Recently in Federal Reserve Category
I hope those who believe in fiscal responsibility and hope to leave a better country to their children will join me in utilizing the new and infinitely accurate term "Krugman Death Spiral" when referring to any country which spends beyond its means and subsequently spirals downward.
Obama Death Spiral works as well - or Reid or Pelosi - your call really. Continue Reading...
I am not a financial expert nor am I an economist – but considering they all have missed virtually every significant financial event from the dotcom bubble to the telecom bubble and the housing bubble let’s just say not being an economist or financial expert probably is a distinct advantage.
Having said this, I would like to discuss a few issues which need to be out in the open and discussed before the new Congress begins.
Bank runs are bad
Banks do not keep all of their assets in cash meaning if the majority of a bank’s customers decide to withdraw all of their money at the same time, the bank collapses. Think about it – they loan much of the money they have to others and don’t have access to it all. When one bank collapses there is a chance other investors will get spooked and create a cascade of bank failures. When not stopped, you have the potential for another Great Depression.
Bank runs are currently stoppable because governments can stop them
To date, bank runs have been stopped because governments around the world have been able to stop them by assuming the bad loans the banks have made.
Soon, global governments may not be able to stop the bank runs
With all the debt global governments have amassed, there is a possibility at some point that investors will start a global bank run meaning county after country will see their banks collapse because the confidence in the ability of a country to pay back its debt has plummeted.
Ireland may kick off a worldwide panic
If you follow financial news you may know much of Europe is in trouble because in general they work less hours than they should and produce far less than they need to in order to sustain the lifestyle they live. Continue Reading...
Consider that this month, 38% of the DC elites think the economy is headed in the right direction but only 26% of the general population believes this is the case.
The poll itself shows why the disconnect is taking place. We know that the Obama administration is responsible for the largest federal payroll in history so we would assume that government workers and those who feed off them are very happy. Moreover, the average government worker makes twice what the typical non-government worker makes. Continue Reading...
This portion of the article is most important:
President Obama was supposed to be announcing an important compromise, as he put it, on tax policy. Normally a president, having agreed with the opposition on something big, would go through certain expected motions. He would laud the specific virtues of the plan, show graciousness toward the negotiators on the other side—graciousness implies that you won—and refer respectfully to potential critics as people who'll surely come around once they are fully exposed to the deep merits of the plan.
Instead Mr. Obama said, essentially, that he hates the deal he just agreed to, hates the people he made the deal with, and hates even more the people who'll criticize it.
Ronald Reagan said the following during his inauguration - "You and I as individuals, by borrowing, can live beyond our means but for only a limited period of time. Why then should we think that collectively, as a nation, we're not bound by that same limitation?"
He continued, "We must act today, in order to preserve tomorrow. Continue Reading...
The more they receive without working - the less requirement there is to be productive.
Austin Hill details the fact that fewer Americans want to work - in part because of Obamacare - and this should scare the heck out of all of us. Not because "free" healthcare is evil but because an nation which is given increasing incentives to not work will get its clock cleaned by countries where the work ethic is greater.
We believe that if the US is to compete with developing countries - we need to explore what they do and we don't. In other words, what makes the US uncompetitive? Continue Reading...
The Federal Reserve under the leadership of Ben Bernanke is in the process of doing something called Quantitative Easing 2 or QE2 – which means they will print money and loan it back to the federal government by purchasing its bonds – basically the idea is they will print money and subsequently lessen its value and generate inflation.
In response to massive so-called stimulus spending and QE1, the US dollar is losing its value and will be able to purchase less. Please take a moment and read about the Weimar Republic so as to understand the gravity of the situation. In that case, the government printed so much money that the currency became worthless and was used as wallpaper.Continue Reading...