04/17/2017

Shovel Ready: How The Fed Makes Us Dig Our Own Graves

The Daily Bell

I just read an article from what the mainstream considers a reputable source of news, the New York Times. The article talked all about monetary policy and didn’t say a thing about the real world.

Because the Federal Reserve is not operating in the real world. They are operating in a world of currency manipulation that they pass off as saving the economy. They act like they are guardians of the dollar when in fact they are just bandits for the government.

What the fed does to “cure” a bad economy is cut interest rates, which continues to make borrowing money easy. The money is there, but the actual value behind those dollars is not–that’s why the economy turned down in the first place. And that is what creates bubbles: when people keep spending easy-to-acquire money, even though tangible goods and services of value do not match how easy it is to get money.

So now the fed is basically stuck at a near zero interest rate when you adjust for inflation.

Right now, for instance, the central bank’s main short-term rate, the federal funds rate, is still only three-quarters of a percent to 1 percent, because the Fed wants to continue stimulating the recovery. This leaves the central bank with very little room to respond if the economy falters. Even a minor slowdown now could require a larger rate cut than is feasible, once again leaving policy makers wishing they could do more.

This dynamic can feed on itself. The less ammunition the Fed has to blast the economy out of its malaise, the weaker and slower will be the recovery, making it more likely that the next bad shock will require the Fed to cut rates more than is feasible.

Wait, you mean, they were just kicking the can down the road all along? And now they have reached the end of their ability to manipulate the economy without dire results? So all the little economic downturns they “helped avert” have really just been bundled up into one big giant bubble ready to burst and rain down, destroying the economy on impact.

It’s okay though, the government as always has the solution, and the New York Times is here to tell us what that solution is.

Perhaps the answer lies outside the Fed. It may be time to revive a more active role for fiscal policy — government spending and taxation — so that the government fills in for the missing stimulus when the Fed can’t cut rates any longer. Given political realities, this may be best achieved by building in stronger automatic stabilizers, mechanisms to increase spending in bad times, without requiring Congressional action.

Yes! So simple! They just have to spend more and tax more. And to avoid all this Constitutional-Congressional-approval-for-spending mumbo jumbo we can just make it automatic!

Read full article



You May Also Like:

Black Police Officer On NFL Protest: "Now I Have Had Enough" [Watch] Brandon Tatum, YouTube

Ted Cruz Just Stuck A Fork In The Graham-Cassidy ObamaCare Repeal/Replace Bill streiff, RedState

ObamaCare’s Tax On The Poor The Wall Street Journal

How Obama Is Funding The Anti-Trump Resistance Paul Sperry, New York Post

John McCain: Obamacare Savior Guy Benson, Townhall

NFL Picked Sides In The Culture War, Now It Has To Live With The Consequences William A. Jacobson, Legal Insurrection

Trump Tells NFL Fans To Stop Going To Games 'Until Players Stop Disrespecting Our Flag & Country’ [Watch] Joseph Weber, Fox News

NFL Team Owner Shahid Khan Joins NFL's National Anthem Protests USA Today

It Was The Deep State That Colluded With The Russians, Not Trump Clarice Feldman, American Thinker

Theresa May Prepares To Leave The EU John O’Sullivan, National Review

Showdown Looms: FBI Misses Third Deadline To Turn Over Subpoenaed Trump Dossier Docs Byron York, Washington Examiner

Global Warming: Who Are The Deniers Now? Investor’s Business Daily

If Trade 'Deficits' Are Bad, Why Do Rich Countries Have Them? Allan Golombek, RealClearMarkets

Reminder: Obama Paid The NFL Millions To Be Patriotic Timothy Meads, Townhall

Can The Sugary Beverage Tax! John O. McGinnis, Library of Law and Liberty

California Legislature Demands Apology From Trump Casey Ryan, Daily Signal

NFL Issues Official Statement On Donald Trump Brian Thomas, Federalist Papers Project

Solar Panels Perfect Case Of Protectionism Costing More Jobs Than It Saves Jeffrey Dorfman, Forbes.com

What Did The Founders Think About Freedom Of Speech? Mike Sabo, American Greatness

For More go to the Home Page >>>

Search

SIGN OUR PETITION

FreeMarket Central

TELL CONGRESS: STOP THE POLITICS.

PASS A HEALTH CARE BILL THAT PUTS PATIENTS FIRST



Americans need a health care bill that serves needs of individuals—not those of Washington and big corporations.

 

Read more

Bookshelf

FreeMarket Central

Some titles recent, all recommended -

Special Video Feature

FreeMarket Central

Voices From The 2017 International Students For Liberty Conference

In Search Of History

When America Was Truly The Land Of Opportunity

For [early immigrants] America was truly the land of opportunity. For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. There were few government programs to turn to and nobody expected them. But also there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found, in fact, a free market, and most of them thrived on it. 

-- Milton Friedman,

Shadow Stats Snapshot


FreeMarket Central

ShadowStats alternate economic indicators are based on the methodology of noted economist John Williams, specialist in government economic reporting.

  • Unemployment:
    FreeMarket Central BLS: 4.44%
    FreeMarket Central Shadow Stats: 22.2%
  • Inflation:
    FreeMarket Central August Year-to-Year: 1.73% (CPI-U*)
    FreeMarket Central Shadow Stats: 9.4%

*[cpi-u is the Bureau of Labor Statistics inflation rate for all urban consumers]