![]() Federal Repression System . My cynical view on their dithering will be detailed below. And of course, the Bank of Japan met and decided that maybe they had gone a bridge too far; and rather than lowering already negative rates when the yield curve was flat out to 4. Japanese bond at zero. ![]() So far, the move has not been a rousing success. This is partially because their banks are bleeding cash and screaming at them, and they have got to figure out some way to walk back what is becoming a very destructive program. When you look at what low rates have done to the Japanese economy and Japanese retirees, Kuroda- san’s coming to Jackson Hole and declaring that negative rates have been a success demonstrated a fair amount of chutzpah. But then he supplied only a small helping of the staggering amount of hubris displayed at Jackson Hole by central bankers from all over the world, who were celebrating the success of the most repressive monetary policy conditions in the history of mankind. The IMF, the BIS, and the World Bank are all revising their global growth predictions downward at a rapid clip. You get the feeling these guys could spin Napoleon’s invasion of Russia into a positive story and one they could take credit for. In today’s letter we are going to look at the FOMC’s decision- making process for monetary policy and survey the unpalatable future that our leaders are cooking up for us. But we won’t be living in the fantasy world they have created for themselves; we are going to have to live in the real world instead, where investment portfolios make a difference to our lifestyle and retirement, not only for ourselves but for our families and clients. I must confess, the more I think about where the “monetary policy community” of academic elites has brought us, the angrier I get. It has been a long time since I have been this passionately upset about something. And not merely because the policies are stupid. If I got passionately upset about every stupid idea I come into contact with, I would soon require serious blood pressure medication. Having been intimately involved in the political process for almost 2. I daily came into contact with stupid ideas and thought myself somewhat immune. No, what the Fed has done is to destroy the retirement hopes and dreams of multiple tens of millions of my fellow US Boomers, and when we include the effects of the destructive policies of the rest of the world’s central banks, the number becomes hundreds of millions. The secure and protected world our central bankers live in is far removed from that of the American or European middle class retiree. ![]() The purity of their theory and the clarity of their economic thought is evidently far more important to them than people’s wellbeing is. However, numerous thoughtful scholars and those in the business community are mounting a serious pushback. They may be considering the wisdom of Winston Churchill’s remark, “However beautiful the strategy, you should occasionally look at the results.”Central bankers of the world look around them and see nothing but confirmation of their brilliance. Mostly they see it reflected from the stock markets, but some of us are beginning to think they are going blind. This week I want to expand on my recent Federal Reserve criticism. I’ve talked about the mistakes I think they will make in the next recession (whenever it starts). Published: Thu, Jun 13, 2013. Beginning next week, The Washington Examiner will move online and to a new weekly print magazine. The revamped news outlet will focus on national politics and policy, investigative. A view to emulate Drupal core's handling of taxonomy/term. Hillary Clinton was provided the exact questions she would be asked by daytime talk show host Steve Harvey, according to a report. Info for Students Attending Ashford University Online. The Iowa State Approving Agency has informed VA that it is withdrawing Ashford University’s approval for GI Bill benefits on June 30, 2016, due to. The Purdue University Online Writing Lab serves writers from around the world and the Purdue University Writing Lab helps writers on Purdue's campus. We need to think about that future in the light of the Fed’s mistakes in the wake of the last recession. That is really where our disagreement with them began. The Fed believes its policies worked. I say those policies did not work, and the dismal recovery we have suffered through occurred in spite of the Fed, not because of it. Federal Reserve policy has actually thwarted the normal recovery process. The Fed’s Fruitless Follies. If the Fed had really believed their own post- recession forecasts, they would have been normalizing interest rates by 2. It starts with good grades. The Buick Achievers Scholarship Program rewards students who have succeeded both inside and outside of the classroom – and who may not be able to attend college without financial. Diabetes protocol program reviews Welcome to Pearson SuccessNet! We have made some important updates to Pearson SuccessNet! Please see the Feature Summary for more details. As always, please contact us if you have any questions. Phone: 1-800-234-5832 (Monday. Note: If you do not have an email address associated with your Career Cruising account, please contact your teacher/site administrator.! Instead, they went on devising, deploying, and now winding down various shotgun stimulus tools. Maybe they honestly believe they hit the target, but the rest of us aren’t convinced. Almost everything the Fed did to us since 2. Here is the federal funds rate from 2. The shaded area is what we now call the Great Recession. The Federal Open Market Committee entered 2. They starting lowering it in August of that year – months before the economy went into recession. Recession or not, many folks weren’t doing well. Even then there was talk of banks having difficulty, though the worst was yet to come. Look how fast rates fell. In July 2. 00. 7 savers could buy Treasury bills, certificates of deposit, or other principal- protected savings instruments and enjoy a 5% or better risk- free yield. Longer- term fixed- income products actually offered even higher yields. A year and a half later, the fed funds rate was bumping the zero bound, and savers could make nothing without taking on market risk, which few wanted to do at the time, because iconic brands were blowing up everywhere. Here is the great irony and possibly the most iniquitous part of the Fed’s monetary policy initiative. They wanted investors to move out on the risk curve. But did they bother to look at the demographics of this country? We have a huge bulge of Boomers – retirees and near- retirees who do not need to be moving out the risk curve at this time in their lives. They need Steady- Eddie returns, and they need to be reducing their risk, not increasing it. A sober look at the current economic environment reveals overvalued, overbought, and illiquid markets everywhere. The global central bank community’s ultra- low and negative interest rates have created an environment of risk that is looking more and more like a bubble in search of a pin. If and when it bursts, it will take the retirement dreams of millions of Americans with it. From the Fed’s perspective, super- low interest rates were economic stimulus. With borrowing costs so low, we were all supposed to race out and buy stuff. Companies should have expanded and hired more workers. Homebuilders should have been incentivized to build more Mc. Mansions in the suburbs, knowing qualified buyers would appear like magic. What was supposed to happen was a normal recovery. What we got was the weakest recovery on record. The Federal Reserve will offer the counterfactual that if they had not given us their stimulus, the recovery would have been even weaker. That, of course, is something that neither they nor we can prove, one way or the other. We can go back and look at a far worse recession in the early 1. Roaring ’2. 0s. Very few people remember what was called the Depression of 1. Unemployment was close to 1. Christina Romer estimates it was a 1. Put that in your CPI pipe and smoke it. Industrial production dropped by 3. And there was a horrendous bear market. By the time President Harding and his Commerce Secretary, Herbert Hoover, got around to calling for a conference and organizing committees, the economy was already recovering. Notably, the administration did cut income taxes, which helped reinforce the Roaring ’2. A large part of the problem in the late ’1. Fed was raising rates into the recession in an effort to protect the dollar and fight what they considered to be inflation. Central bankers of that era had a gold and hard- dollar fetish that led to massive policy errors. When they actually began to normalize their monetary policy, the economy took off. A normalized interest rate policy, what a concept. No one really minds if the value of their stocks, real estate, and other assets go up; and there was the assumption that a rise in the stock market and real estate would trickle down to Main Street. Clearly, it has not. Speaking of asset price inflation, Peter Boockvar writes this week: The inflation/deflation debate we know goes both ways for consumer prices. Where there should be NO debate is the asset price inflation we’ve seen over the past 5+ years. We also know that the asset price inflation was more than just in stocks and bonds. It also spilled over into high- end apartments, antique cars, and paintings. It also spread into other . That was a record high price. A few days ago a T2. Honus Wagner sold at auction for $3. In case you missed it yesterday, the WSJ quantified the returns on Mickey Mantle baseball cards over the past 1. For the ultimate Mantle card, his Topps rookie year of 1. The average return for his 1. Topps cards was 5. These returns compare with 8. S& P 5. 00 over the same 1. The Fed, though, has no reason to be fearful on inflation for as long as they don’t include asset prices in the CPI or PCE so we magically won’t have any inflation much above 2%.(Okay, how many Boomers just like me are kicking themselves for not keeping their shoeboxes full of baseball cards? I had those Mickey Mantle and Willie Mays cards, and all the others. And because my dad had played semipro, I collected a lot of the older cards of several previous generations that he told me about. The Ty Cobb and Cy Young cards were the anchors of my portfolio. What did happen was the opposite of stimulus, at least for those who were not the direct beneficiaries of quantitative easing. That would be the people who actually wanted to be prudent and save and put money in fixed- income and certificates of deposits. Remember when you could invest in a CD at 5% to 6%? By reducing the incomes of retirees and terrifying near- retirees, the Fed successfully reduced economic activity. Hopefully, that was not their intent, but that is what happened. They claim they managed to save the banking system from collapse, and I would agree that QE1 was necessary and beneficial to the system. I guess that’s something to their credit, but it came at tremendous cost. They put much of the cost of rescuing the banks on the shoulders of completely innocent people. The cost was borne by savers and small investors. In the Middle of a Massive Monetary Policy Error. GMS – The Gates Millennium Scholars Program. The increasing diversity of our society reminds us that all of America’s citizens must have access to opportunity for higher education if our nation is to sustain and advance itself as a global, competitive democracy in the new millennium. The future of our nation’s economy, democracy, and quality of life is dependent upon the preparation of a diverse cadre of leaders who will help build a stronger society. These potential leaders, drawn from groups that have traditionally and historically been denied access to higher education, must receive the support needed to negotiate the pathway to completing a college education. The Gates Millennium Scholars (GMS) Program, funded by a grant from the Bill & Melinda Gates Foundation, was established in 1. African American, American Indian/Alaska Native*, Asian Pacific Islander American**, and Hispanic American students with an opportunity to complete an undergraduate college education in any discipline area of interest. Continuing Gates Millennium Scholars may request funding for a graduate degree program in one of the following discipline areas: computer science, education, engineering, library science, mathematics, public health or science.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
December 2016
Categories |