Tag Archives | Economics

The Mantra on Wall Street Is ‘Don’t Fight the Fed’, but Do You Know What the Fed Is Doing? And Where Did Belgium Get $141 Billion to Purchase U.S. Treasury Bonds?

via chycho

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The main mantra on Wall Street is ‘Don’t Fight the Fed’, implying that if monetary policy is geared towards easing – lowering of interest rates – then riskier markets are the game in town, and if monetary policy is geared towards tightening – rising interest rates – then volatile markets are to be avoided. But do we know what the Fed is up to?

I. DOW, S&P 500, QE, and Tapering

Both the DOW and S&P 500 are sitting at all-time highs. Since bottoming out in early March 2009 (DOW, S&P 500), the DOW is up approximately 150% and the S&P 500 approximately 180%. Astronomical returns no matter what period you compare this to.

It’s no secret that the only reason the markets have been soaring is because of unlimited quantitative easing [QE], i.e., stimulus, stimulus, and indefinite-stimulus – “fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy.”

By December 2012, funds were being pumped into the markets to the tune of $85 billion a month – a last resort, desperate measure that the FOMC began so that their ‘growth’ targets could be met.

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Rethinking Democracy

rubio_jeffersonA pretty compelling read introducing the radical idea that maybe Democracy needs to be reconsidered. Old hat to postmodernism, of course, but maybe it’s time for some mainstream exposure for these notions.

via Salon:

This is what democracy looks like: grotesque inequality, delusional Tea Party obstructionism, a vast secret national-security state, overseas wars we’re never even told about and a total inability to address the global climate crisis, a failure for which our descendants will never forgive us, and never should. Maybe I’ll take the turtle costumes after all. The aura of democratic legitimacy is fading fast in an era when financial and political capital are increasingly consolidated in a few thousand people, a fact we already knew but whose implications French insta-celebrity Thomas Piketty and the political scientists Martin Gilens and Benjamin Page (of the “oligarchy study”) have forcefully driven home. Libertarian thinker Bryan Caplan sees the same pattern, as Michael Lind recently wrote in Salon, but thinks it’s a good thing.

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Fast Food Strikes Go Global

Striking fast foodworkers in Chicago. Photo by Aaron Cynic

Striking fast foodworkers in Chicago. Photo by Aaron Cynic

What began as a single day walk out in New York City has now become a global movement to raise wages and allow workers to unionize.

Aaron Cynic writes at Chicagoist:

Hundreds of fast food workers in Chicago picketed the Rock and Roll McDonald’s in River North most of Thursday, calling for higher wages and the right to organize a union. The protest was part of a worldwide day of strikes that took place in some 150 cities worldwide. It was the fifth such strike in Chicago calling for a $15 an hour minimum wage, which has since spread across the nation and now across the globe.

“I’d be able to provide my family some of the most basic things,” said Martina Ortega, a mother of three children who works at two different McDonald’s locations on the South Side. Ortega was one of many fast food workers who participated in the strike, including two who walked out of the McDonald’s on LaSalle and Ontario.… Read the rest

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Tanked: The Financial Crisis is Still With Us With No End In Sight. It May be Time to Give War A Chance Once Again

Seal of Federal Reserve SystemEvery month, rise or shine, the Federal Reserve Bank, an institution that most Americans believe is a branch of government, or a federally run Central Bank has one of its computers add $55 billion—that’s dollars with a B—to its ledger and balance sheet.

In actual fact, the FED, as its known is actually a private institution in government trappings,  owned by,  and run by,  the very banks it is thought to regulate.  It actually has kept the economy afloat since August 2007 when the financial crisis began (not 2008 as most media outlets have it with a printing press with an infusion of $3.4 TRILLION.

At first, the Fed’s Economics Professor turned Bank president,  Ben Bernanke was called “Heliopter Ben” in an allusion to all the money he was bombing the economy with His term ended, but the practice, now barely questioned, goes on.

And why is that? To put it simply, the financial crisis is still with us, whatever talk there is of “recovery” because of structural realities that haven’t changed.… Read the rest

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The Bitcoin “Crisis” Explained and 5 Reasons it Can’t be Killed

BitcoinNear the end of last year, Bitcoin was being gobbled up at an unbelievable $1100 per coin. With a cursory glance, at today’s price ($500), you’d think that the Coca-Cola of cryptos is careening toward disaster. In order to understand why that’s not the case, you might need a quick recap on how we got to this juncture.

Via- Midwest Real

For Bitcoin, early 2014 was a PR nightmare. The crypto was constantly being linked to drugs and money laundering, most infamously in the case of The Silk Road. But, the most damning sequence of events was due to a known security vulnerability and good-old-fashioned ineptness. Enter Hurricane Gox. By February, major (but known to be sketchy) Bitcoin exchange Mt. Gox had been having problems for quite awhile. Because of that aforementioned security issue, Mt. Gox halted some of their user’s ability to withdraw Bitcoin while they fixed the hiccup.… Read the rest

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The Rise of Anti-Capitalism

391px-McKinley_ProsperityJeremy Rifkin, author of “The Zero Marginal Cost Society” suggests in his op-ed for the New York Times that we are experiencing the “creeping reality of a zero-marginal-cost economy”:

We are beginning to witness a paradox at the heart of capitalism, one that has propelled it to greatness but is now threatening its future: The inherent dynamism of competitive markets is bringing costs so far down that many goods and services are becoming nearly free, abundant, and no longer subject to market forces. While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring those costs to near zero.

The first inkling of the paradox came in 1999 when Napster, the music service, developed a network enabling millions of people to share music without paying the producers and artists, wreaking havoc on the music industry. Similar phenomena went on to severely disrupt the newspaper and book publishing industries.

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Money Makes Parenting Less Meaningful

310px-K.V.Lemoh_(d.1910)._Parent's_Joy

Pic: “Parents’ Joy” by Karl Lemoch (PD)

According to this study, having a higher socioeconomic status makes parents value the experience of raising children, particularly so for women. In contrast, poverty is associated with an increased risk of child abuse.

Via EurekAlert!:

Money and parenting don’t mix. That’s according to new research that suggests that merely thinking about money diminishes the meaning people derive from parenting. The study is one among a growing number that identifies when, why, and how parenthood is associated with happiness or misery.

“The relationship between parenthood and well-being is not one and the same for all parents,” says Kostadin Kushlev of the University of British Columbia. While this may seems like an obvious claim, social scientists until now have yet to identify the psychological and demographic factors that influence parental happiness.

New research being presented today at the Society for Personality and Social Psychology (SPSP) conference in Austin offers not only insight into the link between money and parental well-being but also a new model for understanding a variety of factors that affect whether parents are happier or less happy than their childless counterparts.

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To Boldly Go to There: The Proto-Post Scarcity Economy of Star Trek

Pic: Desilu Prouctions (C)

Pic: Desilu Prouctions (C)

“The acquisition of wealth is no longer the driving force of our lives. We work to better ourselves and the rest of humanity.” – Captain Jean-Luc Picard

Rick Webb has written a fantastic piece about the economics of Star Trek, and then speculates about whether or not we could begin to incorporate some of these notions…

“Take a mental journey for a moment with me: what if, one day, technology reaches the point that a small number of humans — say, 10 million — can produce all of the food, shelter and energy that the race needs. This doesn’t seem like insanely wishful thinking, given current trends. There’s no rational reason why the advances in robotics, factories, energy and agriculture couldn’t continue unabated for long periods of time. Of course I’m not saying they will, but rather, they could.

“So, then, take that journey. What, then, of labor? In today’s terms, a ‘healthy’ economy now is one at or near full employment.

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Expert Warns of Hyperinflation: “The American Way Of Life Will Be Destroyed”

brokeThe sky is falling over at Eyes Open Report:

If there’s one thing that’s certain about what’s happening in the world right now  it’s that uncertainty is pervading every aspect of the global economy. From fabricated employment statistics and consumer spending reports to obscene levels of debt and a failing domestic monetary policy, the writing is on the wall.

According to top Casey Research analyst Marin Katusa, who has met with energy ministers and business leaders in over 100 countries, it’s only a matter of time before the world’s reserve currency goes the way of the German Reichsmark and Zimbabwe Dollar.

What we’re talking about here is nothing short of an outright collapse of our banking system, hyperinflation of the US dollar, and a complete destruction of the world as we have come to know it.

This is a must-watch for those trying to understand what’s happening with the economic landscape, how to position yourself for an unprecedented paradigm shift in how Americans live their lives, what to expect as this crisis unfolds, and how to find opportunities when everyone else is in panic mode.

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