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.
Ron Paul may no longer be in Congress, but other conservative members are stepping up to carry issues he pushed in the past. On Facebook yesterday, Rep. Paul Broun (R-GA) announced that he reintroduced legislation to audit the Federal Reserve:
Today I reintroduced H.R. 24, the “Audit the Fed” legislation originally authored and championed by former Congressman Ron Paul (R-TX). My plan is to pick up right where Congressman Paul left off. Our economy is far from recovering, and the recent fears regarding the potential impacts of the ‘fiscal cliff’ and its aftermath prove that the American people must continue to demand transparency from the entity charged with ensuring stable economic and monetary policy.
You can read the official statement from Rep. Broun’s office here.
The legislation will open up certain information to the Government Accountability Office excluded from audits in subsection (b) of 31 USC 714, including agreements and transactions with foreign central banks and discussions between the Treasury Department.
The House overwhelmingly passed the Audit the Fed bill last year. Unfortunately, Senate Majority Leader Harry Reid (D-NV) refused to bring it to the floor for a vote, despite his past support of more transparency of the Federal Reserve.
Merely two weeks after Ben Bernanke announced one more round of quantitative easing (QE3), the results are already becoming apparent. And once again, it shows how the culture of “too big to fail” is both immoral and economically devastating.
The immorality of QE3 can be summarized by this quote, from Businessweek: “It’s very good to be a mortgage originator right now,”
Gosh, I wonder why? Is it perhaps because QE3 is benefiting banks/bankers…to the detriment of everyone else? But I thought our president wanted the top 1% to “pay their fair share”! So how do bankers and loan originators end up cashing in on yet another bailout? Yes, I realize I shouldn’t be shocked by a politician saying one thing…and doing the opposite. But I am.
Since images often speak louder than words, here’s an illustration of why it’s “…very good to be a mortgage originator right now”.
This is what Bernanke imagines QE3 is doing:
And here is what is ACTUALLY happening:
I rest my case.
One of Mitt Romney’s top advisors said recently that Federal Reserve Chairman Ben Bernanke needs to “get every consideration” for another term when his current term expires in 2014. When I saw that headline, I had to go read (and re-read) it for myself. Did he really say that?
Yes. Yes, he did.
I take a little comfort in the fact that Romney has previously said that Bernanke wouldn’t likely be returning as the Chairman of the Federal Reserve if he’s elected president. But Glenn Hubbard (no, not this guy) is a top advisor to Romney, and in that YouTube video I just linked to, one of the possible nominees for Bernanke’s job was Hubbard.
While I’m not very concerned about Romney keeping Bernanke around (he’s been a failure under Bush and Obama…it’s time for him to go), the thought that his replacement could be somebody who thinks Bernanke should be considered for another term scares me.
It’s worth mentioning that Hubbard and Bernanke are friends and have been for a long time, so there’s a chance that he’s just trying to be nice and not call his friend a complete miserable failure in the news. But there’s also the chance that he’d continue in Bernanke’s dollar-destroying ways.
Mitt Romney will be the Republican nominee, unless he’s caught with a dead, Muslim, illegal immigrant boy. He will have the difficult task of facing Barack Obama in November. It is no secret that I have my differences with Governor Romney, however for the sake of wanting Barack Obama gone in November, I would like to offer him some free advice.
First thing you need to do Mitt is shut up about the sports team owners you know. We know you’re rich and successful in business, but the problem is, Obama is sending out his class warfare zombies in droves. They will use your success as their best weapon against you. Their goal is to paint you as out of touch with the American people. Also, along those lines, shut up about your dog and his road trip on the roof of your car.
Second piece of advice, be bold on the economy and fiscal policy. Be specific about your proposals and don’t be afraid to defend them. Don’t sugarcoat the fiscal problems we are facing. Propose bold tax reform including a flatter tax with a lot fewer deductions and credits. Eliminate a department or two. Propose real spending cuts and entitlement reform and more importantly, sell it. Outline a free market approach to healthcare as a replacement to Obamacare. Finally, start going after the Federal Reserve by supporting an audit of it.
Third, take a page from the Obama playbook. Set up a version of their “Fight the Smears” web page that they set up in 2008. Eventually Obama and his surrogates will drag the Mormon religion in this race and there needs to be something to address the nonsense they will be putting out.
Fourth, stay out of the social issues trap. The left will try to bring up abortion, gay marriage, birth control, and Lord knows what else to try and change the narrative. Yes, address the issues when they come up but don’t let the media trip up the message. The message needs to be about the economy and jobs first.
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:
We can only hope the president will have time to preview this video before his address — but really, would it matter?
Video produced by Caleb Brown, host of the Cato Daily Podcast, and Austin Bragg.
The race for the GOP nomination for president has really heated up, but there are rumblings that Rep. Paul Ryan and Sarah Palin may be preparing to jump in, candidacies that would dramatically shake up the field. But at least right now, it seems like this is a three way race for the nomination between Mitt Romney, Rick Perry and Michele Bachmann. Polls seem to bear out that conclusion as well, though no one seems to really be the frontrunner.
Here is a look at the current power rankings in the GOP field (and yes, we’ve excluded Thad McCotter on purpose):
Mitt Romney (): If there was ever a question that Romney was on shaky ground as the frontrunner in the GOP field, it has been answered with Rick Perry. That being said, only one poll shows Romney down to Perry; so it’s far too early to say that that Romney has no path to the nomination. Romney still has plenty of arguments for Republicans to get behind him, including that he is the only candidate in the field that really challenges President Obama. However, the worst thing that could happen to Romney would be a Paul Ryan candidacy.
What if the Federal Reserve dollar falls – hard? How is the globalist blueprint known as Sustainable Development Agenda 21 designed to make humans into livestock? Why liberty must be understood by this generation of Americans lest it be lost for a very long time.
More Americans, an accelerating percentage of ordinary citizens, have come to understand the nature of “fiat” monetary system – that is money created out of thin air. The contemporary fiat system came to the United States in 1913 with the congressional creation of the privately owned United States Federal Reserve. The Federal Reserve legislation violated Article 1 Section 8 of the Constitution by the issuance of legal tender and brought once again the influence/control of the globalist banking cartel to the U.S.
Today’s global monetary system was originally authorized by the British Parliament. Its purpose was to form the central bank of England as the Bank of England, which is the equivalent to our Federal Reserve, to control a nation’s money.
“Issuing money” means controlling fiat (phony) money creation through the operation of a printing press or computer entry. This results in the regular increase in the money supply which ultimately expresses itself as price inflation.
Newly issued money is infused into the money supply via the creation of debt. Much of this debt is held by the federal government. More money equals more debt. ‘The harder I work’, says the average American, ‘the deeper in debt the nation becomes.’
Growing debt cedes the ultimate exercise of control to the creditor, particularly as the system breaks down under its own largesse. A “new” system is being designed by the same forces who designed today’s fiat system and who now have America close to the brink of dollar destruction. It is the replacement system that we must be wary of if we are to exercise a wise defense and restoration of freedom.
For the last two weeks the media has gorged on a non-stop litany of stories concerning the single most important issue facing our nation. Would that be the “unexpected” reports of almost non-existent private sector job growth and an economy that, despite Obama’s reassurances, may be on the brink of a double-dip recession? No. Is it Obama’s violation of the War Powers Act with our continued “kinetic military action” in Libya? Nuh-uh. Maybe it’s Sixth Circuit’s review of the ObamaCare case (nope) or the Federal Reserve’s warning that the political body must act responsibly in order to stave off an economic collapse? Wrong again.
Based on the 24-hour saturation in the news cycle and the sheer number of stories written and aired, clearly the most important issue facing our nation is that a skinny New Yorker with an incredibly overinflated sense of his own worth had to finally admit, after days of vehement protests to the contrary, that it was indeed he who sent the lewd photographs of his genitalia, as well as sexually charged and explicit texts, to college-aged women. These women, who include a porn star, are young enough to be his daughters.
And so unravels the scandal of Rep. Anthony Weiner (D-NY), possibly the most obnoxious and arrogant member of Congress now that former Rep. Alan Grayson (D-FL) was defeated in the last election. Weiner, considered a rising star in the Democrat Party and a likely candidate to be the next mayor of New York, instead is tearfully admitting to the nation his indiscretions which have been going on for several years, and with at least a half dozen women. Watching his fall from glory, a Brooklyn-born Icarus plummeting towards earth, the proverbial wax of his wings melted by his own flaming ego, it is hard not to feel just a little sorry for him…at least until you remember that these indiscretions occurred both before and after his marriage to his wife Huma, who is now pregnant.