Stimulus Paying Dividends/Japan Goes Democratic

[Lorax]

Two interesting bits of news, sure to cause the Rethuglicans to run shrieking into the woodwork.

http://www.nytimes.com/2009/08/31/bu..._r=1&th&emc=th


http://www.nytimes.com/2009/08/31/wo...html?th&emc=th


Looks like "Change" is a sweeping concept, away from the ideologies of the fascist right. It's about time.

Now for that single payer health care system, please.

[oladub]

$5B down and over $700B to go. What a lovely story providing hope for the sheeple. Hurray for Goldman Sachs. But stepping away from the banks that financed the McCain and Obama campaigns there is a lot of hurt. In fact, the FDIC is scraping the bottom of its funds because 77 banks have gone bankrupt this year and over 300 banks are on its 'watchlist'. Those are the banks with vultures overhead making lazy circles in the sky spelling out "bush" and "obama".

Retirees have been so understanding. The Fed keeps making money out of thin air allowing banks to loan out money at low rates and borrow at even lower rates. Retirees who anticipated four or five percent interest on their savings to get through retirement are getting a half a percent instead. They should be thanked for their sacrifice for the common good of bankers.

The FDIC does have a couple of cards up its sleeve though. It can borrow up to $500B from the Treasury, that's us folks, to get over the bumps. That $5B of profit mentioned in the Times article will come in handy. Also, special fees can be levied on viable banks to help sustain the FDIC. Grandpa and Grandma will have to sacrifice a bit of their half percent interest to keep the system working it seems.

[ghettopalmetto]

The Fed keeps making money out of thin air allowing banks to loan out money at low rates and borrow at even lower rates.

This is a silly statement. It seems that you're implying that the Fed is resorting to flooding the market with cheap money--a tactic that typically leads to inflation--to save banks. During inflationary periods [[see 1970s and Early 1980s), interest rates tend to rise to discourage price increases. Pro-inflationary policy and historic low interest rates are not compatible with each other. So which is it?

I suppose you'd rather the FDIC just give up and let thousands of Americans lose their hard-earned savings.

Retirees who anticipated four or five percent interest on their savings to get through retirement are getting a half a percent instead.

Anyone who relies on interest from a savings account for their retirement doesn't have a firm grasp on money in the first place. And if you anticipate 4-5% interest on that savings account, double shame on you.

[oladub]

This is a silly statement. It seems that you're implying that the Fed is resorting to flooding the market with cheap money--a tactic that typically leads to inflation--to save banks. During inflationary periods [[see 1970s and Early 1980s), interest rates tend to rise to discourage price increases. Pro-inflationary policy and historic low interest rates are not compatible with each other. So which is it?

I suppose you'd rather the FDIC just give up and let thousands of Americans lose their hard-earned savings.

Anyone who relies on interest from a savings account for their retirement doesn't have a firm grasp on money in the first place. And if you anticipate 4-5% interest on that savings account, double shame on you.

I am not implying . I am saying that the Fed has been printing money like Zimbabwe since China reduced its purchases of Treasuries to flood the market with money to try to re-inflate the bubble which it created. Yes, inflating the money supply will eventually cause higher prices. As our economy crashes, investments, including houses, are deflating in value while necessities such as food and health care are already incurring rising prices. To the extent that the economy recovers, even if just driven by cheap money and government debt, commodities such as petroleum will go through the roof with more demand. Thes price increases will lock us into stagflation and prevent a recovery.

Also, there is a worldwide movement to dump the dollar as the reserve currency. Foreign dollars will consequently come back home to roost causing an additional inflationary supply demand situation.

When Rep. Alan Grayson asked Bernanke which foreign banks the fed gave $500B to [[this guy is good), Bernanke twice said he didn't know. When Senator Bernie Sanders asked Bernanke which banks the Fed gave $2.2T to, Bernanke refused to answer. It is that bad. Transparency is not required of the Fed. The Fed is owned by private banks and serves their interests. Its head lobbyist, Ms. Robinson, was Enron's former head lobbyist. HR 1207 and S 604, if passed will require a CBO audit of the Fed. Bernanke's comment, "You don't want to go there" accompanied by threats. Congress was also threatened, by Paulson, that their was going to be marshall law if the Wall Street bailout was not passed immediately and told by Obama, that inflation might rise above 8.5% if they didn't pass his Porkulus bill by that weekend.

Regarding bank interest. Many retirees do have hundreds of thousands of dollars of savings accumulated. If, for instance, they earned 5% on a five year $300,000 CD or bonds, they would have an additional $15,000 of income. In the fifties, most savings and loans were paying about 3.5% on regular savings accounts. During Carter's Presidency, I was receiving up to 14% on one year CD's so 4-5% is not an unreasonable rate to expect historically. The federal government however has chosen to buoy the bankers at the expense of retirees and others of fixed means and through low interest rates and inflation rob them of their hard earned savings.

[ghettopalmetto]

Regarding bank interest. Many retirees do have hundreds of thousands of dollars of savings accumulated. If, for instance, they earned 5% on a five year $300,000 CD or bonds, they would have an additional $15,000 of income. In the fifties, most savings and loans were paying about 3.5% on regular savings accounts. During Carter's Presidency, I was receiving up to 14% on one year CD's so 4-5% is not an unreasonable rate to expect historically. The federal government however has chosen to buoy the bankers at the expense of retirees and others of fixed means and through low interest rates and inflation rob them of their hard earned savings.

During the Carter administration, interest rates for mortgages also hovered around 18%. Would you rather we bring back those good ole days?

There is no evidence that we are in any danger of bringing on rampant inflation. If there were, the Fed wouldn't have an interest rate that is essentially zero. Rather than set into emotional panic about what you think *could* happen, why don't you track some objective data like the Consumer Price Index?

And since when is it the Fed's responsibility to worry about Joe Senior Citizen's retirement fund? You don't like the current rates on CDs or savings? Make other investments. End of story.

[oladub]

During the Carter administration, interest rates for mortgages also hovered around 18%. Would you rather we bring back those good ole days? [/quote]

That's where we are going. I don't want to bring them back. That's one of the reasons I didn't vote for McCain or Obama and want to close the Fed.

There is no evidence that we are in any danger of bringing on rampant inflation. If there were, the Fed wouldn't have an interest rate that is essentially zero. Rather than set into emotional panic about what you think *could* happen, why don't you track some objective data like the Consumer Price Index?

I see evidence every time I go to the grocery store. The Consumer Price Index was rigged by Clinton to make happier numbers and reduce government cost of living payouts. As previously mentioned, asset prices are still deflating while the cost of necessities is rising.

And since when is it the Fed's responsibility to worry about Joe Senior Citizen's retirement fund? You don't like the current rates on CDs or savings? Make other investments. End of story

You are missing my point that interest rates are being manipulated by the banks and government at the expense of those on fixed incomes. Obviously, the Fed serves Goldman Sachs and the rest of its owners. I agree with Andrew Jackson who told the gathered Fed equivalent bankers of his day,

"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out."

And he did. I don't suppose that Goldman Sachs was his top campaign contributor though.

[humanmachinery]

Trying to talk fiscal or monetary policy with a disciple of the Chicago School or Austrian School is like talking to a brick wall.

If wages and prices continue to shrink, spending stays flat, and businesses continue to liquidate devalued assets in futile attempts to pay off debts, we're far more likely to see deflation than hyperinflation. Real GDP is lagging significantly behind potential GDP, and THAT is scary.

As for nations taking themselves off the US dollar standard, I couldn't blame them, even if our economy was healthy. My guess...my hope...is that the new reserve currency will be something like the old European Currency Unit [[ECU), which was a stored-value unit based on an amalgam of different currencies. In essence, the Global Currency Unit would become a tradable commodity based on a basket of the US dollar, the Euro, a dozen minor currencies, plus...maybe... some stocks of gold and silver.

No coins and bank notes would be circulated. The GCU would become a commodity like gold, and be backed by a basket of international currencies based on the exigencies of international trade needs.

I suspect if the GCU ends up being adopted, it will initially be based on a basket that is heavy in US dollars. This will allow it to smoothly split off from the US dollar [[the current reserve currency internationally) and give it a few years to establish itself.

A currency unit based on multiple currencies would be more stable, and would be less susceptible to the actions of either the US federal reserve or the European Central Bank. Other currencies would trade in relation to the GCU, rather than sliding up and down against the US dollar and each other. Some countries might even decide to peg their currencies to the GCU.

Americans typically only have to deal with commodity-price fluctuations in one dimension. That is, oil goes up $5 a barrel or down $3 a barrel. Other economies have to deal with their currencies fluctuating in value against the US dollar as well, adding another dimension of change.

If commodity traders around the world used a GCU valuation, everyone would deal with one dimension.

There are billions upon billions of US dollars floating around the world being used in economies outside the jurisdiction of the Fed. Yet, the trading of these US dollars will affect [[and be affected by) the valuation of the US dollar. US fiscal and monetary policy interacts with valuation as well.

The market for US dollars outside the USA has the effect of over-valuing the US dollar. This can hurt American industry.

There are advantages and disadvantages to dropping the US dollar. Lately, it seems the advantages are increasing.

[ccbatson]

Sigh...Japan is shifting from the left too the left...and the likelihood that this will improve their situation is???

So, any individuals feeling the healing from the stimulus? Is it comforting to the 10% [[and growing) unemployed? Is it causing any investment from the private sector or scaring it away?