CajunWin4's Blog

 

            Carol Platt Liebau       

• 
• Peter Ferrara                                    

            Sep 17,  2012

    President Obama started his Democratic Convention nomination acceptance speech with one overriding truth: “But when all is said and done – when you pick up that ballot to vote – you will face the clearest choice of any time in a generation. It will be a choice between two different paths for America. A choice between two fundamentally different visions for the future.”

 

Truer words were never spoken. Because America is deciding in this election whether it wants to ditch the economic system that made us the richest, most prosperous nation in the history of the world, for the hope and change not for something better, but for something supposedly fairer, like socialism and communism is supposedly fairer than capitalism.

 

Churchill understood the choice perfectly. He said, “The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of misery.”

 

Obama immediately then plunged into falsehood in his convention speech, saying right after the above, “Ours is a fight to restore the values that built the largest middle class and the strongest economy the world has known.” But that is not what Obama is fighting for. As the Bible says, “By their fruits ye shall know them.”

 

As noted in last week’s commentary, middle class incomes have fallen precipitously under President Obama, down from $54,983 in January, 2009, the month he entered office, to $50,964 by June, 2012, a decline of 7.3%, or $4,019 per family. Moreover, the decline in middle class incomes since the recession technically ended in June, 2009, has been nearly twice as great as the decline during the recession, which is unprecedented. As for the strongest economy the world has known, economic growth under Obamanomics, during the recovery, after the recession, has been mired at about half the historic U.S. average, only about one-fourth to one-third as much as during the typical recovery after a recession. What Obamanomics has delivered is the worst economic recovery from a recession since the Great Depression.

 

The rhetoric about the middle class is straight from self-professed radical extremist Saul Alinsky, and his bookRules for Radicals, preaching that left wing socialist economics would be socially accepted if it was advanced as a program for the middle class. Obama was actually an instructor in Alinsky’s social manipulation methods for the radical Left front group ACORN during his days as a street agitator (“community organizer”).

 

Obama then went on the attack in his convention speech, saying, “Now our friends at the Republican convention were more than happy to talk about everything they think is wrong with America, but they don’t have much to say about how they’d make it right. They want your vote, but they don’t want you to know their plan.”

 

That couldn’t be more wrong. Romney has detailed a very specific tax plan based on a 20% across the board cut in income tax rates for everyone, perfectly analogous to Reagan’s 25% across the board tax rate cut in 1981 that precipitated the greatest economic boom in world history, what Steve Forbes rightly called “an economic golden age.” Cuts in tax rates promote economic growth by enabling producers to keep a higher percentage of their production, expanding incentives for increased productive activity, such as savings, investment, starting businesses, expanding businesses, creating jobs, entrepreneurship, and work. Tax rate cuts are the only tax cuts that promote growth. Reigniting economic growth is the foundation for reducing the deficit.

 

Those tax rate cuts would directly benefit the middle class by cutting the rates that apply to middle class incomes and below. Romney also proposes extending the Bush tax cuts for the middle class. Romney would in addition repeal all the middle class tax increases in Obamacare, including the individual mandate. He would repeal as well the death tax, which trashes successful small businesses at the death of their owners, and the Alternative Minimum Tax, which threatens the middle class in high tax states.

 

The middle class would also benefit indirectly from the tax rate cuts for higher income taxpayers, due to the resulting increased jobs, and the higher wages and incomes that arise from increased demand for labor and from higher productivity due to increased capital investment.

 

Moreover, the Romney/Ryan ticket offers the most detailed budget plan in any election campaign in American history in the Ryan budget, which merely restores federal spending to the long term, historical, postwar average over the last nearly 70 years of 20% of GDP. Romney’s economic plan would greatly benefit, however, from more specifics regarding monetary policy. Essential to stimulating booming economic growth is a stable dollar, which can only be achieved by tying monetary policy to real world guides like the price of gold and other precious metals. That would be accomplished by replacing discretionary monetary policy, which has only caused business cycles involving periodic troublesome recessions, with an established price rule focusing monetary policy on following the market prices of gold and other precious metals. Without a stable dollar, even tax rate cuts and other pro-growth policies will be ineffectual.

 

It was Obama, however, who only talked about his plans for the future with vague rhetoric in his convention speech. But his plans for a second term are part of the public record. He has already enacted increases in the top tax rates for virtually every major federal tax effective January 1, when the tax increases of Obamacare go into effect, and the Bush tax cuts expire, which Obama refuses to renew for the nation’s successful small businesses, job creators, and investors. As a result, the top two income tax rates would jump nearly 20%, the capital gains tax rate would soar by nearly 60%, the tax on dividends would nearly triple, the Medicare payroll tax rate would rocket up by 62% for these disfavored taxpayers, and the death tax would rise from the grave with a 57% increase. That is all on top of a corporate tax rate that is the highest in the world under Obama, except for the socialist one party state ofCameroon. This will drive tax rates well beyond the Clinton era tax rates, but Obama and his propagandists won’t stop using the outdated talking point that they are only bringing back those rates.

 

That is a prescription for renewed recession rather than restoration of the American Dream and the strongest economy the world has known. That would only reduce rather than increase federal revenue, sharply increasing rather than reducing deficits and debt.

 

Moreover, Obama’s budget policies for a second term and beyond were already specified in full detail in his own 2013 federal budget. That budget proposed $47 trillion in federal spending over the next 10 years, making him the biggest government spender in world history by far. By 2022, he would be spending $5.82 trillion in that one year alone, the most by any government in world history.

 

That budget also proposes $6.7 trillion in additional deficits over the next 10 years, on top of the $5.3 trillion over the four years of Obama’s reign of error so far, according to the Obama Adminstration’s own numbers. That would leave the national debt held by the public at nearly $20 trillion by 2022, up from $5.8 trillion in 2008, and gross federal debt at nearly $26 trillion, over 100% of projected GDP, again according to Obama’s own OMB.

 

In reality, those projected deficits and debt are grossly low balled. CBO projects that on our current course, under current policies, federal spending would soar to 30% of GDP by 2027, 40% by 2040, 50% by 2060, and 80% by 2080. President Obama’s policies would not take us off that course because he explicitly rejects entitlement reform to reduce spending, instead adding or expanding grossly underestimated new entitlements in Obamacare. Moreover, CBO projects that on our current course, under current policies, federal debt held by the public would rocket to 140% of GDP by 2030, 220% by 2040, and 320% by 2050, on its way to over 700% by 2080, a prescription for social collapse just like Greece. President Obama’s policies would not take us off that course, because his policies would not reduce spending, and his tax increases are more likely to reduce revenues rather than increase them.

 

Of course, Obama persisted in his convention speech, saying, “We’re offering a better path – a future where we keep investing in wind and solar and clean coal, where farmers and scientists harness new biofuels to power our cars and trucks….” That echoed his 2012 State of the Union Address, where he said, “I will not cede the wind or solar or battery industry to China…because we refuse to make the same commitment here.”

 

But in the Wall Street Journal on Wednesday, we learned from Professor Patrick Chovanec of the Tsinghua University School of Economics and Management in Beijing just how those wind, solar, and biofuels industries are doing in China. Chovanec writes,

 

“President Barack Obama has held up China’s investments in green energy and high speed rail as examples of the kind of state-led industrial policy that America should be emulating. The real lesson is precisely the opposite. State subsidies have spawned dozens of Chinese Solyndras that are now on the verge of collapse. Unveiled in 2010, Beijing’s 12th Five-Year Plan identified solar and wind power and electric automobiles as ‘strategic emerging industries’ that would receive substantial state support….Barely two years later, all three industries are in dire straits.”

 

Notice that Obama is looking to the state-led industrial policy and Five Year Plans ofCommunist China as the model for America, rather than the traditional policies that have made America “the strongest economy the world has known.” Those traditional policies can be found in the Romney/Ryan platform, which he ridicules, following again the prescription in Alinsky’sRules for Radicals. China was never building wind, and solar, and electric car batteries for its own use, but to sell to suicidal westerners in Europe and America. To power its own economy, it is feverishly building out coal.

 

Similarly, at theAmerican Thinkerwebsite on September 12, Steve McCann recounts the story of Spain, which is just a few years ahead of us. McCann writes,

 

“In 1999 and 2000, when Spain adopted the euro as its currency, interest rates fell to historic lows as the European Central Bank…made money easily available. So Spain’s banks, its property developers, and the every day home-buyers…embarked on a frenzy of commercial and residential building and buying. From 1996 to 2007, Spanish property values tripled. Spain has a massive social safety net which accounts for a vast majority of its government spending [absorbing] nearly 46%of the country’s [GDP]….Despite this, the Spanish government embarked on one of the most ambitious green energy programs in Europe, pouring untold billions of euros into solar and wind energy.”

 

McCann explains how this has all turned out for Spain, so parallel to where we have been in America:

 

“Their real estate bubble burst in 2007-2008. The construction industry collapsed, throwing hundreds of thousands out of work. Home prices have fallen by nearly 50%, leaving many homeowners owning property worth less than their mortgages. Spanish banks were left with a mounting pile of bad debts which have required major bailouts from the government and the European Central Bank….[T]he nation entered into a recession, causing many businesses and industries to cut back or close…Further, the green industry collapsed, as it turned out that each new job created cost nearly $800,000, while for every four jobs created, nine were lost [because of high energy costs and misallocation of capital].

 

Obama’s favored alternative energy sources are inherently doomed to failure because their energy is so diffuse, while the energy in traditional fossil fuels is so concentrated. That is why the market has so rightly chosen those.

 

McCann reports that in just 4 years Spain has more than doubled its national debt, similarly to Obama. As a result, it has to pay 5 times the interest on its debt that Germany does, contributing to further economic decline. The European Central Bank now buys its bonds, in return for dictated spending cuts. McCann concludes,

 

“As it loses its sovereignty, Spain finds itself in a vortex from which it cannot escape. It has entered into a second recession” where Obama is taking us, with “no money to combat this dilemma, as the private sector is collapsing, and so, as a result, are tax revenues, while the government is stuck with massive social programs.” Following the same path as Obama’s jobs depression, Spain’s unemployment rate is now 24.6%, 52.9% for those 16-24. Spain thus follows Greece: “People are withdrawing and hoarding what cash they have, and many are moving to other countries. Tax revenues thus continue to decline, and few businesses will contemplate a start-up or move to Spain under these circumstances. The nation cannot cut spending beyond a certain point without fomenting a national upheaval, and it cannot promote programs to grow the economy. A financial and social collapse is thus inevitable.”

 

This is precisely the road Obama is offering to America, and worse. Just as Obamacare distracted Obama from jobs these past few years, he has said a focus in his second term will be global warming. He said in his convention speech, “And yes, my plan will continue to reduce the carbon pollution that is heating our planet – because climate change is not a hoax.” But global warming regulation is profoundly anti-jobs, sharply raising the cost of the fossil fuels that have powered the industrial revolution, to the point of phasing them out in favor of the much more costly, energy diffuse, alternative fuels, that have no prayer of maintaining the industrial revolution.

 

The science does not support the theory of catastrophic, man caused, global warming. Obama and his liberals believe in it because it justifies the big government, anti-business and anti- capitalism policies they want to pursue.

 

Obama in his convention speech went on to emphasize policies of increased government spending for education, community colleges, energy conservation, and infrastructure construction -- “roads, bridges and runways.” None of that is a new idea. Obamanomics has only proved that such increased government spending will not drive an economic recovery boom. The speech only further proved that Obama is out of ideas, and doesn’t know how to fix the economy.

 

Obama closed on the attack, saying “Over and over, we have been told by our opponents that bigger tax cuts and fewer regulations are the only way; that since government can’t do everything, it should do almost nothing….[But] a freedom which only asks what’s in it for me, a freedom without a commitment to others, a freedom without love or charity or duty or patriotism, is unworthy of our founding ideals.”

 

But Ryan’s budget proposes to spend $40 trillion over the next 10 years, and would only return America to the long term, postwar, historical average of federal spending at 20% of GDP. That is not a government that would do almost nothing. It does not involve promoting a freedom that asks only what’s in it for me, without a commitment to others, a freedom without love or charity or duty or patriotism. Obama’s rhetoric is just expressing how a Marxist sees capitalism.

 

Finally, the essential message of Obama’s convention speech was encapsulated in this: “And the truth is, it will take more than a few years for us to solve challenges that have built up for decades. It will require common effort, shared responsibility, and the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.” What this means is that again, Obama is out of ideas, and doesn’t know how to fix the economy. Instead, he is offering us the bold, persistent experimentation of the Great Depression, whatever that means.

 

And if Obama is reelected to lead us back into recession next year, we will be enjoying an historical reenactment of the Depression, going back into a steep recession before coming out of the last one. That quote shows where Obama’s head us, back in the depression, and The Grapes of Wrath. And that is where he will take the rest of us if we are stupid enough to reelect him.

 

By Robin Harding and James Politi in  Washington

The US Federal Reserve was always going to catch a few political bullets if  it launched an  aggressive new easing only eight weeks before a presidential election.

Mitt Romney, the Republican candidate, duly opened fire on Friday after the  Fed began an open-ended third round of quantitative easing (QE3), under which it  will buy $40bn of mortgage-backed securities a month.

In some of the most aggressive comments he has made on the Fed, Mr Romney  said QE3 was nothing but a “sugar high”, and would fail to get the economy  moving.

“Recognise that, as the Federal Reserve keeps on trying to stimulate the  economy by printing more money, that there’s a cost to that,” said Mr Romney in  remarks at a fundraiser.

“The value of your savings goes down. People who are living on fixed incomes  don’t see much interest income any more. And the value of the dollar goes down,  and the risk for long-term inflation goes up.”

The criticism places the central bank in an uncomfortable position because it  is all coming from one direction. Democrats are delighted by the move;  Re­publicans are on the attack.

No matter how apolitical the Fed’s decisions – and chairman Ben Bernanke was  at pains to assert his indifference to politics in a press conference on  Thursday – the Fed’s activism in response to a weak recovery has political  consequences.

The question is whether there are also consequences in the other direction:  whether political debate about the Fed’s actions could result in change to its  mandate or leadership. That remains a more distant prospect.

“What Romney is saying to the Fed is, ‘This is not your job’,” said Phillip  Swagel, a professor at the University of Maryland School of Public Policy and a  former economist for the George W. Bush administration. “QE3 will have a very  modest impact on the economy . . . and if anything it stands in the way of  fiscal policy.”

Some conservative economists think the Fed is over-interpreting the  employment side of the dual mandate – and by lowering interest rates and making  it easier for the US to finance debt in the bond markets, this removes the  pressure from Congress to strike a deal on deficit reduction.

The most visible effort to clip the Fed’s wings is a bill introduced in the  House of Representatives by Kevin Brady, a Republican from Texas, who is  vice-chair of the Joint Economic Committee of Congress. His bill would limit the  central bank’s mandate  to inflation, not employment, and restrict its monetary policy operations to  short-term Treasury securities.

Were his bill now law, Mr Brady told the Financial Times, “the Fed would not  be able to embark on this third round of quantitative easing”. He said the bill  had taken off faster than he had hoped and already had 48 co-sponsors in  Congress. “Everyone, whether they agree or not, believes it is the right time to  have this discussion.”

But while Mr Romney has criticised QE3, it would be a huge leap to eliminate  the employment mandate once in office. “I think you can do a lot without changes  to the Federal Reserve Act,” says Prof Swagel. “Romney will probably look to  appoint the next Fed chair as someone who is aligned with his views.”

That is the most realistic political consequence of the Fed’s actions: that  when Mr Bernanke’s term expires at the end of January 2014, a new chairman is  appointed who opposes them.

Once settled in the White House, however, even Mr Romney would have to  consider whether a tight monetary policy was actually in his interest, given  that re-election would probably depend on delivering strong economic growth.

Whether QE3 has any lasting political consequences for the Fed will probably  depend on how well it works. “It puts critics of the Fed in a difficult  position,” said John Makin, a resident scholar at the American Enterprise  Institute in Washington, who called the programme of open-ended easing a “bold  experiment”.

The Fed is trying to bring down  high unemployment and, while the experiment is in progress, critics will  struggle to make headway. If the experiment fails, however, and inflation rises  sharply before unemployment comes down, the Fed may find itself hard-pressed to  resist the proposals of Mr Brady and his  colleagues.

 

Ratings firm Egan-Jones cut its credit rating on the U.S. government to "AA-" from "AA," citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality.

Getty Images

The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. (Read more: Fed's 'QE Infinity' — Four Things That Could Go Wrong)

 

In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.'s real gross domestic product, but reduces the value of the dollar.

In turn, this increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power, the firm said.

In April, Egan-Jones cuts the U.S. credit rating to "AA" from "AA+" with a negative watch, citing a lack of progress in cutting the mounting federal debt.

Moody's Investors Service
[MCO  43.82    0.07  (+0.16%)   ]
currently rates the United States Aaa, Fitch rates the country AAA, and Standard & Poor's rates the country AA-plus. All three of those ratings have a negative outlook.

 

 

• 0 inShare

 

 

 

 

About 30 years ago, Paul Volcker launched a monumental monetary effort to bring down inflation. As Fed chairman, he sold bonds, removed cash from the economy, and cared not one whit about rising interest rates. And it worked. Gold plunged, King Dollar soared, and the drop-off in bank reserves and money extinguished high inflation — and actually launched a multi-decade period of very low inflation.
This week, current Fed Chairman Ben Bernanke embarked on an absolute reversal of Volcker’s policy. He is launching a monumental effort to buy bonds and inject new money into the economy in order to reignite economic growth and job creation. It’s like history is repeating itself, but in reverse. Gold is soaring, the dollar is falling. Something’s wrong with this picture.
Bernanke’s QE3 is an unlimited Fed effort to buy mortgage bonds with new cash. The plan — which starts immediately — envisions $40 billion of bond purchases and money-creation per month, coming to $480 billion over the next year. And there are no limits to these purchases. These operations are open-ended. This could last for years — maybe in perpetuity — until job creation shoots way up and unemployment comes way down.
Nothing like this has ever been used by our nation’s central bank. The Fed’s balance sheet, which has ballooned from around $800 billion to $2.5 trillion under Bernanke, will go to $3 trillion, or $4 trillion, or who knows how high.
But here’s the rub: More money doesn’t necessarily mean more growth. More Fed money won’t increase after-tax rewards for risk, entrepreneurship, business hiring, and hard work. Keeping more of what you earn after-tax is the true spark of economic growth. Not the Fed.
In the supply-side model, the combination of lower marginal tax rates, lighter regulation, and a downsized government in relation to the economy is the growth-igniter. Money, on the other hand, determines the value of the dollar exchange rate and subsequently the overall inflation rate. A falling dollar (1970s) generates higher inflation, a rising dollar (1980s and beyond) generates lower inflation.
This is the supply-side model as advanced by Nobelist Robert Mundell and his colleague Arthur Laffer. In summary, easier taxes and tighter money are the optimal growth solution. But what we have now are higher taxes and easier money. A bad combination.
The Fed has created all this money in the last couple of years. But it hasn’t worked: $1.6 trillion of excess bank reserves are still sitting idle at the Fed. No use. No risk. Virtually no loans. And the Fed is enabling massive deficit spending by the White House and Treasury.
Now, one key political point is that Bernanke’s desperate money-pumping plan to rescue the economy is a very blunt admission that Obamanomics has completely failed. The president is asking voters to give him more time, which is a very weak argument. But his Fed chairman is essentially saying we are running out of time and have to embark on this massive monetary action. Mitt Romney should use the Bernanke argument, but not the Fed solution.
Some argue that Bernanke so desperately wants a victorious Obama to reappoint him, that he’s printing money and driving up stock prices on the eve of the election. I prefer not to believe this cynical interpretation. As an old ex-Fed staffer, I would argue that it’s not a political agency. Although I have to admit, on the eve of the election, the question is going to be asked.
More to the point, the Achilles’ heel of the Bernanke plan is the collapse of King Dollar, the result of printing so many new ones for so long. That, in turn, will drive up commodity prices, especially energy and food, and will do great damage to the middle class, which is already suffering from income declines and rising living standards.
This is what happened in 2011, when QE2 did more harm than good to the economy. Middle-class savers and retirees will also get their heads handed to them because of rock-bottom interest rates. And bank lenders may withhold credit since the difference between short and longer rates is so narrow there’s no incentive to make loans.
So at the end of the day, Obama’s economic program of tax, spend, and regulate has been a dismal failure. And now his Fed chairman is acting dramatically to bail him out. Guess what? It won’t work.
To find out more about Lawrence Kudlow and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

© Creators Syndicate Inc.

Brandon Smith September 14th, 2012 Alt Market Comments (178) Read by 7,794 people

What is it that makes Keynesians so insanely self destructive?  Is it their mindless blind faith in the power of government?  Their unfortunate ignorance of the mechanics of monetary stimulus?  Their pompous self-righteousness derived from years of intellectual idiocy?  Actually, I suspect all of these factors play a role.  Needless to say, many of them truly believe that the strategy of fiat injection is viable, even though years of application have proven absolutely fruitless.  Anyone with any sense would begin to question what kind of madness it takes to pursue or champion the mindset of the private Federal Reserve bank…

Quantitative easing has shown itself to be impotent in the improvement of America’s economic situation.  Despite four years of free reign in central banking, employment remains dismal in the U.S., the housing market continues its freefall, and, our national debt swirls like a vortex at the heart of the Bermuda Triangle.  Despite this abject failure of Keynesian theory, the Federal Reserve is attempting once again to convince you, the happy-go-lucky American citizen, that somehow, this time around, everything will be “different”.

Sadly, as I discussed in August of this year, not only has the Fed announced a new and UNLIMITED round of stimulus measures, but the European Central Bank has also devised its own bond buying free for all:

http://www.alt-market.com/articles/954-has-the-perfect-moment-to-kill-the-dollar-arrived

I predicted simultaneous QE programs by the two central banks because it made perfect sense, at least, for those with diabolical intentions.  With engineered currency devaluation in full swing in the EU and the U.S., the implosion of both currencies, especially the dollar, will be masked.  That is to say, the dollar index is measured in large part by comparison to the relative strength of the Euro.  If the Euro falls through overt printing, the dollar will appear stronger than it really is, duping the general public and giving bankers more time to inflate.

Germany’s top constitutional court, only a day before QE3, announced its decision to support a Euro-area rescue fund, which the German people and a large part of its government are vehemently opposed to.  This action was preceded by “warnings” from various banking insiders, including Nosferatu himself (George Soros), that the EU would be sent into perdition and total economic chaos if the nation did not bow down to the ECB and hand over its GDP engine for the “good of the union” and the world:

http://www.nytimes.com/2012/09/14/world/europe/14iht-letter14.html?_r=0

http://www.bloomberg.com/news/2012-09-11/germany-s-currency-nostalgia-is-badly-off-the-mark.html

Sound familiar?  This is exactly what Americans were told in the face of their 80% disapproval rating against the bailout bonanza.  The response from the elites, whether in Germany or the U.S. is essentially that the people “don’t know what’s best, and should sit down while the so called “experts” take it from here.”  Again, mainstream talking heads will suggest that new stimulus is not a problem, and that the unlimited quantitative easing of central banks around the globe should become standard.  In fact, they have already begun the propaganda campaign.  Apparently, QE3 will save us all, rich and poor:

http://www.bloomberg.com/news/2012-09-13/with-qe3-we-all-win-poor-and-rich-alike.html

 

These are the typical musing of centralized banking proponents.  But where is the historical precedence for their theories?  Where are the benefits from the last two QE’s?  All we have received so far for the future debt enslavement of ourselves and our children is: Perpetually High Unemployment Rates: There has been NO advancement in employment due to quantitative easing.  Official jobless percentages have fallen, but even the mainstream media now admits this is due to unemployed Americans being removed from benefits rolls because they have been without work for too long:

http://www.businessweek.com/articles/2012-09-07/weak-jobs-report-shows-obamas-long-road-ahead

True unemployment including U-6 measurements continues to hover around 20%.  So much for the job creation that both the Bush and Obama administrations promised in the wake of the bailouts.

A Housing Market Black Hole: Does anything else really need to be said about the housing market?  Is it not blatantly clear to almost every homeowner in this country that QE has changed nothing in terms of protecting their home values or their ability to sell?  Has attaining a loan become any easier since 2008?  Alternative analysts including myself ALL pointed out four years ago that property markets would continue to crash despite any efforts (real or fraudulent) on the part of the Fed.  We were right.  The mainstream media shills were wrong.  Moving on…

Disintegrating Global Demand: Manufacturing in almost every economically prominent country has gone bust, from Europe, to the U.S., to China.  The Baltic Dry Index, a pure indicator of supply and demand using shipping rates for raw goods as a medium, hit incredible lows in 2008.  However, since the QE marathon, the BDI has gone even lower!  In January of 2012, it broke historic lows, and continues to skate along the bottom today, indicating that an even greater collapse in demand and the markets is near at hand.  Demand drives economics.  Period.  No demand, no economy.  Tangible demand cannot be fabricated.  QE has done nothing to drive savings into the pockets of consumers, and therefore, it has done nothing to entice them to spend.  The public is broke, we continue to be broke, and we will be even more broke tomorrow.

Unsustainable National Debt: Our “official” national debt in 2008 was around $10 trillion.  Four years later, we have broken $16 trillion.  This obviously does not include outstanding debts on long term entitlement programs, and new programs like Obamacare, which would by some estimates bring our national debt to around $120 trillion:

http://www.nypost.com/

Whether you believe the Treasury’s statistics or not, the bottom line is that at the very least our national debt has increased by 60% in only four years time!  Now, the private Federal Reserve wants to introduce unlimited stimulus, on top of Operation Twist, and the incredible money burning habits of our current government?  Are Keynesians really foolish enough to think that the generation of such massive liabilities will somehow undo the crippling effects of already debilitating debt?  Answer:  Yes.

Inflation In Necessities: Food and energy prices remain painfully high, and are now in the process of inflating beyond the average person’s ability to pay.  Oil in particular has remained almost static above $100 a barrel (Brent).  This has been blamed on numerous scapegoats, from Middle East turmoil to “speculation”.  Yet, long term high prices show that neither of these explanations is fully sufficient.  In reality, only currency devaluation allows for such a steady and consistent inflationary reaction in commodities.  Unfortunately, we haven’t seen the worst yet.  QE3 will send prices skyrocketing, and with the open-ended nature of the stimulus, there is no ceiling.  We could very well witness Wiemar style hyperinflation in the near term.

As I have said in the past, I believe QE3 will be the final straw for many foreign holders of U.S. debt and dollars.  The world reserve status was already under severe threat after QE1 and QE2.  The MSM has virtually ignored China’s bilateral trade agreements building since 2010.  In the past two to three years, China has made deals with Russia, India, Japan, South Korea, Iran, and the ASEAN trading bloc (most South-Asian nations), that remove the dollar as the world reserve currency.  And, this year, China has arranged a similar bilateral deal with Germany:

http://www.reuters.com/article/2012/08/30/germany-china-yuan-idUSB4E7JG00D20120830

 

These countries combined offer at least 30% of global GDP, and could easily annihilate the dollar if they decide to dump the greenback completely as the world reserve.  With the advent of QE3, this is now a certainty.

Open ended inflation is exactly what destroyed Wiemar Germany, and more recently Zimbabwe.  The central banks and their lackeys will claim there is no comparison.  I beg to differ.  When a nation expands debt spending instead of cutting it, and then monetizes that debt through fiat printing in order to allow even more debt to accumulate, that nation is not going to survive.  That nation will eventually hyperinflate, then default, then collapse, either turning into something entirely alien, or fading from history altogether.  This is what we have to look forward to in light of QE3, the final and infinite stimulus adventure.  Something has to give, and it has to give soon.  My bet is on the dollar…

You can contact Brandon Smith at:  brandon@alt-market.com

Alt-Market is an organization designed to help you find like-minded activists and preppers in your local area so that you can network and construct communities for mutual aid and defense.  Join Alt-Market.com today and learn what it means to step away from the system and build something better.

You can’t accuse Federal Reserve Chairman Ben Bernanke of not living up to his nickname.  Back in 2002, Bernanke delivered a speech entitled “Deflation: Making Sure ‘It’ Doesn’t Happen Here” in which he referenced a statement by economist Milton Friedman about fighting deflation by dropping money from a helicopter.  Well, it might be time for a new nickname for Bernanke because what he did today was a lot more than drop money from a helicopter.  Today the Federal Reserve announced that QE3 will begin on Friday, but it is going to be much different from QE1 and QE2.  Both of those rounds of quantitative easing were of limited duration.  This time, the quantitative easing is going to be open-ended.  The Fed is going to buy 40 billion dollars worth of mortgage-backed securities per month until they have decided that the economy is in good enough shape to stop.  For those that get confused by terms like “quantitative easing” and “mortgage-backed securities”, what the Federal Reserve is essentially saying is this: “We’re going to print a bunch of money and buy stuff for as long as we feel it is necessary.”  In addition, the Federal Reserve has promised to keep interest rates at ultra-low levels all the way through mid-2015.  The course that the Federal Reserve has set us on is utter insanity.  Ben Bernanke can rain money down on us all he wants, but it is not going to do much at all to help the real economy.  However, it will definitely hasten the destruction of the U.S. dollar.

And the Federal Reserve is apparently very eager to get QE3 going.  Purchases of mortgage-backed securities are going to start on Friday.

In the coming months, hundreds of billions of dollars that the Federal Reserve has zapped into existence out of nothing will be injected into our financial system.

So what will happen to all of this new money?

If banks and financial institutions use that money to make loans then it could have somewhat of a positive impact on the economy in the short-term.

However, the truth is that it isn’t as if banks are hurting for cash to loan out.  In fact, right now banks are already sitting on $1.6 trillion in excess reserves.  Just like with the first two rounds of quantitative easing, a lot of the money from QE3 will likely end up being put on the shelf.

But the stock market loved the news because they know that the previous two rounds of quantitative easing have been great for the financial markets.  On Thursday, the stock market soared to levels not seen since December 2007.

There is much rejoicing on Wall Street right now.

And this stock market bounce is great for Bernanke’s good buddy Barack Obama.

Obama nominated Bernanke to a second term as Fed Chairman, and this might be Bernanke’s way of paying him back.

But of course the Fed is supposed to be “above politics” so that would never happen, right?

The Federal Reserve essentially “crossed the Rubicon” today.  No longer will quantitative easing be considered an “emergency measure”.  Rather, it will now be considered just another “tool” that the Fed uses in the normal course of business.

Considering how vulnerable the U.S. dollar already is, announcing an “open-ended” round of quantitative easing is utter foolishness.  According to the Fed, when you add the 40 billion dollars of new mortgage-backed security purchases per month to all of the other “easing” measures the Fed is continuing to do, the grand total is going to come to about 85 billion dollars a month.  The following is from the statement that the Fed released earlier today….

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

So what does all of this mean?

I really like how one analyst put it when he described this announcement as a “I’m gonna ease till your eyes bleed kinda statement“.

The Fed also promised to keep interest rates at “exceptionally low levels” until mid-2015….

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

It seems that whenever the U.S. economy gets into trouble, Bernanke and his friends at the Fed only have one prescription and it goes something like this….

“Print more money and promise to keep interest rates near zero even longer.”

Of course a lot of Republicans are quite disturbed that QE3 was announced with just a couple of months remaining in a very heated election battle.

Even big news organizations such as CNBC are commenting on this….

Though the Fed is ostensibly politically independent, the decision comes at a ticklish time with the presidential election less than two months away.

And without a doubt the mainstream media will be proclaiming this to be “good news” for the economy in the short-term.

But is QE3 really going to help the average person on the street?

Well, first let’s take a look at employment.  We are told that one of the primary reasons for QE3 is jobs.

But did QE1 and QE2 create jobs?

The answer is clearly no.

As you can see from the chart below, the percentage of working age Americans with a job fell dramatically during the last recession and has not bounced back since that time despite all of the quantitative easing that has been done already….

So why try the same thing again when it did not work the first two times?

But what more quantitative easing is likely to do is to pump up stock market values because a lot of the money from QE3 is going to end up being put into stocks and other investments.

This is going to help the wealthy get even wealthier, and it is going to make the “wealth gap” between the rich and the poor even larger in America.

QE3 is also probably going to cause commodity prices to rise just like QE1 and QE2 did.

That means that you will be paying more for gasoline, food and other basic necessities.

So there may not be more jobs, but at least you will get the privilege of paying more for things.

The inflation that QE3 will cause will be particularly cruel for those on fixed incomes such as retirees.

None of the extra money from QE3 is going to go into their pockets, but they will have to pay more to heat their homes and fill up their shopping carts.

And the “exceptionally low interest rate” policy of the Federal Reserve is absolutely devastating for those that have saved for retirement and that are relying on interest income for their living expenses.

In short, quantitative easing is very good for the wealthy and it is very bad for the average man and woman on the street.

But what else would you expect from the Federal Reserve?

It is imperative that we educate the American people about the Federal Reserve and about how they are destroying our economy.  For much more on this, please see my previous article entitled “10 Things That Every American Should Know About The Federal Reserve“.

Perhaps the biggest danger from QE3 is that it could greatly hasten the day when the U.S. dollar ceases to be the reserve currency of the world.

The rest of the world is not stupid.  They see that the Federal Reserve is now firing up the printing presses whenever they feel like it.  They can see the games that we are playing with our currency.

Why should the rest of the world continue to use the U.S. dollar to trade with one another when the United States is constantly debasing it and playing games with its value?

As I wrote about the other day, China and Russia have been calling for a new reserve currency for the world for several years.  They have been leading the charge to conduct international trade in currencies other than the U.S. dollar, and I have documented many of the major international agreements to move away from the U.S. dollar that have been made in the last couple of years.

The status of the U.S. dollar in the world has already been steadily slipping, and now Helicopter Ben Bernanke pulls this kind of nonsense.

We are handing the rest of the world an excuse to abandon the U.S. dollar on a silver platter.

And when the rest of the globe rejects the U.S. dollar as a reserve currency, the dollar will crash, the cost of living will increase dramatically, our standard of living will go way down and we will never fully recover from it.

So if you think that things are “bad” now, just wait until that happens.

The U.S. dollar is one of the best things that the U.S. economy still has going for it, and Helicopter Ben Bernanke is doing his best to absolutely destroy that.

What is your opinion of QE3?  Please feel free to post a comment with your thoughts below…

The policy that has hastened the political rise of Islamic radicalism and the attacks on diplomatic missions in Egypt and Libya in the wake of the so-called “Arab Spring” was hatched in the “ivory tower” of the Obama administration, charged talk-radio host Michael Savage today.

“We’ve gone from the ivory tower to the loss of power, literally in one administration,” he told his “Savage Nation” audience.

Savage pointed to three women in the Obama administration who helped advance the policy that ousted Libyan dictator Muammar Gadhafi and created the political vacuum in which radical jihadists attacked the U.S. Consulate today and killed Ambassador Christopher Stevens and four others.

Secretary of Stare Hillary Clinton, Ambassador to the United Nations Susan Rice and Special Assistant to the President Samantha Power convinced Obama to go to war with Libya based not on American interests, but on a doctrine championed by leftist billionaire activist George Soros, Savage noted.

As WND has reported, “responsibility to protect” is based on the belief that sovereignty is a responsibility not a right and focuses on prevention of crimes against humanity rather than defending America’s borders.

Savage noted he predicted in his book “Trickle Down Tyranny” that the Obama policy would help bring the Islamic radicals to power

The decision to go to war against Gadhafi, Savage wrote in his book, “reveals just how flimsy Obama’s foreign policy was in the testosterone-free zone known as the Obama White House.”

Savage recalled Hillary Clinton’s boast in an interview with CBS News after Gadhafi was killed last October.

“We came, we saw, he died,” she said, laughing.

Savage, meanwhile, praised Republican presidential nominee Mitt Romney for accusing Obama of apologizing for American values.

Romney criticized the Obama administration’s “disgraceful” initial response to violence in Libya and Cairo.

“I think it’s a terrible course for America to stand in apology for our values, instead when our grounds are being attacked, being breached, the first response of the United States is to be outraged,” Romney said. “The statement was akin to an apology and I think was a severe miscalculation.”

Romney said American should “never hesitate when we see something which is a violation of our principles.”

Savage said that in the “ivory tower occupied by the academics in this administration, real men are not welcome, so it has fallen to three women.”

“You’ve only seen the beginning of what’s coming,” Savage warned. “The tyranny they have unleashed in the Middle East will come home to haunt us here in this United States.”

New article for PolicyMic.

Now that the convention circuses are finally over, the highly  anticipated August jobs report was released yesterday with less than  optimistic numbers. According to the Labor Department, nonfarm payrolls increased by only 96,000 in August, significantly  lower than the 140,000 needed to put any dent in the unemployment rate.

• 
•                 Carol Platt Liebau                     Blogger, Townhall.com               

            Sep 11,  2012 07:11 PM EST

On 9/11, a day devoted to remembering those killed at the hands of Islamofascist terrorists -- and this year, a day when a mob in Egypt attacks the US embassy and replaces the American flag with the Al Qaeda one -- here is the Obama administration's statement in full:

The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims – as we condemn efforts to offend believers of all religions. Today, the 11th anniversary of the September 11, 2001 terrorist attacks on the United States, Americans are honoring our patriots and those who serve our nation as the fitting response to the enemies of democracy. Respect for religious beliefs is a cornerstone of American democracy. We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others.

One would think this was a horrible, outrageous joke.  But it's not.  It's the actual statement.  It's kind of reminiscent of Obama's response to 9/11 itself.  Just a week after the collapse of the Twin Towers, them State Senator Obama published a piece in the Hyde Park Herald where he discussed

“the more difficult task of understanding the sources of such madness.”

“The essence of this tragedy, it seems to me, derives from a fundamental absence of empathy on the part of the attackers: an inability to imagine, or connect with, the humanity and suffering of others,” he wrote. “Such a failure of empathy, such numbness to the pain of a child or the desperation of a parent, is not innate; nor, history tells us, is it unique to a particular culture, religion, or ethnicity….”

“We will have to make sure, despite our rage, that any U.S. military action takes into account the lives of innocent civilians abroad,” he went on. “We will have to be unwavering in opposing bigotry or discrimination directed against neighbors and friends of Middle Eastern descent."

(That rhetoric, was, of course, before his expanded use of drones meant more civilian deaths.)

Note his big concerns: "understanding" the attackers and the preemptive denunciation of expected "bigotry or discrimination" against Middle Easterners -- bigotry that really never materialized.  It is, however, revealing of his view of average Americans . . . just as his administration's statement  today likewise is dismayingly reflective of his concerns and priorities.

 

Share this Article

By Mac Salvo (SHTFPlan.com | Original Link)

Take a good look. This is who we elected to be our leader. When you take away the pre-written speeches, the teleprompters, the flashy stage lights, the thousand dollar suits, and the star power, you’re left with just another political sycophant and his rhetoric.

His actions speak much louder than the words that convinced tens of millions of our countrymen that he would act in our interests.

Barack Obama’s administration is plagued with one promise after another being broken.

For those who have not yet been hypnotized into submission by his words, the following will be infuriating.

 

Via The Daily Crux:

This is a stunning thirteen minute video that shows Obama in his own words, with commentary from mostly mainstream media sources. If this video goes viral and reaches moderate and independent voters, it would be a big blow to the Obama re-election bid.

IJ review

Share this Article

By Mac Salvo (SHTFPlan.com | Original Link)

Take a good look. This is who we elected to be our leader. When you take away the pre-written speeches, the teleprompters, the flashy stage lights, the thousand dollar suits, and the star power, you’re left with just another political sycophant and his rhetoric.

His actions speak much louder than the words that convinced tens of millions of our countrymen that he would act in our interests.

Barack Obama’s administration is plagued with one promise after another being broken.

For those who have not yet been hypnotized into submission by his words, the following will be infuriating.

 

Via The Daily Crux:

This is a stunning thirteen minute video that shows Obama in his own words, with commentary from mostly mainstream media sources. If this video goes viral and reaches moderate and independent voters, it would be a big blow to the Obama re-election bid.

IJ review

by Jerome R. CorsiEmail | Archive

 

Israel Hanukoglu

Israeli Science and Technology “ungrouped” image of Obama long-form birth certificate

According to the Obama administration, the unemployment rate in the United States has been slowly coming down over the past couple of years.  But is that actually true?  When you take a closer look at the data you quickly realize that the real unemployment numbers are much worse than we are being told.  For example, if the labor force participation rate was the same today as it was back when Barack Obama first took office, the unemployment rate in the United States would be a whopping 11.2 percent.  But every month the Obama administration has been able to show "progress" because of the fiction that hundreds of thousands of Americans are "disappearing" from the labor force each month.  Frankly, the way that they come up with these numbers is an insult to our intelligence.  Personally, I much prefer the employment-population ratio.  It is a measure of the percentage of working age Americans that actually have jobs.  I like to call it "the employment rate".  So what happened to the "employment rate" in August?  It fell slightly to 58.3 percent.  It is lower than it was when the last recession supposedly ended, and it is almost as low as it has been at any point since the very beginning of this crisis.  A few times during this economic downturn it has actually hit 58.2 percent.  Needless to say, things are not getting any better.  So why aren't the American people being told the truth?

After every other recession in the post-World War II era, the employment rate has always rebounded.

But not this time.

Does this look like a recovery to you?....

So how in the world can Barack Obama claim that we are better off now?

In August 2010, 58.5 percent of working age Americans had jobs.

In August 2012, 58.3 percent of working age Americans had jobs.

So where is the recovery?

It is two years later and a smaller percentage of Americans are employed.

It is very frustrating to me that we are not being told the truth about the unemployment numbers.  The following are some more indications that the real unemployment numbers are much worse than we are being told....

-In July, 142,220,000 Americans were working.  In August, only 142,101,000 Americans were working.  So the number of Americans working fell by 119,000 and yet the government would have us believe that the unemployment rate actually declined from 8.3 percent to 8.1 percent.

-According to the federal government, 96,000 jobs were added to the economy in August and the U.S. labor force shrank by 368,000 even though our population is continually growing. If the size of the U.S. labor force had stayed the same, the official unemployment rate would have actually gone up to 8.4 percent.

-Almost all of the new jobs added in August were the result of the "birth-death" model used by the Labor Department to estimate jobs added by new businesses.  That model has been heavily criticized for being inaccurate.  If you take the 87,000 jobs added by that model out of the equation, then the U.S. economy only added 9,000 jobs in August.  But it takes somewhere around 125,000 new jobs each month just to keep up with the growth of the population.

-If the labor participation rate was sitting where it was when Barack Obama first took office, the unemployment rate in the United States would actually be 11.2 percent.

-If the labor participation rate was sitting at the 30 year average of 65.8 percent, the unemployment rate in the United States would actually be 11.7 percent.

-John Williams of Shadow Government Statistics would put the "real" rate of unemployment up around 23 percent after adding in all workers that have given up looking for work and all underemployed workers.

-The labor participation rate for men has fallen to 69.9 percent.  This is the lowest level that it has been since the U.S. government began tracking this statistic back in 1948.

-There was more bad news for manufacturing in this latest report.  During the month of August the U.S. manufacturing sector lost approximately 15,000 jobs.

-The official unemployment rate has now been above 8 percent for 43 months in a row.

-The percentage of working age Americans with a job has been below 59 percent for 36 months in a row.

-The employment numbers for both June and July were revised downward significantly.  For June, it turns out that only 45,000 jobs were added to the economy as opposed to the 64,000 that were originally reported.  For July, it turns out that only 141,000 jobs were added to the economy as opposed to the 163,000 that were originally reported.

-Incredibly, 58 percent of the jobs created since the end of the last recession have been low income jobs.

-The U.S. economy currently has 4.7 million less jobs than it did when the last recession started.

So what is the solution to these problems?

The media is breathlessly proclaiming that more quantitative easing is on the way and that the Federal Reserve will save the economy and send the stock market soaring to new heights.

A headline on CNBC on Friday boldly declared the following: "Market Sees 'Helicopter Ben' Coming to the Rescue".

You can almost hear the chopper blades whirling now.

Apparently Bernanke has had a love of showering the economy with money for a very long time.  For example, you can see a picture of a young Ben Bernanke in action right here.

Of course that is a joke, but you get the point.

In recent years Federal Reserve Chairman Ben Bernanke and the rest of his cohorts have printed money like there is no tomorrow.

So have the previous rounds of quantitative easing solved our problems?

Of course not.

The employment rate is even lower today than it was two years ago.

But all of that money printing has sent the stock market soaring and it has enabled the big Wall Street banks to make an obscene amount of money.

The truth is that the Federal Reserve, the Obama administration and the big Wall Street banks don't really care about you.

They don't really care that the middle class is rapidly shrinking and that the number of Americans on food stamps has risen by more than 14 million since Barack Obama became president.

What they care about is what is good for them.

As I have written about previously, if we continue on the same path that we have been on for the past several decades, there will never be enough jobs in America ever again.

On our current trajectory, we will end up just like Greece where the unemployment rate is now up to 24.4 percent.

Once upon a time the economy of Greece was thriving.

But today, many formerly middle class Greek citizens are leaving Greece and are picking up whatever work they can find....

As a pharmaceutical salesman in Greece for 17 years, Tilemachos Karachalios wore a suit, drove a company car and had an expense account. He now mops schools in Sweden, forced from his home by Greece’s economic crisis.

“It was a very good job,” said Karachalios, 40, of his former life. “Now I clean Swedish s---.”

Karachalios, who left behind his 6-year-old daughter to be raised by his parents, is one of thousands fleeing Greece’s record 24 percent unemployment and austerity measures that threaten to undermine growth.

Would you be willing to do that?

Don't laugh.

Someday when the unemployment rate in the United States gets that high we will see large numbers of desperate Americans leaving this country in search of work somewhere else.

Already, an increasing number of Americans are buying expired food at auctions.

Times are hard and people are trying to get by any way that they can.

More than 100 million Americans are already on welfare and things have not even gotten that bad yet.

This is nothing compared to what is coming.

As you can see from the chart posted near the top of this article, the last economic downturn appears to have permanently weakened the U.S. economy.

Now the next wave of the economic collapse is rapidly approaching.

How much worse will things get when it finally hits us?

That is something to think about.