FED

We Are All Modern Monetary Theorists Now

As a consequence of loose monetary policy with a fiat currency, the United States is rapidly descending into an economic reality of Modern Monetary Theory, or MMT.  While MMT (also known as Chartalism) is typically associated with its Keynesian predecessor and the policies of the Left, new developments reveal that both parties are responsible for the slip into a brave new economic world.

Essentially, there are four preconditions in Modern Monetary Theory:

1) Money enters the economy through government spending, as the total amount of money is constrained not by gold but by the total output of the national economy;
2) Government spending is speculative as it prints as much money as it needs to control production and, as a byproduct, employment, and spending beyond productive capacity leads to inflation;
3) Taxes do not pay for expenditures but are instead a way to throttle private sector demand; and
4) The government is the issuer of the currency, sovereign governments that issue their own currency are never insolvent, so debts essentially don’t matter.

Who Has The Party Delegates?

What all the GOP candidates are after, are so-called ‘delegates.’Elected officials that will broker the convention of either party this fall. Officials are parcelled by the amount of votes, the candidates receive in the primary.

During Michigan’s primary recently, for instance, there were 30 official delegates, state-wide. Two were ‘at-large’ candidates, which meant they could be assigned individually to any winning candidate. The other 28 were ‘proportional’ ones, alotted through 14 congressional districts. During the push for the nominations in Michigan last night, Mitt Romney and Rick Santorum spent millions of dollars to influence the voting population; with TV ads, pamphlets, media, interviews, rallies, stickers, and much more. Michigan’s grand sum of politcal expenditure was near six million bucks.

Delegates are what really counts at the GOP convention. What looks to be happening, is that no clear winner will come out victorious. There’s a righteous number: 1444 delegates will win any nominee the victory-nod of the Republican National Committee. Nationwide, 2169 delegates are extended for contestation, until the RNC celebration in Tampa, Florida. From the RN Committee, an additional 117 delegates are added into the mix, ostensibly to keep debate lively and clear-up dead locks. So what appears, on first looks, to be a rather hot-headed and fast paced Republican rocket-launch to the RNC, is more like a jammed or misfired pistol in a duel.

Momentarily, Mitt Romney is in the lead, with 167 total delegates. Rick Santorum is second with roughly half, at 87. Newt Gingrich won only one state and has 32, while Ron Paul has 19 carefully collected delegations. The count may reshuffle at any moment, since constitutionalism and populism together, ring alarm-bells in states such as Arkansas, Kentucky, Tennessee, Texas, Oklahoma and New Mexico.

Ronald Paul Assails GOP Establishment

It’s not often that the media give Ronald Paul (R-Texas) a chance to speak.

There were reasons, why I didn’t watch the second GOP debate on Sunday.

Ronald Paul cleared the field on Saturday, he was the last man standing! After some initial tampering with his microphone, and pitch, he opened his arguments by restating his offensive tactic on “big-government Republican”, Rick Santorum. The only two real Tea Party contenders: Ronald Paul and Rick Perry, were left to languish on stage for the better part of 15 minutes, until allowed to join the discussion.

Mitt Romney was busy arguing how many jobs were, lost and gained under his CEO leisure. Newt Gingrich quoted the New York Times. Paul smoothly stepped back, blocked Santorum’s smugness by raining down: “he voted to raise the debt [ceiling] five times.”

Rick Santorum let loose liberal counter-attacks, naming sources “leftist”, and calling Mitt Romney class-consciously dangerous. In so doing, Santorum looked less Republican, more like a blue-state lawyer from the Northeast. Neither Paul nor Romney delved deep into his attacks, mostly picking up on their own strengths. Santorum was a negative force, not a positivist in this debate, Saturday night January 7th.

When Ronald Paul raised his hand for a response, the slick Stephonopilis retorted back to Paul (his senior by quite a few years): “we’ll stay with the subject, don’t you worry.” Brilliance in public debate rarely comes to the fore, especially on television. Paul showed it by counterstriking first Santorum, then defecting the attack from Rick Perry, onto Santorum and Newt Gingrich.

Jon Huntsman decided not to attack. Mitt Romney largely left the debate unscathed. Only because Ronald Paul made no concerted effort to attack the former Massachusetts blue-state Governor. It was easy for Paul to slice-down the cryptic schizophrenity of Gingrich, whose attempted slur of Ronald Paul on “style”, many see as hearnestness.

14 Fixes For Our Messed Up Country

Everyone seems to be proposing fixes for our country lately, whether it’s amendments to repeal the First Amendment or ban gays or whatever. I have a few ideas of my own that I think will go a long ways towards restoring some sanity in government and fixing what’s wrong with our society. Some of these will require constitutional amendments, and I don’t expect the entire list to actually get enacted unless magic somehow returns to the world and we resurrect Barry Goldwater, F.A. Hayek, and George Washington all at once.

I originally drafted a list of some 23 ideas, but I figured that it would be way too long for a blog post, so I shortened it to 14, a baker’s dozen. None of these are simple or light fixes, they are not tweaking around the edges to ensure a marginally better outcome. Judging from the situation our government and economy is in, from the horrific hard place our civil liberties are wedged behind, and the unmanageable mess that is Washington, I don’t think that “moderate” or “conservative” changes will do anything. We cannot pussyfoot around the issue; we need radical alterations to how our government works if we’re going to get us out of this morass. Again, most of these may never pass, but that’s to be expected.

Certainly, if you wish to hear my entire list, let me know and I’ll write it up, but for now, here are my 14 ideas for fixing our country:

1. Establish Approval Voting

I’ve already talked about this idea at length here, so I will not bore you again. In this post, all I will say is that I believe if we are to get anything done—and I do mean anything—we need to systematically reform how people actually get into office. That’s the foundation upon which any democracy stands, and when you’re up to your eyeballs in tar, the only way to get that fixed is to drain the swamp and start at the beginning.

Lies, Damned Lies, and Unemployment Statistics

Before Democrats, the Obama Administration, liberals, and progressives start crowing about the updated unemployment figures—which the Bureau of Labor Statistics say is now down to 8.6%—there’s something you should know about the why it is down—and it’s not pretty.

The BLS divides up the unemployment numbers into six figures, U-1 through U-6. U-3 is the “official” number, the one that’s always toted on the primetime news channels. U-6, however, is the real unemployment figure, which counts marginally attached workers (those that have stopped looking for work for the time being) and underemployed workers (those working part time but want full time work), among others. And the worst part is?

Even that is rosy compared to the “real truth.”

The truth comes in near the middle of the Bureau’s press release:

In November, the number of job losers and persons who completed temporary jobs declined by 432,000 to 7.6 million. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.7 million and accounted for 43.0 percent of the unemployed. (See tables A-11 and A-12.)

The civilian labor force participation rate declined by 0.2 percentage point to 64.0 percent. The employment-population ratio, at 58.5 percent, changed little.(See table A-1.)

Emphasis mine.

Federal Reserve is Conflicted and Interested

Last month, the office of US Senator Bernie Sanders (I-Vt.) released a report [warning: PDF] on the GAO Audit on “major conflicts of interest at the Federal Reserve.” I didn’t see this until just recently, but the summary is quite interesting:

 

Is this the best the GOP has?

I was at the Defending the American Dream Summit last Friday, put on by the Americans for Prosperity Foundation. I was really there just for the Free Market Job Fair, sponsored by the Leadership Institute and ConservativeJobs, but I also managed to see the speeches by Romney, Cain, and Giuliani in the ballroom. (Fortunately, I left long before the OccupyDC nutcases appeared, but that’s another post.)

Sitting there in the back, the room illuminated only by the four gargantuan TV screens projecting the speaker’s face, and the light on the stage, I was awestruck by how cavernous the place was. No, really—you could have parked the Nimitz in there and still probably had enough room for a Space Shuttle or two. That feeling, however, was quickly replaced by awe at the candidates who graced us with their presence—and the fact that one old guy up in the front was really spry, to be hopping around like that.

Namely, though, the awe was, “This is the best the GOP has?”

To me, Romney’s biggest plus was he has a voice that belongs in nearly every commercial about life insurance and in cartoons. It has that deep texture that you look for in voice actors, and seriously—could you not imagine this guy being the voice of Skeletor? Aside from that, however, I was disappointed. He offered up the same conservative talking points of cutting government spending and working from one’s bootstraps (including a story about creating Staples in the back room of a warehouse with used Naugahyde chairs), but those are words: will they actually translate into action?

A candid moment from a member of the FOMC

Federal Reserve Chairman Ben Bernanke just announced Operation Twist, a new combat operation that will supposedly fix our market woes. Supposedly. (Hey, pass the vodka, will you? I need a drink before I listen to this guy.)

I am not a financial markets expert, and I have not heard that much on the actual details of Operation Twist, but, courtesy of CNN, here’s a brief explanation:

NEW YORK (CNNMoney) — The Federal Reserve announced “Operation Twist” Wednesday, a widely expected stimulus move reviving a policy from the 1960s.

The policy involves selling $400 billion in short-term Treasuries in exchange for the same amount of longer-term bonds, starting in October and ending in June 2012.

 

While the move does not mean the Fed will pump additional money into the economy, it is designed to lower yields on long-term bonds, while keeping short-term rates little changed.

The intent is to thereby push down interest rates on everything from mortgages to business loans, giving consumers and companies an additional incentive to borrow and spend money.

So basically, they’re selling bonds and buying bonds. Nothing exactly Earth shattering here. And definitely not anything that will get us out of this rut.

Interestingly, some members of the FOMC agree with my assessment, and one of them had a speech about it. Mr. Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, had this to say about recent monetary policy, using a Nordic weather station as a metaphor:

MIAC Report: Ron Paul Supporters Labeled Domestic Terrorists?

Ron PaulThe general rule for me is if Alex Jones says it, don’t take it seriously. And that’s what I said on Thursday to several friends that e-mailed me a link to a story about how the Missouri Information Analysis Center (MIAC) basically correlates libertarians and more specifically supporters of Ron Paul, Bob Barr and Chuck Baldwin, with potentially being a domestic terrorist or member of a militia.

Say Goodbye to the American Dream

Most of us have seen the passionate speech given by George Baily in It’s a Wonderful Life to the evil bank-owner, Mr. Potter, begging for leniency towards Potter’s delinquent homeowners and espousing why owning a home makes the residents of Bedford Falls better citizens and more productive members of society.

Mr. Potter is simply interested in making sure his payments are received on time and that foreclosures are issued to those who fall behind.  He believes, and rightly so, that if a man has overextended himself and cannot pay his bills, the mortgage owner has the right to claim the house and boot the residents out.

George Baily, however, is more interested in promoting the “American Dream”- home ownership- and has built his life and Savings and Loan business around helping families buy homes… even if they’re not quite ready to take on that financial responsibility.

 


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