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Posts Tagged ‘federal reserve’

U.S. Fed Raises Rates For First Time In Nine Years – -Federal Reserve Ends Zero-Interest Rate Policy

December 17th, 2015 Comments off

With the announcement by the Federal Reserve that it is raising its interest rate by 25 basis points, a policy of virtual zero-interest rates maintained by America’s central bank–and imitated by other central banks worldwide since the global economic and financial crises that arose in 2008–has officially come to an end. The minor rate increase of 0.25 percent is the first time since 2006 that the Fed has upped its benchmark interest rate.

The end of the extraordinary and long-lasting  monetary easing aggressively maintained by the Fed for nine-years thus  comes to an end, the justification being that the policy “worked,” the evidence being a very minor rise on forecasted future GDP growth prospects for the American economy. The decision by the Fed to raise its interest rate has supposedly been priced in by the equity markets for probably the last two years, at least. Nevertheless, the continued weakness in the global economy may provide a lesson in how fragile it really is, once the monetary pump-priming of zero-interest  rates is gone.

 

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Sheldon Filger's photo.

Fed Chair Yellen Muses Rate Increase

March 28th, 2015 Comments off

After a decade and a half of very low interests rates–and virtually zero interest rates since the onset of the global economic crisis in 2008, the U.S. Federal Reserve is increasing the rhetoric regarding what everyone knows is inevitable: rate increases.  The most recent comments by the Fed chair, Janet Yellen, point in that direction.

Yellen couched her words carefully, hinting that the rate increases will be slow and gradual, occurring in small increments over a period of several years. But the message is clear; monetary chicanery has run its course as an economic palliative. The distortions in the economy created by artificially low interest rates cannot be sustained forever.  The problem is, what bullets will be left to policymakers when the next recession strikes?

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

The U.S. National Debt: Can The Federal Reserve Perform Fiscal Alchemy Forever?

May 23rd, 2014 Comments off

In the year 2000, as George W. Bush assumed the role of 43rd president of the United States, America’s national debt stood at $ 5.7 trillion, while the annual GDP was $10.7 trillion. Now, fourteen years later, with the U.S. GDP standing at $16.2 trillion, the gross national debt exceeds $17.5 trillion. The numbers are so massive, they numb our consciousness and render America’s fiscal reality incomprehensible. Thus explains the lack of public arousal over the size of the country’s federal government debt. What cannot be understood-or explained- is deemed irrelevant to the public at large. After all, what impact could the nation’s archaic fiscal bookkeeping have in the lives of the average citizen?

History, however, teaches a very different lesson. The historical record on the rise and fall of major powers reveals more often than not that the sovereign’s fiscal insolvency is more likely to lead to its demise than military defeat. Witness the break-up of the Soviet Union, and the British and French empires in the last half of the twentieth century.

A look at the statistics of the U.S. national debt tells a story of fiscal nirvana. Between  2000 and 2014 America’s GDP grew, in nominal terms, by 51 percent. In that same period, the national debt increased by more than 200 percent.  In other words, during the past decade and a half, the U.S. national debt has grown at four times the rate of its national economy. This would appear to be an unsustainable expansion of the national debt, yet there appears to be no obvious signs of economic or financial crisis afflicting the nation, despite the clear fiscal trajectory.

Appearances are deceiving, owing to a unique institution, the Federal Reserve, and equally unique status of the American dollar as the  global reserve currency. The unprecedented interventions  enacted by the Federal Reserve since the onset of the global financial and economic crisis in 2008, including quantitative easing and debt monetization, have had the effect of artificially depressing interest rates the U.S. Treasury pays on its debt instruments. At times, America’s bonds have sold widely on the global debt market, despite paying near zero interest rates. To put this monetary and fiscal alchemy into perspective, in 2000 the U.S. made $362 billion in interest payments; the figure for 2013 was $415 billion, despite the national debt that year being three times larger than in 2000. Factoring in the growth in the federal budget over that same period, the proportion of federal outlays devoted to debt servicing costs in 2013 was actually significantly lower than was the case in 2000.

What this all means is that the United States has no fiscal problem, as long as the Federal Reserve can maintain artificially low interest rates in perpetuity. Failing that, when interest rates return to normal levels, America’s fiscal reality will become mathematically unsustainable, leading to a profound budgetary crisis. When that happens cannot be predicted, but it is a matter of metaphysical certainty that it will, and when that dreaded day occurs, it will be beyond the capacity of Washington’s policymakers, including the Federal Reserve, to conjure up a solution devoid of pain.

 
 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

 

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

 

U.S. Economic Crisis Remains A Job Crisis

May 7th, 2014 Comments off

About four years into the supposed end of the Great Recession,  the proclaimed recovery of the U.S. economy remains one that is largely jobless, as well as being artificially goosed and propped up by massive bouts of monetary stimulus, known as quantitative easing, by the Federal Reserve. Thus, the April jobs report has been heralded as great news by pundits, claiming that the American economy that month created 288,000 net new jobs, and that the official unemployment rate has declined to 6.3 percent. Sounds like good economic news-but not so fast.

The economics correspondent for the British newspaper The Telegraph, Ambrose Evans-Pritchard, has waded into the details of official employment and workplace participation statistics in the United States, and found that in fact the non-farm workforce in the U.S. actually declined by 806,00 in April and overall labor participation in the U.S. has declined to a miserable 62.8 percent of the population. Thus, it is able-bodied men and women who have left the labor force due to discouragement that has driven down the unemployment rate, and not new job creation. The U.S. economy, which officially grew by a measly 0.1 percent in the last quarter (essentially no-growth),  is still dependent on massive monetary stimulus and large government deficits. Meanwhile, monetary stimulus is losing its economic punch, while distorting the economy through the creation of massive asset bubbles. The Fed recognizes this, and is well into its tapering back of quantitative easing.

From every perspective, the American economy does not look nearly as good as it is being described in official circles, and ditto for much of the rest of the world, still mired in the great global economic crisis.

 

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

 

 

 

Excellent Critique Of U.S. Federal Reserve And Ben Bernanke By Israeli Economist Dr. Yishai Ashlag

September 24th, 2013 Comments off

Those who regularly read my blog, either on the GlobalEconomciCrisis.com website or my blogs pieces that are published in the Huffington Post, know that to say I am a critique of Ben Bernanke and his loose monetary policies at the U.S. Federal Reserve is an understatement.  Though most mainstream economists believe that Bernanke is a hero of the global economic crisis, a supposed savior from liquidity doom, there are a few excellent economists who from time to time offer incisive critiques on the Fed’s policies under Ben Bernanke.

Recently, I read an outstanding opinion piece on the madness of Ben Bernanke’s policies, and why it is bad for  other countries, including his own, to march in lock-step with the Fed’s easy money policies. Dr. Yishai Ashlag, an economist who writes for Israel’s leading business publication, “Globes,” has a piece entitled, “Interest rates should be raised not cut.” According to Ashlag’s take on Ben Bernanke,  “his policies are bad for the U.S. and bad for the world.” His explanation is well worth reading; here is the link to Dr. Ashlag’s piece on the “Globes” website:

http://www.globes.co.il/serveen/globes/docview.asp?did=1000880933&fid=4111

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

Hillary Clinton Nude

HILLARY CLINTON NUDE

Hillary Clinton Nude

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Streetgo in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

U.S. Economy Growth Is Tepid

August 1st, 2013 Comments off

The U.S. Commerce Department released Q2  results that indicate that, at an annualized rate, the American economy grew at 1.7 percent. And Wall Street and its coterie of experts are ecstatic. Why, I may ask? Because that number supposedly beat the predictions of those same experts, and exceeded that Q1 number, which reflected annual growth of the U.S. GDP at 1.1 percent.

Let’s hold our horses before uncorking the champagne bottles. By any standard, 1.7 percent annual GDP growth is tepid, and it is downright atrocious when one considered the massive fiscal and monetary stimulus being poured into the U.S. economy by the politicians and the Federal Reserve, care of Fed Chairman Ben Bernanke’s quantitative easing and purchases of U.S. securities at the rate of 85 billion dollars per month, facilitated through the Federal Reserve’s printing press.

In addition to the above facts, the comparison with Q1 is misleading. Yes, 1.7 percent looks better than 1.1 percent. But let us recall that the 1.1 percent figure is a corrected number; the original Commerce Department report on Q1 was annual GDP growth of 1.8 percent.  Who can be certain that the Q2 number will not at some point be corrected downward, just as with the Q1 report?

All in all, despite the celebratory hype, I find nothing to cheer about in the report, and find the meager growth figure a pathetic end product derived from unprecedented fiscal deficits and Federal Reserve money printing.

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

Hillary Clinton Nude

HILLARY CLINTON NUDE

Hillary Clinton Nude

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Streetgo in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.
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The Dow Jones At 14,000: Party Before The Storm?

February 7th, 2013 Comments off

With the Dow Jones having reached 14,000, it can be said that the worst losses on the index since 2008 have been made whole. But does that mean the global economic crisis is over? Hardly, as what we are seeing on Wall Street is totally unconnected to the real economy, American or global, as most economists and experts realize. The Dow Jones rally is a product of financial engineering, as opaque as any mortgage backed security, courtesy of the U.S. Federal Reserve and its chairman, Ben Bernanke.

While the rally on Wall Street has been occurring, unemployment in virtually every advanced economy, including America, has remained at historically high levels, despite unprecedented deficit spending  by governments. With austerity now replacing stimulus as the mantra of policymakers in the United States and Europe, there is no realistic likelihood for any meaningful reduction in the unemployment rate in the U.S., Eurozone and U.K.  in 2013. Currency wars are being waged by desperate governments, as economic strife leads to political unrest and instability, and geopolitical tensions threaten to blow up what remains of an anemic global economic recovery at anytime during the next twelve months. Yet, despite  the dire straits and fragility of the real economy, central bankers worldwide, but especially the Federal Reserve in the United States, have succeeded in raising equity valuations with all the deft  cunning of a snake charmer.

By design, the Fed, spooked over a moribund economy that is saturated with  sovereign debt and enfeebled by incompetent policymakers, has deployed monetary policy for one purpose; to create the mother of all asset bubbles, right on Wall Street.  Fed  Chairman Bernanke has imposed an essentially zero interest rate policy, or ZIRP, for what seems an eternity, with the objective of punishing savers and fixed income investors, and forcing them to plow their money into equities in search of any yield above real inflation, irrespective of risk factors.

The brokers on Wall Street are obviously delighted. But this stock market engineering by Ben Bernanke can only work in the long-term if the real economy recovers. Failing that, there is the old Newtonian law of physics; whatever goes up must surely come back down to earth.

                 

 

 

 

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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Ben Bernanke’s QE3 Will Not Reverse Global Economic Crisis

September 19th, 2012 Comments off

 

As expected, stock markets around the world swooned to the heavens after the Federal Reserve announced its third dose of quantitative easing. Ben Bernanke had already unleashed QE1 and QE2, with only short-tem, temporary stabilization of the financial and economic crisis still raging in the U.S. and Europe. What to make of Bernanke’s third version of quantitative easing? As Albert Einstein once said, the definition of insanity is repeating the same thing, over and over again, and expecting a different result.

The public is largely ignorant of what quantitative easing is ( and what it is not). It is simply money printing by a central banking, focused on using the artificially created liquidity to purchase sovereign or private sector debt instruments or depreciated assets, with the view of alleviating market conditions, such as countering high yields on government bonds. It is no substitute for sound economic and fiscal policies, and repeated doses of quantitative easing are inflationary, and typically create distorted asset bubbles.  The tech bubble of the 1990s,and the housing bubble that unleashed the global financial crisis of 2008, were the result of easy money policies by the Fed.

 Now we again have easy money intrusions into the market through the Fed, this time through QE3.  The only tangible result so far is the creation of a new bubble-the equity bubble  on Wall Street and beyond. As before, this bubble will not resolve the economic crisis afflicting most of the world, and will likely make it worse.

                 

 

 

 

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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Fed Chairman Ben Bernanke Ramps Up The printing Press

September 13th, 2012 Comments off

It seems an eternity ago when Ben Bernanke, Chairman of the U.S. Federal Reserve, spoke optimistically about “green shoots” on the economic horizon. No more. Two bouts of quantitative easing and “Operation Twists” have been abject failures, as the country’s economic crisis-which is global in nature-continues. Now, the Fed’s FOMC  has jumped in again with more money printing.

“The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” say the FOMC (Federal Open Market Committee), justifying their decision to purchase $40 billion in mortgage backed securities each month. In addition, the Fed plans to keep interest rates at near zero until at least 2015.

The global economic crisis erupted in 2008. The Fed is now saying, through its ill-conceived policy decisions, that this crisis will last at least until 2015-seven years after the implosion of Lehman Brothers. An this is not an economic depression?

 

                 

 

 

 

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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Inflation Is Not The Solution To The Economic Crisis

August 20th, 2012 Comments off

Almost instantaneously, as soon as governments across the globe went into unparalleled debt to bail out their financial systems beginning in 2008, economists openly were discussing  the impossibility of ever paying back those sovereign loans, and that a different solution was required. The answer, so the economists said amongst themselves, was targeted inflation. In effect, so argued those economists, inflation significantly higher than recent levels, targeted at a level of at least 5 percent, would be “good.”

Why would inflation, a fiscal and monetary circumstance which human beings by instinct regard as an ill omen, be seen in such positive hues by economists as renowned as Nobel Prize winner Paul Krugman? The answer is that inflation is viewed as the ideal solution for eliminating sovereign debts that can never be repaid. In effect, inflation is the methodology by which a nation-state defaults on its loan obligations stealthily. The printing presses expand money supply beyond the level generated through real economic productivity, in the process depreciating the value of the currency. The nation-state , on paper, doesn’t default on its loan repayments, since the contractual obligation is repaid in monetary terms. However, inflation depreciates the value of the currency, so the outstanding loan obligation shrinks in real terms. In addition, so argue the economists, inflation, by destroying the value of money, discourages savings, leading to higher spending and improved economic growth.

It is a neat gimmick, one resorted to by indebted sovereigns throughout history. However, despite claims by economists that precisely targeted inflation has worked in the past, history tells a different story. In the great majority of examples where countries deliberately employed inflation as a fiscal and economic policy, the results were not only counterproductive; very often the social anguish created by the policymakers resulted in political consequences of dire proportions. One can look back at Weimar Germany’s bout of inflation, which went out of control and morphed into rampant hyperinflation. There are many countries that experimented with inflation at levels far less  than those experienced by Weimar Germany and, more recently, Zimbabwe, which still did no good and much harm economically and socially.

The basic problem with modern economic policymaking is that it is too fixated on fiscal gimmickry to resolve core problems. Whether it  is quantitative easing and “Operation Twist” by the Federal Reserve or stealth sovereign bond purchases by the European Central Bank,  the “experts” play fiscal games rather than address the fundamental factors underlying the global economic crisis; flawed systems and economic architectures that have transformed nations that formerly focused on production into entities of debt-financed consumption.  Regrettably, instead of coming to grips with the true underlying factors responsible for the first global economic depression of the 21st century, the economists advising our policymakers look increasingly towards inflation, and the destruction of whatever financial assets are still retained by the increasingly beleaguered middle class, as the last best hope for resolving the sovereign debt crisis.

It is unfortunate that our modern-day economic gurus have not read Santayana, who warned that those who disregard the mistakes of the past are condemned to repeat them.

 

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.