headed by two former Census Bureau officials,” found that “[f]rom June 2009 to June 2012, inflation-adjusted median household income fell 4.8 percent,” Michael A. Fletcher of the Washington Post reported today. What’s more, the fall in median household income was much worse for blacks, “a staggering 11.1 percent drop.” June 2009, you may recall, marks the end of the recession that began in December 2007.
Yet such news was shoved down to page A10 by Post editors, rather than placed on the paper’s August 23 front page, which included, among other things, a large photo of a woman working on a large sand sculpture at a resort in Florida, a story about Mitt Romney’s campaign ‘Mad Men,’ and a story about how Lance Armstrong “won’t fight doping charges” anymore.
The Sentier Research survey also found that young Americans suffered a steeper hit than the average American, with those under 25 seeing a 6.1 percent drop in median income and those in the 25-34 bracket suffering an 8.9 percent drop. Given how well President Obama did with the youth vote, their economic suffering under his administration is certainly worthy of coverage and criticism.
If such data were discovered in a survey released just a week before the Democratic convention in 2004 or 2008, it most certainly would be front-page news as the media hit the Bush administration and Republicans for a soft economy and teed up the opposition party with a talking point to flog during the convention.
But alas, the media are too busy with more important things, like dutifully echoing Democratic talking points tarring the entire Republican Party with one Missouri congressman’s offensive comments on rape.
The funniest thing is that the more Obama has tried to help whatever group or region with his failed policies, the more that group or region suffered. That ought to tell you something. Blacks have been absolutely devastated by Obama, but 95% of them are going to vote for the man who has destroyed them. The same applies to the young people who voted Obama into office in 2008 and now live in their parents’ houses, with half of all college graduates under Obama unable to find a job. Maybe they can’t find a damn job because they’re still stupid enough to vote for the man who wrecked their lives. And no region has fared worse than the West, but don’t tell that to states like California and Washington which would both vote for Chairman Freaking Mao if he were running as a Democrat.
This reminds me of how Adolf Hitler systematically destroyed Germany until there was just nothing left. It wasn’t the rank-and-file people who were fiercely loyal to him come what may; it was the rabid Nazis who demanded the nation follow Hitler to its very grave. Similarly, Barack Obama and his Marxist Obamanomics has been the absolute systematic destruction of the American economy and the American middle class, but with the mainstream media and the Democrat machine rabidly following this turd and slant the news with outright propaganda. And so just like Nazi Germany, America may well end up in the graveyard of dead nations by 2016 if Obama gets another chance to finish the destruction of America that he started in 2009.
I’ve been pointing out since December 2008 right after Obama was elected that we would be staring into the abyss of a Great Depression due to this evil man’s failed policies. I pointed out in that article that the Great Depression began with a market tank, followed by a series of failed liberal-progressive policies that were like sugar for a diabetic; at first things seemed to get better, and then we had the real crash. You look at what I wrote in that article and tell me that we aren’t right on schedule.
Who was right? And who has been totally full of CRAP from the getgo?
Conservatives have been right again and again and again and Democrats have continued to demonize us even as their own failed policies have kept failing just like we said they would.
Democrats ran both the House and Senate since the November 2006 elections when unemployment was 4.6% as Nancy Pelosi and Harry Reid and the Democrats took over Congress. Most Americans have no idea whatsoever that the LAST budget that Republicans passed (and I note that it has been 833 DAYS since Democrats have bothered to pass a budget) had a deficit of only $161 billion dollars. Democrats have since utterly skyrocketed our reckless deficit spending into the trillions of dollars. And all the while they have done nothing but blame and demonize Republicans.
Now, let’s just say for the sake of argument that you were watching the Democratic National Convention in August of 2008 and came to the belief that the mainstream media coverage was so blatantly biased and dishonest that Barack Obama was going to win the election. And you had a vision of the sheer smackdown that would happen in this “God damn America.”
So you made an appointment with your portfolio manager and told her you wanted to cash out all of your stock holdings so you could put your investment nest egg into silver and gold.
What do you expect your portfolio manager would say? Do the words, “This is a big mistake. Trust me, the stock market is not going to collapse. The average gains of the stock market invariably outperform gold indices. Blah blah blah.” The bottom line is that if you pull your money out of the fund she manages, she’s not going to get any more of your money.
Well, the fool who did that would have bought all kinds of silver at about $13 an ounce and gold at about $825 an ounce. And that fool would have more than doubled his money while everybody else lost their shirt, then got part of their shirt back if they played the game right, then lost their shirt again.
And so “the fool” bailed out of the economy of the most evil man who has ever led this country and bought the only thing that made any sense to buy if he was right.
And who was right?
“The fool” who bet against Obama bought gold at $825 an ounce and that same gold is worth over $1,700 an ounce as of COB Monday. That fool bought silver at about $13 an ounce and that same silver is worth nearly $40 an ounce Monday. Then that fool went to bed and woke up this morning and saw that gold was saying good morning to him at $1,770 an ounce. And silver was down slightly from the previous day so he’d only tripled his money from the day he bought the stuff by the pound.
Who was right? The fool who bet Obama was a fool or the downgraded president who has now been factually proven wrong a ten thousand times times ten thousand times???
[Update, 8/9/11]: The above was written on August 8 and pulished early this morning; what follows is written in the hindsight of the market rebound today.
Well, I knew we’d get a sucker’s rally, and we sure got a sucker’s rally today. After plunging to its sixth worse loss ever, the Dow rallied to its eleventh greatest gain ever. I didn’t think we would see such a rally so quickly and I certainly didn’t think the Fed would throw this kind of a hail Mary pass by announcing that already rock-bottom interest rates would remain the same for two years.
Obama and his teleprompter showed up yesterday and neither one of them had any plan or any clue as to what to do. Fortunately, I suppose, Ben Bernanke DID have a plan. It’s not QE3, but it’s kind of like a QE3; basically, by enabling the banks to borrow money at near zero percent interest, banks (which were absolutely CLOBBERED in yesterday’s bloodbath) can make a ton of money by loaning that same money at a higher interest rate.
“Fisher and Plosser have warned repeatedly that the Fed risks stoking inflation or another asset bubble by keeping money too easy for too long.”
This seems to be the right point to state that we haven’t had dissent at the Fed since November 1992.
So why do the three Fed heads disagree with this policy? Basically, they understand that the artificially low interest rates created by the Federal Reserve are a rigged game. The co-owned Federal Reserve, banks, and Wall Street firms benefit from the policy, while people who are trying to save money lose out because the artificial interest rates simply do not honestly reflect the weakening dollar and the rising prices we are clearly seeing all around us. It amounts to a tax on savers and a subsidy for spenders. Here’s an article on that gimmick by a writer pleading with Bernanke to allow interest rates to reach their market equilibrium well before his ploy today.
And artificially low interest rates also clearly increases the risk of an asset bubble (e.g., that’s what blew up our economy in 2008 with said “asset” being real estate) because it incentivizes people to increase their debt load far beyond what they can afford.
Ultimately, what Ben Bernanke did was kick the can down the road. Because in two years (hint: AFTER Obama is up for re:election) we’re going to HAVE to see a spike in interest rates that will absolutely slaughter both the bond markets AND the stock markets. We always selfishly think that whatever crisis we have now justifies setting up an even worse crisis later, just as we always foolishly believe that in a couple of years we will have developed the will to embrace tough choices that we clearly don’t have the will to face now.
An increase in the money supply is rather like an overdose of drugs. And in this case the effect of the overdose will be hyperinflation. Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate. Why? Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued. There’s simply no way it can’t be. If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire. The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems. If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency. And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins. Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.
What I am essentially saying is that the government’s constant monkeying around has created a dilemma: as long as we remain in recession conditions, things will continue to suck as we slowly grind along. But if we actually start to experience a real recovery, we’re going to very quickly get a crippling punch in the gut as the interest rates we’ve been holding down for FAR TOO LONG begin to rise in an out-of-control manner. I’m not talking about “politics” or “economics” when I say this: it is simply the grim reality of physical math on a balance sheet.
The Bernanke move will ultimately hurt us badly. Just not today.
Meanwhile, nothing else has changed. The horrible fundamentals of our economy and the greater world economy are still just as horrible today as they were yesterday. Europe’s sovereign debt crisis is still spiralling out of control. with France and England joining Italy and Spain as being both broke and “too big too bail”; and nothing whatsoever about our ravaged and dysfunctional economy has changed in any way, shape or form from the moment that the market began to take off after the Fed announcement.
Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. […]
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. […]
Which is to say that 1) Growth has been “considerably slower” than expected; 2) Labor market conditions have deteriorated substantially; and 3) Household spending has “flattened” (actually it has tanked); and 4) The housing sector remains depressed (and is literally more depressed than the Great Depression).
Anybody who believes that today’s Fed action or the stock market’s immediate reaction to it is simply a fool. The very reason the Fed even resorted to this dramatic and risky move was because things truly suck, and are expected to remain terrible until at least 2013.
The Fed, essentially in desperation, is now going to attempt to force bond yields to remain low while trying to keep stock prices high – which they define as “price stability.” This entire process will in fact virtually REQUIRE the Fed to do a QE3 (which they did not feel they could do now because it was far too early after just-ended QE2), according to analysts from CNBC. And the Fed is simply not worried about inflation at this point because they think they have bigger fish to fry.
When they get to the QE4 point – which QE3 itself will guarantee just as the ending of QE2 itself guaranteed QE3 – they will simply forgive their own debt and the system will run amok until it completely crashes due to hyperinflation.
I know I make all this sound so cut and dry that, if I’m right, any fool ought to be able to see what I’m describing and avoid the pitfall I predict. And so it is easy to conclude that I simply can’t be right.
I don’t doubt that the thinkers at the government and the Fed and Wall Street who are making these ruinous decisions are well familiar with the history of hyperinflation (e.g. the Weimar Republic or Africa); and they know the dangers of their policies.
But there’s another attribute these decision-makers have in addition to their pathological refusal to accept responsibility when they can kick the can down the road and make the future pay for their actions now instead; and that attribute is hubris. Which is to say they reason, “Yes, that problem always happened before when a government did what we’re doing now, but we’re smarter. And we have computers. And so what happened to everyone else who did what we’re doing now won’t happen to us.”
And the thing about computers that has always been true is garbage in, garbage out. The economic models these thinkers are plugging into their computers are filled with preconceptions that are in fact basically the same preconceptions that failed so wildly in the Weimar Republic. And it doesn’t matter how many digits to the right of the decimal point your computer can calculate; when your assumptions are wrong, your model will turn out wrong.
By the way, “the fool” who bought so much gold was quite happy today. That is because there is no point saving money, and the only two basic options are to risk your money in risky equities or to buy gold; so gold will continue to increase in value, baby.
They talk about “fool’s gold” (iron pyrite), which fools think is real gold. But real genuine gold has the property of revealing fools in another way: consider that gold has spiked twice since 1970: during the misrule of the fool Jimmy Carter and now during the misrule of the fool Barack Obama:
[Update, 8/10/2011]: Oh, oh. It looks like that wild roller coaster ride is going DOWN the steep track again. The DOW was down 520 points – more than erasing the gains from the previous day and putting the kibosh on the television talking head narrative that we were about to enter better days because the Fed had saved us.
I didn’t know we’d go up 430 points yesterday on the Fed’s hail Mary. I didn’t know it would tank 520 today on the most radical market roller coaster in my lifetime. But I know that Barack Obama will fail and bring America down with him unless the people stand up and STOP HIM. This is God damn America now under Obama. And God damn America is going to go down hard unless we stand up and repent of the evil that is the Obama agenda.
And that “fool” who bet that Obama would wildly fail is thrilled with his bet that Obama would ruin America, with gold soaring to over $1,800 an ounce today.
The Los Angeles Times print edition ran this story on July 2 under the considerably more Marxist headline, “Wealthy benefit from recovery as workers struggle“:
WASHINGTON (AP) — This is one anniversary few feel like celebrating.
Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.
After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest.
Workers’ wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable — about 64 percent through boom and bust alike.
[…]
But if the Great Recession is long gone from Wall Street and corporate boardrooms, it lingers on Main Street:
— Unemployment has never been so high — 9.1 percent — this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.
— The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans.
— The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then.
[…]
Hard times have made Americans more dependent than ever on social programs, which accounted for a record 18 percent of personal income in the last three months of 2010 before coming down a bit this year. Almost 45 million Americans are on food stamps, another record.
[…]
Because the labor market remains so weak, most workers can’t demand bigger raises or look for better jobs.
“In an economic cycle that is turning up, a labor market that is healthy and vibrant, you’d see a large number of people quitting their jobs,” says Gluskin Sheff economist Rosenberg. “They quit because the grass is greener somewhere else.”
Instead, workers are toughing it out, thankful they have jobs at all. Just 1.7 million workers have quit their job each month this year, down from 2.8 million a month in 2007.
The toll of all this shows in consumer confidence, a measure of how good people feel about the economy. According to the Conference Board’s index, it’s at 58.5. Healthy is more like 90. By this point after the past three recessions, it was an average of 87.
How gloomy are Americans? A USA Today/Gallup poll eight weeks ago found that 55 percent think the recession continues, even if the experts say it’s been over for two years. That includes the 29 percent who go even further — they say it feels more like a depression.
Allow me to start with the second paragraph in the story:
“Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.”
The weakest and most lopsided of any recovery since the 1930s, you say???
WHO WAS PRESIDENT IN THE 1930s? WHICH PARTY DOMINATED BOTH THE HOUSE AND THE SENATE IN THE 1930s?
And next let me ask you, “Are there any similarities between socialist Democrat Franklin Delano Roosevelt and socialist Democrat Barack Hussein Obama??? And the answer is, “HELL YES THERE ARE!!!”:
Which is to say, “This is the worst the U.S. economy has ever been since the LAST time we had a socialist just like FDR – and the mainstream media proudly hailed Obama as FDR and Obama’s as a NEW “New Deal.”
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt. After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
”Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. ”We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”
In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
[…]
”The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. ”Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”
And of course all the “experts” the mainstream media love to trot out have all bought hook, line and sinker the notion that capitalism is something to be loathed and feared. So they demand that America pursue asinine government stimulus policies that fail even by the “experts'” own standards, and then these same “experts” proceed to argue that the economy failing to recover somehow is proof that more of the same thing that already failed is necessary.
These “experts” whom the mainstream media give a loud microphone to to espouse their socialist views are pathologically incapable of seeing this connection between socialist policies and an economy in the doldrums. Every bit of negative economic news is invariably “unexpected” (liberals favorite adjective to wave a hand at bad economic developments whenever a Democrat president is in charge), because these “experts” cannot separate the inevitable results of their ideology from their terribly failed ideology. There has to be a disconnect, or more commonly, a scapegoat.
I think of the Soviet Union, which literally blamed the total failure of their entire political philosophy and the ruinous policies that philosophy entailed by claiming that their agricultural output had been adversely affected due to 72 years of bad weather. And the Soviet Union has gone the way of the Dodo bird for that very reason.
Is America under Obama the next Dodo bird to fall apart while we’re assured that everything is fine while some suitable scapegoat bears the blame for every failure that can’t be ignored???
It couldn’t be the fact that socialism is nothing more than state-planned economic failure. It had to be something else, ANYTHING else.
The Big Brother from the novel 1984 had Emmanuel Goldstein. The Big Brother who is now occupying our White House has George W. Bush.
The next obvious question to ask and answer is, “Why are the wealthy benefitting while the workers struggle?”
The answer is twofold: 1) because when you attack the employers, the first thing to go is the employees and 2) because that’s exactly how crony capitalism works.
There is a magnificent book entitled, New Deal Or Raw Deal? How FDR’s Economic Legacy Has Damaged America, which should be required reading. Burton Folsom Jr. points out that when FDR structured his many policies and regulations that strangled economic growth, he did so in such a way that favored the big crony capitalist corporations at the expense of the smaller businesses that could no longer compete given the costly regulatory requirements. The smaller businesses were forced out of the market while the big businesses protected themselves with insider deals based on access to and influence with the government that only they could afford. And there is no question whatsoever that – even as FDR employed the class warfare of socialism – the rich got richer while the poor got poorer. Income tax revenues plunged as the wealthy sheltered their wealth from the high tax rates and the poor paid an increasingly high overall percentage of tax revenues via excise taxes. Regulations mandating higher pay for workers priced those workers right out of their jobs. Folsom provides the official data to back it up.
In 1929, prior to FDR demonizing the rich, income taxes accounted for 38% of total revenue collected, and corporate income taxes accounted for 43%. Excise taxes which burdened the poor only counted for 19% of revenues. By 1938, the rich and the corporations had protected themselves from FDR’s demagogic tax policies (but the poor couldn’t), such that the only 24% was collected in income taxes (versus 38%) and only 29% from corporate income taxes (versus 43%). Meanwhile the poor-punishing excise taxes (e.g. gasoline tax) soared from 19% to 47% of the total taxes collected. Meanwhile, when income taxes were kept low, the wealthy invariably paid FAR MORE in the total tax revenue as they put their money out to invest in and expand the economy in pursuit of the profits. And they created millions of jobs in doing so.
And the exact same mindset is yielding the exact same results ALL OVER AGAIN. Obama has put the fear of God (actually the fear of the Soviet-style STATE) into the wealthy and the corporations. They keep hearing Obama demagogue them, and they keep sheltering their money. And they will CONTINUE to keep doing that until the threat of Obama is gone. Just like they did with FDR.
That said, there is also a deliberate and fundamental misunderstanding of fascism by the left. If you read leftists, you come away thinking that somehow “fascism” is the takeover of a state by corporations. But stop and think: Hitler, Himmler, Eichmann, Hess and all the other key Nazis WEREN’T corporate CEOs who took over the state; THEY WERE SOCIALIST POLITICIANS WHO TOOK OVER THE CORPORATIONS. They usurped the corporations and FORCED them to perform THEIR agenda. They either performed the Nazis’ will or they were simply taken away from their rightful owners and nationalized.
And to the degree that German crony capitalist corporations helped Hitler in his rise to power, THEY WERE JUST MORE USEFUL IDIOTS.
The same sort of takeover of German corporations by socialists is building in America. Take Maxine Waters, a liberal Democrat, as the perfect example. What did she say of the oil companies?
“This liberal will be all about socializing … uh uh … would be about … basically … taking over … and the government running all of your companies.”
THAT’S what Hitler did, too. Hitler got this power through regulations that required corporations to do his bidding, just like Obama has now REPEATEDLY done.
I stand by that sweeping statement. People need to realize that “Nazi” stood for “National SOCIALIST German Workers Party,” and that both Nazi socialism and Soviet socialism were big government socialist tyrannies that failed their people. As to our own experiment with socialism here in the USA, I point out in an article that explains how “Government Sponsored Enterprises” Fannie Mae and Freddie Mac policies led us into economic implosion in spite of warnings for YEARS prior to the 2008 economic collapse:
The timeline is clear: Fannie Mae and Freddie Mac were giant behemoths that began to stagger under their own corrupt weight, as even the New York Timespointed out:
Fannie Mae and Freddie Mac are so big — they own or guarantee roughly half of the nation’s $12 trillion mortgage market — that the thought that they might falter once seemed unimaginable. But now a trickle of worries about the companies, which has been slowly building for years, has suddenly become a torrent.
And it was FANNIE and FREDDIE that collapsed FIRST before ANY of the private investment banks, which collapsed as a result of having purchased the very mortgaged backed securities that the Government Sponsored Enterprises SOLD THEM. It wasn’t until Fannie and Freddie collapsed that investors began to look with horror at all the junk that these GSE boondoggles had been pimping.
The man who predicted the collapse in 1999 wrote a follow-up article titled, “Blame Fannie Mae and Congress For the Credit Mess.” It really should have read, “Blame DEMOCRATS.” Because they were crawling all over these GSEs that they had themselves created like the cockroaches they are. But Wallison is nonpartisan
That Chicago corruption extends right into Obama’s home, by way of his wife Michelle. This is a woman who sat on high-paying boards in direct quid-pro-quo consequences of Obama advancing in public office. And in some of those boards, she participated in the worst kind of hospital patient-dumping.
Here’s a video of Michelle Obama you ought to watch – if you can stand the revelations:
Too bad we voted to nationalize the Chicago Way.
I also pointed out that when you attacked employers, the ones who would be hit the most and the hardest would be EMPLOYEES.
Through the 12 months ended in March of last year, 505,473 new businesses started up in the U.S., according to the latest data available from the Bureau of Labor Statistics. That’s the weakest growth since the bureau started tracking the data in the early 1990s. It’s down sharply from the record 667,341 new businesses added in the 12 months that ended in March 2006.
Many times large corporations will even lobby for more regulations for their own industry because they know that they can handle all of the rules and paperwork far easier than their smaller competitors can. After all, a large corporation with an accounting department can easily handle filling out a few thousand more forms, but for a small business with only a handful of employees that kind of paperwork is a major logistical nightmare.
When it comes to hiring new employees, the federal government has made the process so complicated and so expensive for small businesses that it is hardly worth it anymore. Things have gotten so bad that more small businesses than ever are only hiring part-time workers or independent contractors.
So what we actually have now is a situation where small businesses have lots of incentives not to hire more workers, and if they really do need some extra help the rules make it much more profitable to do whatever you can to keep from bringing people on as full-time employees.
And who do all these rules and regulations hurt the most but the very people Democrats cynically and deceitfully claim they are trying to help? Meanwhile, who does it help the most but the crony capitalist corporations who DON’T do most of the hiring in America who can profit from Obama’s war on business that results in the destruction of their small business competition.
A Slowdown for Small Businesses
By CATHERINE RAMPELL
Published: June 14, 2011
In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them.
That is according to a new report released Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses across America.
The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking.
While big companies are buoyed by record profits, many small businesses, which employ half of the country’s private sector workers, are still struggling to break even. And if the nation’s small companies plan to further delay hiring — or, worse, return to laying off workers, as they now hint they might — there is little hope that the nation’s 14 million idle workers will find gainful employment soon.
“Never in the 37-year history of our company have we seen anything at all like this,” said Frank W. Goodnight, president of Diversified Graphics, a publishing company in Salisbury, N.C. He says there is “no chance” he will hire more workers in the months ahead.
“We’re being squeezed on all sides,” he says.
So let me ask again the question that the Los Angeles Times phrased: “Why are the wealthy benefitting from the ‘recovery’ as workers struggle?
And the answer is simple: because Barack Obama and the Democrat Party are socialist who have destroyed the engine that creates the jobs that workers depend upon to flourish.
An interesting fact is that businesses are now forced to spend $1.7 TRILLION a year in regulatory compliance costs. That is a massive hidden tax on their viability; it exceeds the overt income taxes businesses have to pay, and it most certainly exceeds their profits. And right now Obama is attacking them via the Dodd-Frank regulatory legislation, via the EPA, via OSHA, via ObamaCare and via the ridiculous actions of the NLRB in addition to their tax burden. Just to name a few. The result is businesses terrified to expand and further place their necks under Obama’s axe blade.
Meanwhile, Obama’s socialist policies have not only devastated the worker by destroying his jobs, but they’ve ruined America on numerous other levels, too. Take the housing crisis – which was THE cause of the economic implosion of 2008. Did Obama make it better? Well, here’s a headline for you from CNBC: “US Housing Crisis Is Now Worse Than Great Depression.” Which is to say that Democrats – who first created the housing crisis by refusing to allow the regulation of their pet socialist wealth redistribution agencies Fannie Mae and Freddie Mac – took something awful and turned it into an American Dream-massacring nightmare.
The latest job figures simply further document my point: Obama is destroying America job by job. Not only did the unemployment rate go up to 9.2% (Obama promised the American people that the unemployment rate would be 7.1% by now if he got his massive government-spending stimulus); not only were the previous two month figures adjusted DOWNWARD by some 45,000 jobs; not only have a third of the unemployed been unemployed for at least a YEAR with fully half of the unemployed having been unemployed for over six months (which is unprecedented); not only did the economy create an incredibly dismal 18,000 jobs (versus the 100,000 the economists naively expected); but a quarter million more people simply walked away from the workforce entirely – abandoning any hope that Obama will do anything more than crush their hopes of finding a job.
There’s a memory that still makes me laugh. I had a friend who worked the graveyard shift when I was in college. When he got off work (i.e., when I was just getting up) he took his car to the shop for a repair and had asked me to meet him there and give him a ride home.
So I was standing there when the mechanic began to explain what was wrong with my friend’s car. And my friend, wanting to see, put his hand on the radiator of the still hot engine. He leaped back holding his hand. The mechanic looked at him for a second, shook his head, and continued explaining.
Soon enough, my friend AGAIN put his hand on the radiator. With the same result. This time the mechanic looked at me and shook his head before going on.
You won’t believe this, but my friend actually did it a third time.
And the mechanic looked at him and said, “You just don’t learn, do you?”
I am here to tell you that Democrats are every bit as dumb as my friend. And the only thing more hopelessly stupid than a liberal is a liberal “expert.”
Our economy is in a state of ruin. Many of the most important numbers – such as unemployment and housing and manufacturing and consumer confidence – aren’t just as bad as they were when Obama took over, but far, far worse. And with no sign of getting better.
If you survey the history of economics, there has never been a recession that lasted forever. Sooner or later, things hit their bottoms and begin to get better. Most severe recessions last about two years. Even during the Great Depression – which in fact was a Great Depression for virtually every country on the planet – most of those nations emerged after no more than a few years. The ONLY exception was the United States of America, which was being led by a socialist named FDR with near dictatorial power. That recession/depression just went on and on and on. FOR SEVEN YEARS LONGER THAN IT SHOULD HAVE.
Franklin Delano Roosevelt was such a disaster that we actually amended the Constitution to make sure that we’d never end up with another FDR ever again. Roosevelt knew absolutely nothing about business or economics and actually thought that by punishing business he’d somehow get more employment. Like my friend, he repeated the same mistakes again and again and again, constantly expecting different results than the ones he kept getting.
And that is precisely where we are today: helplessly writhing in the grasp of a dictatorial socialist fool.
Allow me to show you how Obama, how the Democrats and how their “economists” – to put it in the words of the mechanic – “just don’t learn.”
In the weeks just before President Obamatook office, his economic advisers made a mistake. They got a little carried away with hope.
To make the case for a big stimulus package, they released their economic forecast for the next few years. Without the stimulus, they saw the unemployment rate — then 7.2 percent — rising above 8 percent in 2009 and peaking at 9 percent next year. With the stimulus, the advisers said, unemployment would probably peak at 8 percent late this year.
We now know that this forecast was terribly optimistic.
According to Obama’s forecase, unemployment would NEVER rise above 8% if that massive government spending aka the stimulus was passed. And unemployment would be UNDER 7% this year. Let’s chalk that up as a great big giant “NOT!!!”
OUCH!!! That’s one hand on the hot radiator.
Obama and the Democrat Party and their “economists” continued to stuipdly talk about all the jobs he “saved.” The only problem was that “saved jobs” had NEVER IN THE ENTIRE HISTORY OF ECONOMICS BEEN CONSIDERED PRIOR TO THE AGE OF OBAMA:
Harvard economics Professor Gregory Mankiw said, “there is no way to measure how many jobs are saved.” Allan Meltzer, professor of political economy at Carnegie Mellon University said “One can search economic textbooks forever without finding a concept called ‘jobs saved.’ It doesn’t exist for good reason: how can anyone know that his or her job has been saved?”
And they went on and on with pure unadulterated totally bogus bullcrap to pat themselves on the back for what in reality was a total fiasco. They just don’t learn, do they?
“OUCH!!!”
Let’s call that a second hand on the hot radiator – even though they did it over and over and over again – and are STILL doing it as we speak.
But that wasn’t it with this pile of pure fools. If at first your policy fails, keep trying to fail more and bigger:
President Obama is being forced to wade into a domestic economic debate that just won’t go away: As the unemployment rate rises, there have been calls for a second round of stimulus spending.
Obama is in a difficult position. He has to defend his $787 billion economic stimulus package at a time when there are few visible signs that it has had an effect. Unemployment is at 9.5 percent, even though the White House predicted in January that with the stimulus bill, it would rise to only about 8 percent
That’s right, boys and girls. Obama and his ilk couldn’t learn from the hot radiator. They assumed that something else must have been hot, and they weren’t really touching what they’d just been touching. Massive government spending was just an unmitigated failure that the answer was clearly …. (drumroll, please) …. EVEN MORE MASSIVE GOVERNMENT SPENDING!!!
“OUCH!!!” That’s a third hand on that hot radiator.
Then there were the “green shoots” Obama saw in 2009:
US President Barack Obama believes his strategy to battle the economic downturn is beginning to show some positive results.
It comes as skepticism is growing as to the wisdom of his massive budget plan. The president took to the podium to defend his actions and answer questions from the world’s media. He said: “We’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to restart lending and to grow our economy over the long-term. And we are beginning to see signs of progress.” Next week Obama makes his debut on the world stage when he attends the G20 summit in London. He outlined what he was looking for from the talks. “The goal of the G20 summit, I think, is to say to all countries ‘let’s avoid steps that could result in protectionism that would further contract global trade.’ Let’s focus on how are we going to move our regulatory process forward,” he said. Obama claims his economic plan, along with his new budget which is being prepared, is based on job creation, a more fluid housing market and a banking industry that is prepared to get credit flowing again.
Were there ever any green shoots? Nope. And certainly if there WERE, it’s a bunch of dead grass now. Obama’s bullcrap stinks to high heaven, but it lacks the power to fertilize much of anything.
“OUCH!!!”
You put your hand there AGAIN, Barry Hussein? Man, you just don’t learn, do you?
You might have thought my friend was pretty dumb. But history would prove that he’s smarter than the man who is now President of the United States. My friend only did it three times. Obama’s up to four and counting.
Because what did we have in 2010 but “recovery summer”???
Vice President Joe Biden today will kick off the Obama administration’s “Recovery Summer,” a six-week-long push designed to highlight the jobs accompanying a surge in stimulus-funded projects to improve highways, parks, drinking water and other public works.
David Axelrod, a senior adviser to the president, said: “This summer will be the most active Recovery Act season yet, with thousands of highly-visible road, bridge, water and other infrastructure projects breaking ground across the country, giving the American people a first-hand look at the Recovery Act in their own backyards and making it crystal clear what the cost would have been of doing nothing.”
Biden, President Barack Obama and other administration officials will travel to more than two dozen Recovery Act project sites in coming weeks. On Friday, the president will travel to Columbus, Ohio, to mark the groundbreaking of the 10,000th Recovery Act road project to get under way. The administration says the road improvement project in downtown Columbus is expected to create over 300 construction jobs, and will contribute to a broader economic development effort in the area around Nationwide Children’s Hospital. […]
“OUCH!!!”
Oh, come ON, Barry Hussein. Are we going to have to put a cork on your fork so you don’t stab out your other eye???
Okay, so last year we were at “wreckovery summer.” What now? I mean, what else can this fool possibly say?
Obama is a far more stupid and more foolish man than my friend will ever be.
The question is, just how stupid are YOU??? I hope not so much as to actually re-elect this complete moral idiot.
In August 2009, while Obama was still talking about his “green shoots,” we had this prediction:
Peter Schiff, Pres Euro Pacific Capital: “The recession might be coming to an end; the problem is the depression is just getting started.”
“Newsweek trumpets the recession is over. But it’s just a temporary ‘good time’ like the high you get if you do too much crack cocaine; with the stimulus being an artificial stimulant that gets us deeper and deeper into debt. Remember the problem was we took on too much debt; well, now we have even more debt than when the recession began.”
OUCH!!!
Only this one is YOUR hand on the boiling hot radiator of an economy in meltdown …
We need to balance our insane budget deficit, Democrats say. And it’s time the rich paid their fair share.
All the top 10% of earners paid is 73 percent of the income taxes collected by the federal government. That’s nothing. It’s those poor poor who suffer the most. The bottom 50% have to pay a whole bunch of nothing. It’s just brutal for them every April. They want to write a check to the government, but only the rich get to do stuff like that. And the bottom 40% are so screwed by our federal income tax system that they actually are forced to accept free money in addition to paying a whole bunch of nothing. Unless the Associated Press is lying about it.
Nothing makes me more annoyed than the phrase “give the rich tax cuts.” Because it presumes that the government owns us and graciously allows us to keep some of what we earn. The way liberals understand things, they own all the means of production. They own my labor and whatever I earn from my labor. And I am lucky if the commissars allow me to keep enough to feed myself. It derives from a tenant of Marxism: “From each according to his ability, to each according to his need.” At the core is central planning; government stands above us, it stands above God (which is why consistent Marxists deny God exists and religion is merely an opiate of the masses), and government should redistribute everything according to its divine power.
That is the intrinsic logic of their view that allowing the rich or anyone else to keep more of their own money is considered a cost to the government. But it ISN’T a cost to the government to allow me to keep more of my own money; anymore than it is a cost to me to allow my next door neighbor to keep more of his own tools.
Obama gave an address in which he paid lip service to reducing spending – even though his budget that he released only TWO MONTHS AGO didn’t reduce any spending at all – and in fact stated that it would be dangerous to do so. Obama has no plans to cut spending; in fact, the deficit in just the first six months of this year shot up another 15.7%. Obama is going to do what he’s been doing since he started running for president; he’s going to offer meaningless rhetorical platitudes about cutting spending and reducing costs, while demonizing the rich and demanding that the ONLY people who pay REALLY START TO PAY.
We don’t know exactly what Barack Obama is going to say when he fires up his teleprompters at George Washington University tomorrow. The color, we do know, however: it’s red, as in “red ink,” what Mitch Daniels at his speech at CPAC earlier this year called “the new red menace.” (I like to think that the invocation of the old “red menace,” the Communist, socialist one, was deliberate: it is, I would argue, apt.)
The substance of the speech, as ABC notes, is “closely held.” Everybody thinks that there will be at least pro forma acknowledgement that spending on such programs as Medicare and Social Security needs to be reined in. But the big O will also return to one of his favorite themes, a by-word from his 2008 campaign: “increased taxes on the wealthy” (that’s according to “White House officials”).
Here’s my bet: the operative word in Obama’s speech tomorrow night, the mantra that will be repeated endlessly not only by O but also by the left-wing commentariat, is “fairness.” You remember his campaign shtick: the Saddleback Church event, for example, when Rick Warren asked candidates John McCain and B.O. about taxes. “Define rich,” he asked. McCain tossed out an income of $5 million, which elicited derision. But the gravamen of his response came in the elaboration: “I don’t want to take any money from the rich. I want everybody to get rich.”
How different was B.O.’s response: What he was looking for, he said, was “a sense of balance, and fairness in our tax code. It is time for folks like me who make more than $250,000 to pay our fair share.”
“Our fair share.” That, as I noted at the time, is B.O.’s refrain. “[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.” It’s a small step from the invocation of “our fair share” to Obama’s call for a tax on “the windfall profits of oil companies,” a tax increase on capitals gains, elimination of the tax on Social Security tax, etc., etc.
The crucial point here is that what Obama is interested in is not increasing revenue but in promulgating redistributionist policies that make it harder for people to prosper economically. William McGurn, writing in The Wall Street Journal back then, recalled Obama’s response to ABC’s Charlie Gibson when Gibson observed that raising taxes led to decreased revenues: “Well, Charlie,” Obama replied, “what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”
“For purposes of fairness”: that means, “for purposes of economic egalitarianism.”
McGurn observed:
[I]t doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.
Now there are good reasons Mr. Obama is not likely to pursue the revenue side of the fairness question. As this newspaper noted in a recent editorial, the latest data from the Internal Revenue Service does not show to Mr. Obama’s advantage. As we come to the end of the Bush administration, the top 1% of American taxpayers already pay 40% of all income taxes — the highest level in 40 years. The top 10% of income earners pay 71% of the taxes.
The bottom line is that when Obama invokes “fairness,” he wants us to feel guilty about economic success. This is the secret of his appeal to the socialistically inclined.
It worked in 2008. Let’s see how it goes down tomorrow. Over the last two years, Barack Obama has presided over an economic Armageddon. Everyone knows about that $14 trillion that is the federal debt. Few people, I suspect, really appreciate what that unimaginable figure represents. And the kicker is, $14 trillion is only a tithe of the trouble. As Kevin Williamson and others have pointed out, the country’s real debt, when you facotr in state indebtedness and unfunded so-called “entitlement” liabilities, is closer to $130 trillion. That horror-movie figure is just too awful to contemplate, so I will draw a veil.
[…]
For the record, I wrote an article entitled, “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues,” in which I documented that every single time the United States has reduced the income tax rate, federal revenues have gone up. I go back to Warren Harding to document that. I include John F. Kennedy, Ronald Reagan, and George Bush – who increased federal revenues by lowering tax rates.
But this recurring documented fact of U.S. history is tantamount to rocket science to liberals. Because they adhere to the entirely unrealistic premise that if I were to double your taxes, I would collect double the revenue, because people wouldn’t react to the tax increase by altering their behavior.
Recent developments give me a crystal clear example of why liberals couldn’t be more wrong:
Americans are taking rising gas prices seriously. They’re already driving less, “reversing what had been a steady increase in demand for fuel,” the Associated Press writes. “For five weeks in a row, they have bought less gas than they did a year ago.”
The average price of gas is an obvious indicator of why national fuel consumption is dropping. At the end of March, AAA reported that gas reached an average of $3.60 nationally. Today, AAA says the national average is $3.79 for regular grade, a 29 cent jump in about two weeks. Business Week reports that many analysts forecast that these numbers will worsen, and expect that consumers could pay as much as $5 a gallon this year due to political unrest in North Africa and the Middle East, which supply much of the United States’ oil. The $5 per gallon speculation has been floating around the industry for some time, but last year, CNN stated that former president of Shell Oil, John Hofmeister predicted that Americans could pay $5 a gallon by 2012. Analysts have bumped that date up.
“Drivers are already reacting to the change,” writes Kicking Tires. “In the first week of April, consumption was down 3.6%, or 2.4 million gallons of gasoline,” based on data from MasterCard Spending Pulse.
One of the best ways to combat rising gas prices is to drive less, but there are other simple things you can do. […]
Even uneducated, ignorant and frankly stupid people understand this incredibly basic concept: cost goes up, activity goes down. And yet you have liberals with PhDs staffing agencies such as the Congressional Budget Office utterly fail to understand that if they make taxes go up, they will end up with reactions that will invariably produce less revenue for the government.
If even high-school dropouts understand that if the price of gasoline goes up, they need to drive less, how is it that brilliant businessmen won’t realize that if their tax rates go up, they need to protect their money?
Here’s another analogy that might be spot on the money. Suppose your going to work and a mugger jumps you and takes all your money. As he’s walking off, counting your (well, his now) cash, he says, “I hope you’ve got as much dough tomorrow, because I’m going to mug you again.” Now, if you’re smart, you won’t be happening by that way at all the next day. But if you’ve absolutely got to go that way to get to work, will you have as much money that next day? Not if you’ve got a single functioning brain cell. On my analogy, if you figure out some other way to get to work, that’s tax avoidance. If you stash your cash somewhere so you don’t have it for the robber to take, that’s tax sheltering. And if you’re too stupid to understand that this is what people do when their taxes go up, that’s liberalism.
The more taxes increase, the more activities that were previously not worth doing – such as sheltering assets, moving assets overseas, investing in collectibles, purchasing tax-exempt investment vehicles, or just dodging taxes – become worth doing.
And so,what happens every single time happens yet again. Raise taxes expecting more revenue, get less revenue, and hurt the economy in the process by penalizing productivity and investment risk and thereby restricting growth. And when you encourage growth by reducing the tax burden and allowing people to keep what they earn, lo and behold, cetaris parabis, there is a surge in activity, an increase in economic growth and a corresponding increase in federal tax revenue.
I say “cetaris parabis” because if you throw in a socialist Fannie Mae and Freddie Mac that undermine something as vital as our housing mortgage market by imposing morally and fiscally insane policies until the system comes crashing down, such as what occurred leading up the crash in 2008, the best tax rates in the world can’t save the system.
Here are just a few articles I wrote on that subject, in order of date written with the earliest listed first:
We need to have intelligent economic policies. If we don’t have such policies, we’re going to struggle regardless of our tax rates.
Quickly, another liberal policy that will not even possibly work is the Federal Reserve QE2 (that’s the second shot at quantitative easing) that artificially reduces interest rates by artificially increasing the money supply in order to increase lending.
Here’s the problem with that. Short term, it might seem to work. The stock market looks at the apparent backstopping of our economy and follows the leader (Uncle Sam) up until the ship starts to sink. After which they will sell, sell, sell. But the ship ALWAYS sinks. Why? Because you have a lot more dollars chasing after the same supply of finite goods and services (if anything, in the last few years, we have a LOWER supply of finite goods and services). So what happens? More dollars chasing less stuff. That’s inflation. It will INVARIABLY require more devalued dollars to buy the same things. The more you inflate the money supply, the worse that inflation gets. And we have massively increased our money supply.
An increase in the money supply is rather like an overdose of drugs. And in this case the effect of the overdose will be hyperinflation. Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate. Why? Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued. There’s simply no way it can’t be. If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire. The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems. If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency. And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins. Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.
And let me point out that we’re looking at huge inflation now – even as Obama declares victory over the recession – in insanely rising gas prices, food prices, clothes prices, all prices:
This phenomenon is going on all over the world because most of the world is tied to the U.S. dollar – the currency that Obama has been poisoning hoping for short-term political gains.
And, again, a temporary extension of the Bush tax cuts (which doesn’t help businesses and individuals who are desperately searching for consistency so they can predict their costs) is not going to help us out of this kind of moral and fiscal insanity.
But what we are going to see is Obama now demagoguing all the massive economic failure that his own policies are responsible for creating in the first place to demand that the rich “pay their fair share.”
Under Barry Husseins’ pathetic failure of leadership, 24% of Americans believe that the recession will last 2 years. And another 51% believe that it will last MORE than two years. Given the fact that Obama will only be president for another two years, and given the fact that Obama was elected to fix the economy, what we basically have is a statement from 75% of Americans that Obama will be a completely failed president.
Here’s another one, and allow me to quote from below:
Only 13 percent of Americans say Mr. Obama’s economic programs, among them the stimulus package, have helped them personally. Twenty-three percent say they have hurt, while 63 percent say they have had no effect.
Now, understand: the stimulus is officially $862 billion, but it’s actual cost according to the Congressional Budget Office will be $3.27 TRILLION. And 87% of the American people say that this beyond supermassive sum of money which will burden our children for decades either had no effect at all or actually HURT them.
Now, this $3.27 trillion will surely ultimately be ripped out of the hide of the US economy. It’s only a matter of time. An increase in the money supply is rather like an overdose of drugs. And in this case the effect of the overdose will be hyperinflation. Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate. Why? Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued. There’s simply no way it can’t be. If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire. The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems. If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency. And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins. Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.
That said, there is solid evidence that the stimulus actually HURT THE ECONOMY AND EMPLOYMENT IN THE RIGHT-HERE-AND-NOW by sucking money out of the private sector where it would have been put to good use and instead funneling it through the government were it was pissed away on political boondoggles and bureaucratic inefficiencies. The evidence is clear: the governments that did not pass huge stimulus packages have fared much better than those like the US which did.
A further fact in our economic and political collapse is that Obama is creating a permanent elite class of government bureaucrats. USA Today found that “At a time when workers’ pay and benefits have stagnated, federal employees’ average compensation has grown to more than double what private sector workers earn.” Obama has massively expanded government, even as the the real pie for everyone (the economy) has been shrinking. Since government workers don’t actually create wealth, but merely live off the taxes paid by those who create wealth, and since there are more and more government workers and fewer and fewer private sector workers, we’re heading for a real problem. Again, “paradoxically” is a good word, as paradoxically Obama is creating a ruling class over the people who consume the peoples’ wealth in the name of helping the people.
And all of the above contributes to why Gerald Celente says America is about to experience what he calls “the Greatest Depression.”
CBS News Poll analysis by the CBS News Polling Unit: Sarah Dutton, Jennifer De Pinto, Fred Backus and Anthony Salvanto.
(Credit: CBS)
A majority of Americans have a negative impression of the economy and expect the effects of the recession to linger for years, according to a new CBS News poll.
Most also say President Obama has spent too little time on the economy, which Americans cite as the country’s most important problem by a wide margin.
Three in four Americans now say the effects of the recession will last another two years or more. More than eight in 10 say the condition of the economy is bad, up five points from last month.
Just 25 percent of Americans say the economy is getting better – down from 41 percent in April. About half say it is staying the same, and the remaining quarter say it is getting worse.
More than half of Americans – 52 percent – say Mr. Obama has spent too little time dealing with the economy.
And with unemployment near 10 percent, the economy is their priority: Thirty-eight percent volunteer it as the country’s most important problem. That far outpaces the percentage that cited the wars in Iraq or Afghanistan (seven percent), health care (six percent), the deficit (five percent), and the oil spill in the Gulf (five percent).
The county’s most important economic problem, Americans say, is jobs, volunteered by 38 percent of respondents. Coming in a distant second was the national debt, the deficit and spending, cited by 10 percent in the poll, which was conducted between July 9th and 12th.
Just 27 percent of Americans say their local job market is good. Seventy-one percent call it bad. Nearly one in four expect their household finances to get worse over the next year, twice the percentage that expects their finances to improve.
Only 13 percent of Americans say Mr. Obama’s economic programs, among them the stimulus package, have helped them personally. Twenty-three percent say they have hurt, while 63 percent say they have had no effect.
Twenty-three percent say the stimulus package made the economy better – down from 32 percent in April and 36 percent last September. Eighteen percent say the stimulus package damaged the economy, while 56 percent say it had no effect.
The president’s job approval rating on the economy now stands at 40 percent – a drop of five points from last month. Fifty-four percent disapprove of his handling of the issue.
In general, Americans see Mr. Obama as spending too little time on the economy and the oil spill in the Gulf, and too much time on health care: Thirty-nine percent say he has spent too much time on the issue, while 24 percent say he spent too little time.
Americans do believe the president takes decisive action, with two and three suggesting he does. But more than half (53 percent) say he is not tough enough in his approach.
Americans are evenly split, meanwhile, on whether the president shares their priorities. Two in three believe he cares at least to some degree about people like them.
The president’s overall approval rating now stands at 44 percent, matching his disapproval rating. It stood at 47 percent last month.
The Issues: Economic Priorities
Most Americans – 53 percent – say the best way to get the economy moving is to cut taxes. Thirty-seven percent instead choose government spending on job creation.
Americans are split about how the federal government should spend its money: Forty-six percent say the priority should be spending to create jobs, and 47 percent want to put the focus on deficit reduction.
More than half want Congress to extend unemployment benefits now, a Democratic priority that has been blocked by Congressional Republicans.
More than half say states should be allowed to pass illegal immigration laws, while 42 percent say only the federal government should have that power.
Americans are somewhat split on the impact of illegal immigrants: 42 percent say they take jobs away from Americans, while more – 50 percent – say they take jobs Americans don’t want.
Americans are roughly evenly split on whether BP will stop the flow of oil in the Gulf of Mexico by the end of the summer. Most (58 percent) are not confident that the company will fairly compensate those affected by the spill.
Wall Street Reform:
With Democrats poised to pass sweeping reforms of Wall Street this week, a majority (57 percent) say bank regulations should be increased.
In Iraq, 55 percent say things are going well, while 28 percent say things are going badly.
Most Americans favor a timetable for withdrawing troops from Afghanistan. Fifty-four percent back a timetable, while 41 percent oppose one. Mr. Obama has said the United States will start removing troops from the country in July of next year, but only if conditions on the ground permit.
Elena Kagan:
Most Americans can’t say whether Supreme Court nominee Elena Kagan should be confirmed. Among those who have an opinion, 21 percent say yes and 19 percent say no. Less than half say they are closely following news about her nomination.
The Long Run:
Despite their concerns about the economy, Americans do not believe their country is on the decline. Fifty-nine percent expect things to get better in the long run, while 36 percent say America’s best days have passed.
This poll was conducted among a random sample of 966 adults nationwide, interviewed by telephone July 9-12, 2010. Phone numbers were dialed from random digit dial samples of both standard land-line and cell phones. The error due to sampling for results based on the entire sample could be plus or minus three percentage points. The error for subgroups is higher.
This poll release conforms to the Standards of Disclosure of the National Council on Public Polls.
The layoffs add to growing fears that the economic recovery is slowing and the countrycould slip back into a recession.
There’s your double-dip recession for you. And that recession belongs entirely to Obama and the Democrat Party, which are leading us toward complete ruination.
And Americans now trust Republicans more than Democrats on ALL TEN of the most important issues facing the country, according to the lastest Rasmussen survey:
If all of this doesn’t represent a massive failure of leadership, precipitating a failure of trust which itself creates massive economic suffering, please tell me how it isn’t.
From the King Hussein Version, Genesis of America’s Demise, chapter 2:
“Thus the economy and American foreign policy were finished, and all the host of them. And on the seventh vacation The One temporarily paused his destruction which he had made; and he rested on the seventh day from all his destruction which he had made.”
President Obama rebuffed reporters’ attempts to ask about Afghanistan today, focusing instead on what he described as his administration’s biggest challenge: Jobs.
“I will not rest until businesses are investing again and businesses are hiring again and people have work again,” Obama said after meeting with his Cabinet.
That’s an interesting headline compared to this one from today as Obama stretches his scrawny body at Martha’s Vineyard:
WASHINGTON – Employers appear to be laying off workers again as the economic recovery weakens. The number of people applying for unemployment benefits reached the half-million mark last week for the first time since November.
It was the third straight week that first-time jobless claims rose. The upward trend suggests the private sector may report a net loss of jobs in August for the first time this year.
Initial claims rose by 12,000 last week to 500,000, the Labor Department said Thursday.
Construction firms are letting go of more workers as the housing sector slumps and federal stimulus spending on public works projects winds down. State and local governments are also cutting jobs to close large budget gaps.
The layoffs add to growing fears that the economic recovery is slowing and the country could slip back into a recession.
Obama might argue that he’s really, really, really tired for not resting a single night the last two years while he has utterly failed to live up to any of his incredibly cynical promises. Which paradoxically means he needs all those vacations to rest from all of his not resting.
The Federal Reserve acknowledged Tuesday that its confidence in the economic recovery had dimmed, and it announced that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities, The New York Times’s Sewell Chan reports from Washington.
Bu bu but I thought Barry Messiah said this would be the summer of economic recovery. I thought Barry Hussein had kissed the economy with his beatific wonderfulness and made it all better.
The fourth paragraph in the Slimes article underscores the fact that the Keystone cops of the Obama administration have absolutely no idea what they’re doing:
The Fed’s new stance marked the completion of a turnabout from a few months ago, when officials were discussing when and how to eventually raise interest rates and gradually shrink the $2.3 trillion balance sheet the Fed amassed through its response to the 2008 financial crisis.
Wednesday, Federal Reserve Chairman Ben Bernanke warned Congress that the Federal Reserve does not plan to “print money” to help Congress finance the exploding U.S. national debt. In fact, Bernanke told Congress that the U.S. could soon face a debt crisis as bad as the one in Greece if the U.S. government does not get things in order financially. This represents a fundamental change in policy for the Federal Reserve, because they have been enabling the massive borrowing by the U.S. government over the past couple of years by “buying” the majority of new U.S. government debt that has been issued. But now the fat cats over at the Federal Reserve have apparently changed their minds. Using uncharacteristic bluntness, Bernanke told Congress that the Federal Reserve is “not going to monetize the debt”.So why is the Federal Reserve changing course?
Well, have no fear: the Federal Reserve is Re-changing course. Like a boomerang that comes back around to smack an ignorant fool right in the head. Perhaps they have come to realize that the U.S. economy is about to flush down the drain and plunge into a deep, dark hole, and they figure the fall might be softer if we land on giant piles of worthless currency.
Yes we’ll monetize the debt. Oh no we won’t. Oh yes we will. Stop arguing with me! But I am you!
I thought the following was a good article due to its provision of a historic context for today’s Fed decision:
The Federal Reserve, in announcing the results of this week’s meeting of the Open Market Committee, surprised the market by revealing it will begin purchasing US Treasury notes and bonds with the principal income it receives from its vast holdings of Fannie Mae and Freddie Mac mortgage securities. This practice – wherein the Fed buys up US government securities and injects cash into the public market as payment for these securities – is a form of monetizing the debt. The last time the Fed did this on a big scale was back in the 1960s when it attempted to mop up the excess Treasury securities that were flooding the market as a result of Lyndon Johnson’s efforts to finance the Vietnam War. That Fed program was viewed at the time as a failure, since the cash the Fed put back into the economy in exchange for the securities was a big reason – perhaps the major reason – why price inflation accelerated from the late 1960s until a decade later, when Paul Volcker managed to squelch inflation once and for all with forbiddingly high interest rates.
The market was expecting some sort of monetary stimulus, but not this. The expectation was that the Fed would renew its “quantitative easing” program involving Fannie Mae and Freddie Mac securities – a program designed to push down long term mortgage rates. That program was successful inasmuch as mortgage rates are at record lows, but it left the Fed with well over a trillion dollars of these securities on its balance sheet. Fed officials have lately been pondering publicly how to get rid of these securities, and apparently have concluded they can’t under present market conditions without forcing mortgage rates back up again, which would only hurt the housing market. Instead, these officials have concluded that the Fed has no choice but to hold on to these securities until they mature, which is well over 10 years from now for the portfolio.
The Fed receives billions of dollars of principal and interest payments every year on this portfolio, and what to do with this cash has always been open for discussion until now. But using principal proceeds from these securities to monetize the government debt is fraught with risk. For one, should the housing market start to weaken again and foreclosures rise from current levels, the Fed will be sitting on billions of dollars of credit losses on its portfolio. This could eat up most if not all of the profit it would otherwise earn on this portfolio. Second, older investors have memories of the nasty inflationary consequences the last time the Fed monetized the debt, and the market has become very skittish about the risk of inflation, and maybe even hyperinflation ala Weimar Germany, that could result from the enormous fiscal and monetary stimulus put into the economy since 2007.
In terms of these risks, the best thing the Fed has going for it at the moment is that the pricing problem facing the current economy is not inflation, but deflation. A growing number of economists, and even some Fed governors, are worrying outright about deflation, but at least in a deflationary environment the Fed is given a lot more leeway to monetize the debt and build up its balance sheet as a consequence. The Fed press release today did not mention deflation per se, but the FOMC no longer described the economy as “progressing”, as it did in June. Instead, the Fed sees an economy with substantial slack, a stagnant housing market, repressed earnings power for workers, and very low inflation.
The bond market was happy to buy Treasuries on this news, concentrating in the 2 to 10 year maturities, in anticipation of higher prices (and thus lower yields) once the Fed begins actively purchasing. So far, in other words, the bond market sees no risk of inflation, much less hyperinflation, and is content to see yields continue to head to record low levels. Such excessively low yields on government bonds have only been seen in deflationary economies like Japan has experienced for nearly two decades. This is in essence what the bond market is forecasting for the US economy.
The stock market, which has been on a tear since early July, took this news in stride, but time and past experience is weighing heavily on this stock rally. When bond yields fall to record lows, this has never boded well for equities. In a deflationary economy, stock prices are one of the main victims, and the US stock markets have so far shown no significant adjustment downwards to reflect deflation. Stocks may have some serious “catching up” to do.
At the least, we can say we are no longer in that environment in the spring when Fed governors were talking seriously about how they were going to remove all their monetary stimulus now that the economy has recovered. Instead, we are witnessing yet another round of monetary stimulus, a recognition by the Fed that their previous efforts have failed to ignite a sustainable recovery.
All this from the Federal Reserve, an entity that is neither “federal” nor a “reserve.” It is a private bank that issues currency based on fiat of delegated institutional power. And what it is doing now is akin to photocopying a dollar bill to pay a credit card bill. Another analogy would be if you were facing bankruptcy, and decided to start buying your own furniture from yourself.
Mind you, this is only partly the Federal Reserve’s fault. They are in an impossible position as the Failure-in-Chief continues a path of spending America into collapse, and they have to figure out how to finance Obama’s addiction.
The Obama administration alternately fearmongered and promised that if the stimulus was passed that unemployment would not rise above 8%. They lied. The rate has been dropping from an earlier high exceeding 10% only because discouraged workers who give up are paradoxically dropped off the roles and aren’t counted. Then they spent months creating pure fictions such as “created or saved” as “evidence” that Obama’s failed policy had succeeded.
To quote:
“One can search economic textbooks forever without finding a concept called `jobs saved.’ It doesn’t exist for good reason…” – Allan Meltzer, professor of political economy
“There is no way to measure how many jobs are saved.” – Harvard economics Professor Gregory Mankiw
Then Obama spent months telling us that the economy was recovering when it really wasn’t, culminating in his bogus “summer of economic recovery.”
This is an administration that falsely takes credit for a false recovery even as they falsely blame Bush and refuse to accept responsibility for their own policies. It’s “win, we win, lose, Bush loses.”
These people should have zero-point-zero-zero credibility.
(Credit: CBS)
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