Forum Post: The Fed has cast the deciding ballot on the economy. The Media has not evolved to reporting journalism.
Posted 12 years ago on Sept. 14, 2012, 7:55 a.m. EST by GNAT
(150)
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I'm not trying to sound defeatist, but there isn't really much to do now but wait. The consequences of action taken by the president, congress, and the Fed are now set on an unshakable one way path. Protests have failed to force a change in course. I encourage protesters, revolutionaries and reformists to begin looking to what the consequences will be, and prepare to make a public case of cause and effect. Over the next few months, it is important to gather information as events unfold. This will help you tie everything together and to make the case once things fall apart.
The Obama drones and the media want you to ignore all the information that indicates the real collapse ahead (there was also a great recession shortly before the depression). The media ignores it for reasons I don't understand. The Obama drones ignore it because it isn't conducive to getting Obama reelected, and we know this priority for them overshadows even reality or self preservation. I'm not going to bother with links this time because anyone who wants the truth can easily find it. The problem is most people don't want to hear anything unpleasant including the truth unless it involves someone else's misfortune.
All your recycled Go Team bullshit sounds 1,000 times more absurd than it did just yesterday. I have learned well that none of you are capable of rising to the occasion or breaking from your mind numbing routines. I look forward to the chaos on this website over the next 3-6 months as the reality of the situation sinks into your thick skulls. Naive doesn't begin to cover your attitudes.
Amen.
What would you see as a solution, if there is one?
Controlled deflation by incrementally increasing leverage requirements across the spectrum of financial instruments. Some people think deflation is the same as a depression, there is no point in talking to those people. For those who understand the reality of deflation, however unpleasant it seems, it's the only way to close the gap between inflation (current, not rising) and wages in order to reignite higher levels of demand. But, this isn't going to happen because as you see by the Fed's actions, nobody is allowed to touch investor returns, even if it collapses the global economy. The demand side of supply and demand has been traded in for supply and invest where investment has grown outside it's intended use and combined with price inflation is now a convenient way to hide lower unit sales. This practice is what keeps prices artificially high when the economy is in a slump and for just an economic slump, it works (however immoral it is). Tragically, this has been applied to a situation much much larger than a slump and the consequences are grave.
Well, I can agree that deflation is not the same as depression, but has historically tended to create recession. I can agree that the demand side has been traded for supply and invest, as you say. I don't agree with much else. Deflation is a tightening of the money supply. It has never increased demand nor do I see any reason to believe it ever will. I do not believe the problems with the economy have much to do with, or can be solved by monetary or fiscal policy. I can agree that there is a false economy.
It can can be a connected issue but it isn't required. This is why I suggest controlled deflation by increasing leverage requirements. You slow the velocity of top end economic circulation instead of causing deflation by actually removing money from circulation. By increasing leverage requirements the money is still in the economy, but it means you increase capital/leverage retirements on financial instruments. The prices and the economy will self correct as it would then be controlled by real economic factors rather then the artificial arrangement we have now.
I think increasing leverage requirements is a good idea. I can see you've invested a lot of thought into this. You have some basics right. I just don't think that the velocity at the top is getting to the core. It's good you understand the concept of the velocity of money, but it is the velocity in the lower levels, the masses, so to speak, that seems to be where the problem lies. By the way, I saw in another of your responses, to the "village idiot" of this forum, (VQK) , where you suggest talking to 15 locally o/o businesses. I have one of those. One down, 14 to go. Yes, revenues,sales, units, are down, but so are profits. Input, commodity prices are up. if you drive down the price I get for my products, I must lay off help, to survive. What I see as a cause, is that we are in the predictable end stages of the neoliberal agenda. Wages have been decreased, (real wages), unions have been busted, jobs have been offshored. No fiscal or monetary solution can counter this.
This is why I advocate for using leverage to initiate deflation at the top. This will effect commodities first. You'll see the price drop in your overhead before it would be seen anywhere else.
Obviously, focus on labels does nothing to fix he economy.
The economy is a fiscal and monetary issue. And here I thought your questions had a serious point.
No,the real economy is not a fiscal/ monetary issue. Real goods and services are what the real economy is about.
By following your reasoning, the Fed is playing no roll at all in the economy. The Fed makes decisions based on fiscal and monetary policy. Nice trick trying to separate the issue though.
Well, if you think separating issues that are separate is a trick, there's nothing left to say.
You're saying the Fed has no effect on the economy. Noted.
I'll put it as plainly as I can, then I will leave you to your illusion. Fiscal/ monetary/ policy cannot fix STRUCTURAL ISSUES.
I have been addressing structural issues this entire conversation. And the Fed's actions are part of that conversation. CAPS LOCK DOESN'T CHANGE REALITY.
http://www.newyorkfed.org/research/current_issues/ci9-8/ci9-8.html
Do you have any context for the link or are you just implying credibility on your part by posting links that you hope nobody reads?
http://www.streetinsider.com/Fed/Bernanke%3A+Monetary+Policy+Not+Panacea%3B+Says+Fed+Alone+Cannot+Fix+Unemployment/7725861.htm The current recovery has seen steady growth in output but no corresponding rise in employment. A look at layoff trends and industry job gains and losses in 2001-03 suggests that structural change—the permanent relocation of workers from some industries to others—may help explain the stalled growth in jobs.
Your hand has been shown. Game over. Thx for playing.
http://en.wikipedia.org/wiki/Capital_structure
I'll just let others read your link, I'm sure they will see the same thing I did. The Fed is going ahead with QE3. This has the sole intent of effecting the economy. All or nothing arguments won't change that. It does make one wonder why you try so hard to skew reality.
One wonders why you don't know what structural issues are and what they aren't. out.
So then increasing demand is what you proposal would do?
Go to 15 businesses today, locally owned and operated, ask them how there sales are doing and get them to compare over the last 10 years. If the Fed had not intervened by propping up WallSt, prices would have come down dramtically within 18 months and the scope of what the working class could afford would have grown significantly which would create higher demand and the economy would be back on track, today, with minimal impact on the national debt. The Fed is and has been exasperating the situation.
Even easier, do a google for "lower unit sales". Anything over the last few years.
What do businesses do when they have stagnate inventory? They lower prices in order to move product. So why has this not happened in over 5 years of economic decay? I suggest looking at the numbers (all of them, profit / unit sales) on WallSt.
I do not support the banking controlled Fed to be sure.
In so far as demand, corp sales as such. I always felt this was related to the high unemployment, corp created wage stagnation, high consumer/mortgage/student loan debt.?
Couldn't we address this problem directly by cutting taxes/debt for working class Americans, pass the jobs bills being obstructed, maybe remove the tax breaks that encourage outsourcing, maybe add tax breaks for insourcing. Increase taxes on the wealthiest, and cut the defense budget?
Wouldn't that also increase demand.?
The link between the economy and the government is like the link between the left and right halves of your brain. There is a connection and communication but they are independent entities serving different functions.
Taxes need to be fixed because revenue is shotty compared to the size of the bill we have to pay.
Fixing the economy requires another set of responses that aren't even being discussed.
So then my suggestion will NOT increase demand?
"Taxes need to be fixed"? You mean repaired? Or left alone (not raised)?
A short fix is the expiring Bush taxes. The long term is a flat tax that includes SS, Medicaid, Medicare, and a wage system that provides financial well being for the worker and also provides capacity for them to pay that flat tax. This creates a level tax system and also fixes the entitlements shortfall in revenue. Part of the reason it's so easy to ignore the poor is because all you have to do is mention how little they contribute to the system. This is the ultimate in financial oppression. Want to fix that, start using the word "Deadbeat Employer" everywhere you go.
I don't support a flat tax. It is regressive. In fact medicare/SS should have the payroll tax increased to all higher levels of payroll not just below 110K. that would be progressive and fair. In fact I think with that we could lower the payroll contribution for lower income people, further increasing demand.
So you said "a short fix is the expiring Bush taxes" Are you saying you support letting them expire?
So then you don't think my proposal will increase demand.?
Further regression into a welfare state does not benefit the poor, it solidifies wage slavery. Welfare is a backup plan, why are you trying to mainstream it with tax subsidies? Even in a socialist society, everyone is required to contribute. Welfare states are cultivated to ensure low wage labor.
In my proposal welfare roles would shrink! Oh I should also add to my proposal a living wage and some kind of exec pay cap to spread that money down to the real workers! Not the lazy fat ass execs.!
I don't understand your question "why are you trying to mainstream it (welfare) with tax subsidies?" I am not trying to do that. Why do you think I am.?
So... You don't think my proposal would create demand?
No.
Oh. Well I think getting money in peoples hands in fact isthe only thing that will increase demand.
I don't see how your proposal would create demand. Could you explain?
Last night I listened to an economist state that the new QE would give businesses confidence that future growth would occur and they would therefore hire workers.
Do you agree?
Welfare doesn't buy cars, houses, or even computers.
No: http://www.cnbc.com/id/49031991
The article was interesting. Not surprising. I agree and do not support much that the Fed does. Can't say I understand it entirely but as I've already said I am against the bank controlled fed.
So we may agree on that. I can't say I understand you proposal or how it helps the unemployed/working Americans.
Do you know Richard?
no welfare doesn't buy much at all. My proposal would reduce the welfare rolles.
I don't see how yours would. Are you suggesting you proposal would reduce welfare rolls
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Should we start hoarding food & ammo? What are doing to prepare? Do you have an underground bunker ready.?
Got room for one more?
The Obama drones and the media want you to ignore all the information that indicates the real collapse ahead (there was also a great recession shortly before the depression). The media ignores it for reasons I don't understand. The Obama drones ignore it because it isn't conducive to getting Obama reelected, and we know this priority for them overshadows even reality or self preservation. I'm not going to bother with links this time because anyone who wants the truth can easily find it. The problem is most people don't want to hear anything unpleasant including the truth unless it involves someone else's misfortune.
All your recycled Go Team bullshit sounds 1,000 times more absurd than it did just yesterday. I have learned well that none of you are capable of rising to the occasion or breaking from your mind numbing routines. I look forward to the chaos on this website over the next 3-6 months as the reality of the situation sinks into your thick skulls. Naive doesn't begin to cover your attitudes.
I thought you said you didn't mention candidates?
Was that a lie?
Is this an anti Obama partisan political campaigning screed?
Do you like Pres Obama?. Do you think the Fed's actions will help the economy or do you agree with the party (R's) that may not be named?
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The republicans also fully support the actions by the Fed. Not trying to hear your childish bullshit today. Don't you think at 49 years of age that it's time for you to grow up?
insults.? C'mon you give up already.?
You know the truthis comin right? Ha Ha Ha!
I just heard Your boy Romney come out against it. Don't you know your republicans have attempted to stop/obstruct anything that might help the economy because they don't want a real recovery while a dem is in the Oval office?
Maybe you missed that talking point. Re read your dailt Repub briefs.