mick silver
17th May 2016, 05:53 AM
Politicians and the damage they doBy Ed Mattson (http://www.veteranstoday.com/author/mattson/) on May 16, 2016
In my previous article I pointed out that today’s youth have been so dumbed-down by our federally controlled education system, they believe Bernie Sanders and his Marxist ideology is the cure for what ails America following two terms of President Barack Obama. As I pointed out in part one, less than 16 percent of those queried could properly define what socialism is, even though calling Bernie Sanders a “Socialist” is far to the right of the political beliefs he carries in his heart.
During the last two administrations (Bush and Obama), we have seen our country’s credit rating http://www.veteranstoday.com/wp-content/uploads/2016/05/obama-economics-457x640.pngdevalued by the government’s policy of quantitative easing and economic stagnation never seen before within the borders of the United States . . . not even during the Great Depression. While we blame Washington and the Obama Administration in particular, it is we the voters who are actually to blame. We had the golden opportunity to turn this foolish policy around, but instead, re-elected this foolhardy gang of fools for a second term.
With the best minds in Washington, which will tell you volumes about the stupidity we have elected to public office, and with the best input from academia, which will show you why our education system has failed our children, there must be an explanation as to why they have been so wrong . . . here’s my take:
The best business minds we have in this country come from, you guessed it – The Private Sector. The foremost authority to what my research has shown are the folks at Forbes. They have looked into the problem federal monetary policy in detail.
According to Forbes contributors from the Trefis Team (http://www.trefis.com/), Quantitative Easing (QE) is a rather unconventional monetary policy, which has found widespread use in recent times. “Many major central banks, such as the Federal Reserve, Bank of Japan, and the European Central Bank, have resorted to this policy to kick start economic growth. Typically, QE works by simultaneously injecting liquidity and pulling down interest rates. This, in turn, stimulates borrowing and spending activity, which, in turn, promotes economic growth”. Why is it all these so-call ingenious ideas that seldom work as they are promised, always come from the minds of government?
Trefis delved into the U.S. experience using QE to tell us what went wrong:
“In 2008, the world faced its worst economic crisis since the Great Depression. The crisis, which found its roots in the U.S. housing market, had quickly spread to the U.S. financial sector, and then to the global financial sector. It brought down with it the investment banks, insurance companies, commercial banks, mortgage lenders, and a number of companies who relied on credit. Furthermore, the contagion spread to major economies across Europe and Asia that had dabbled in the American real estate sector, wiping out over 30% of the value of a number of major economies. The result was a widespread slowdown in growth, in the U.S., and in the world”.
With collapse of global markets the Federal Reserve used several rounds of QE to try to get the economy back on track. In doing so the Fed began increasing its balance sheet by purchasing government bonds and mortgage-backed securities (MBS). As to the effectiveness of this program, the first round of QE, called QE1, which was initiated in November 2008, was deem to be the most effective and extended to March of 2009.
The Fed proposed purchased $100 billion of agency debt and $500 billion of mortgage-backed securities, and once the program was extend, the Fed used another $850 billion to purchase mortgage-backed securities and debt. It also channeled another $300 billion into longer-dated treasuries. This should give everyone food for thought about government’s ability to properly use taxpayer money for any well-intentioned idea it can think up, because nobody wants to stand tall for what happened to all this money.
With the President’s “Shovel Ready Jobs Program”, “Cash for Clunkers” (Now politely called Car http://www.veteranstoday.com/wp-content/uploads/2016/05/SHOVEL-READY-JOB-640x494.jpgAllowance Rebate System – C.A.R.S.), and many other programs, the money being pumped into the economy by the federal government, did not solve the nation’s problems as promise. Today the government claims an artificially low unemployment rate because we just don’t count the 95 million people who no longer are collecting unemployment and are no longer in the employment marketplace, and one family out of every five families have no family member employed!
According to Michael Grabell of the N.Y. Times, “I spent three years reporting on the $840 billion stimulus plan that the Obama administration pushed through Congress in 2009. My conclusion: government can create jobs — it just doesn’t often do it well”. The Time goes on to state, “The stimulus ultimately failed (http://www.nytimes.com/2012/02/12/opinion/sunday/how-the-stimulus-fell-short.html) to bring about a strong, sustainable recovery. Money was spread far and wide rather than dedicated to programs with the most bang for the buck. “Shovel-ready” projects, those that would put people to work right away, took too long to break ground. Investments in worthwhile long-term projects, on the other hand, were often rushed to meet arbitrary deadlines, and the resulting shoddy outcomes tarnished the projects’ image“.
From 2010 to the end of 2014, the federal government has been printing money and continuing QE programs with very little effect other than to destroy the wealth of those who have played the game of life with responsible savings and investing. It has however allowed inordinate profit to banks and multi-national companies who have had access to unlimited money for very little cost.
Oh . . . remember that little problem General Motors had back in 2009 when it fell in like a house of cards leaving we stockholders holding the bag? I lost about $900,000 in GM and GMAC stock, but nobody gave a hoot about us . . . CEO Mary Barra’s compensation (http://fortune.com/2016/04/22/mary-barra-gm-pay-general-motors/) for 2015 rose 72% from the prior year to $28 million, and in between those years, nobody went to jail!
Forbes astutely contends (http://www.veteranstoday.com/2016/05/16/politicians-and-the-damage-they-do/CEO%20Mary%20Barra’s%20compensation%20for%202015%2 0rose%2072%25%20from%20the%20prior%20year%20to%20$ 28%20million) that, “when the Fed buys these financial instruments like MBS and federal debt, the money supply in the economy increases. This is evident when one looks at the U.S. monetary base, which shows that total amount of currency that is in circulation with the public, or held as commercial bank deposits in central bank reserves. However, commercial banks did not give all of this money out as loans. In fact, they kept a large proportion of this money created as excess reserves with the Fed”.
For individuals, when they are holding more cash than they would like to they put this extra cash into assets such as bonds, stocks, and real estate. This, in turn, bids up the price of these assets and consequently reduces the yield on these assets, killing those who are retired living on fixed incomes. It works the same way with the Fed by artificially driving up demand increasing the price and consequently reduces the yield. A new equilibrium interest rate is reached in the economy that is lower than what it was previously, and with this lower interest rate it should stimulate borrowing, investing, and spending activity, to supposedly kickstart economic growth. Instead, we are now hearing warnings of a new balloon that has been created and is about to burst!
Economists have attributed the weakest recovery in U.S. history to the low interest rate’s effect in housing sales, car sales, business expansion, etc., to the low interest rate environment created by QE. Critics believe QE will also be a very dark cloud on the horizon. For one, the policy can lead to high inflation, which is a by-product of injecting liquidity into the economy, without a sold backing like gold. We have been fortunate that lower energy prices have helped hold down the cost of commodities like food, clothing and other goods, but what happens when prices go back up?
As I just touched upon, the real adverse consequence of QE is punishing responsible behavior. Since QE drives down interest rates, savers, who in the U.S. case are mostly the older generation, have been punished, while borrowers, who are generally younger, have been rewarded with easy money. Does anyone believe this new generation of millennials, many of whom are still living at home at the age of thirty, have the smarts to effectively handle money and debt with daddy and mommy paying most of the bills? I contend QE has, in a way, negatively affected personal behavior.
So America comes to the crossroads once again. It seems each generation has had to deal with adversity,http://www.veteranstoday.com/wp-content/uploads/2016/05/19-trillion-640x513.jpg yet no generation has had to stare at a national debt of $19 trillion, had their Social Security trust fund stolen from them by lying cheating and stealing politicians. No generation comes to mind that will be faced with the prospect of repaying school loans far in excess of what many will earn in a job market of part-time work and low wages kept artificially low by an illegal immigration mess, and having to face the prospects of fighting terrorists, homegrown and otherwise, on our own soil.
Back to Bernie Sanders from my previous article. Only a free market capitalistic economy would ever be able to generate enough economic mojo to pull the United States back to the nation we once were. It is the free market that raises people out of poverty, not Marxist-socialist centrally planned government pipe dreams. They only insure mediocrity and misery for all. Bernie’s solutions are akin to the Soviet Union, Cuba, North Korea and Chinese, but as reluctant as the Democrats are to building a wall to keep illegal immigrants from coming into this country, we won’t be like the a fore mentioned countries which have walls and barriers around their countries to keep their citizens in. We will be free to leave . . . but then, where will be able to go?
Hillary on the other hand, if she manages to defy the rational thinking of anyone with a brain still living in this country who believes she should be in jail, promises a third term of President Obama. Under the furtherance of Obama policies which would mean continued government regulation, forced mandates of private business, political correctness at every turn, possible annulment of the first, and second amendment by a liberalized Supreme Court, and continued federal debt with fewer and fewer working citizens to carry the load.
I for one, will take a chance on Donald Trump. He’s the only one who even looked at running for President who has ever had to sign a pay check and hire real workers (all colors, all sexes, and all education levels), fought government regulation, and still manages to make a profitable bottomline. Sounds like the perfect applicant for CEO of America.
In my previous article I pointed out that today’s youth have been so dumbed-down by our federally controlled education system, they believe Bernie Sanders and his Marxist ideology is the cure for what ails America following two terms of President Barack Obama. As I pointed out in part one, less than 16 percent of those queried could properly define what socialism is, even though calling Bernie Sanders a “Socialist” is far to the right of the political beliefs he carries in his heart.
During the last two administrations (Bush and Obama), we have seen our country’s credit rating http://www.veteranstoday.com/wp-content/uploads/2016/05/obama-economics-457x640.pngdevalued by the government’s policy of quantitative easing and economic stagnation never seen before within the borders of the United States . . . not even during the Great Depression. While we blame Washington and the Obama Administration in particular, it is we the voters who are actually to blame. We had the golden opportunity to turn this foolish policy around, but instead, re-elected this foolhardy gang of fools for a second term.
With the best minds in Washington, which will tell you volumes about the stupidity we have elected to public office, and with the best input from academia, which will show you why our education system has failed our children, there must be an explanation as to why they have been so wrong . . . here’s my take:
The best business minds we have in this country come from, you guessed it – The Private Sector. The foremost authority to what my research has shown are the folks at Forbes. They have looked into the problem federal monetary policy in detail.
According to Forbes contributors from the Trefis Team (http://www.trefis.com/), Quantitative Easing (QE) is a rather unconventional monetary policy, which has found widespread use in recent times. “Many major central banks, such as the Federal Reserve, Bank of Japan, and the European Central Bank, have resorted to this policy to kick start economic growth. Typically, QE works by simultaneously injecting liquidity and pulling down interest rates. This, in turn, stimulates borrowing and spending activity, which, in turn, promotes economic growth”. Why is it all these so-call ingenious ideas that seldom work as they are promised, always come from the minds of government?
Trefis delved into the U.S. experience using QE to tell us what went wrong:
“In 2008, the world faced its worst economic crisis since the Great Depression. The crisis, which found its roots in the U.S. housing market, had quickly spread to the U.S. financial sector, and then to the global financial sector. It brought down with it the investment banks, insurance companies, commercial banks, mortgage lenders, and a number of companies who relied on credit. Furthermore, the contagion spread to major economies across Europe and Asia that had dabbled in the American real estate sector, wiping out over 30% of the value of a number of major economies. The result was a widespread slowdown in growth, in the U.S., and in the world”.
With collapse of global markets the Federal Reserve used several rounds of QE to try to get the economy back on track. In doing so the Fed began increasing its balance sheet by purchasing government bonds and mortgage-backed securities (MBS). As to the effectiveness of this program, the first round of QE, called QE1, which was initiated in November 2008, was deem to be the most effective and extended to March of 2009.
The Fed proposed purchased $100 billion of agency debt and $500 billion of mortgage-backed securities, and once the program was extend, the Fed used another $850 billion to purchase mortgage-backed securities and debt. It also channeled another $300 billion into longer-dated treasuries. This should give everyone food for thought about government’s ability to properly use taxpayer money for any well-intentioned idea it can think up, because nobody wants to stand tall for what happened to all this money.
With the President’s “Shovel Ready Jobs Program”, “Cash for Clunkers” (Now politely called Car http://www.veteranstoday.com/wp-content/uploads/2016/05/SHOVEL-READY-JOB-640x494.jpgAllowance Rebate System – C.A.R.S.), and many other programs, the money being pumped into the economy by the federal government, did not solve the nation’s problems as promise. Today the government claims an artificially low unemployment rate because we just don’t count the 95 million people who no longer are collecting unemployment and are no longer in the employment marketplace, and one family out of every five families have no family member employed!
According to Michael Grabell of the N.Y. Times, “I spent three years reporting on the $840 billion stimulus plan that the Obama administration pushed through Congress in 2009. My conclusion: government can create jobs — it just doesn’t often do it well”. The Time goes on to state, “The stimulus ultimately failed (http://www.nytimes.com/2012/02/12/opinion/sunday/how-the-stimulus-fell-short.html) to bring about a strong, sustainable recovery. Money was spread far and wide rather than dedicated to programs with the most bang for the buck. “Shovel-ready” projects, those that would put people to work right away, took too long to break ground. Investments in worthwhile long-term projects, on the other hand, were often rushed to meet arbitrary deadlines, and the resulting shoddy outcomes tarnished the projects’ image“.
From 2010 to the end of 2014, the federal government has been printing money and continuing QE programs with very little effect other than to destroy the wealth of those who have played the game of life with responsible savings and investing. It has however allowed inordinate profit to banks and multi-national companies who have had access to unlimited money for very little cost.
Oh . . . remember that little problem General Motors had back in 2009 when it fell in like a house of cards leaving we stockholders holding the bag? I lost about $900,000 in GM and GMAC stock, but nobody gave a hoot about us . . . CEO Mary Barra’s compensation (http://fortune.com/2016/04/22/mary-barra-gm-pay-general-motors/) for 2015 rose 72% from the prior year to $28 million, and in between those years, nobody went to jail!
Forbes astutely contends (http://www.veteranstoday.com/2016/05/16/politicians-and-the-damage-they-do/CEO%20Mary%20Barra’s%20compensation%20for%202015%2 0rose%2072%25%20from%20the%20prior%20year%20to%20$ 28%20million) that, “when the Fed buys these financial instruments like MBS and federal debt, the money supply in the economy increases. This is evident when one looks at the U.S. monetary base, which shows that total amount of currency that is in circulation with the public, or held as commercial bank deposits in central bank reserves. However, commercial banks did not give all of this money out as loans. In fact, they kept a large proportion of this money created as excess reserves with the Fed”.
For individuals, when they are holding more cash than they would like to they put this extra cash into assets such as bonds, stocks, and real estate. This, in turn, bids up the price of these assets and consequently reduces the yield on these assets, killing those who are retired living on fixed incomes. It works the same way with the Fed by artificially driving up demand increasing the price and consequently reduces the yield. A new equilibrium interest rate is reached in the economy that is lower than what it was previously, and with this lower interest rate it should stimulate borrowing, investing, and spending activity, to supposedly kickstart economic growth. Instead, we are now hearing warnings of a new balloon that has been created and is about to burst!
Economists have attributed the weakest recovery in U.S. history to the low interest rate’s effect in housing sales, car sales, business expansion, etc., to the low interest rate environment created by QE. Critics believe QE will also be a very dark cloud on the horizon. For one, the policy can lead to high inflation, which is a by-product of injecting liquidity into the economy, without a sold backing like gold. We have been fortunate that lower energy prices have helped hold down the cost of commodities like food, clothing and other goods, but what happens when prices go back up?
As I just touched upon, the real adverse consequence of QE is punishing responsible behavior. Since QE drives down interest rates, savers, who in the U.S. case are mostly the older generation, have been punished, while borrowers, who are generally younger, have been rewarded with easy money. Does anyone believe this new generation of millennials, many of whom are still living at home at the age of thirty, have the smarts to effectively handle money and debt with daddy and mommy paying most of the bills? I contend QE has, in a way, negatively affected personal behavior.
So America comes to the crossroads once again. It seems each generation has had to deal with adversity,http://www.veteranstoday.com/wp-content/uploads/2016/05/19-trillion-640x513.jpg yet no generation has had to stare at a national debt of $19 trillion, had their Social Security trust fund stolen from them by lying cheating and stealing politicians. No generation comes to mind that will be faced with the prospect of repaying school loans far in excess of what many will earn in a job market of part-time work and low wages kept artificially low by an illegal immigration mess, and having to face the prospects of fighting terrorists, homegrown and otherwise, on our own soil.
Back to Bernie Sanders from my previous article. Only a free market capitalistic economy would ever be able to generate enough economic mojo to pull the United States back to the nation we once were. It is the free market that raises people out of poverty, not Marxist-socialist centrally planned government pipe dreams. They only insure mediocrity and misery for all. Bernie’s solutions are akin to the Soviet Union, Cuba, North Korea and Chinese, but as reluctant as the Democrats are to building a wall to keep illegal immigrants from coming into this country, we won’t be like the a fore mentioned countries which have walls and barriers around their countries to keep their citizens in. We will be free to leave . . . but then, where will be able to go?
Hillary on the other hand, if she manages to defy the rational thinking of anyone with a brain still living in this country who believes she should be in jail, promises a third term of President Obama. Under the furtherance of Obama policies which would mean continued government regulation, forced mandates of private business, political correctness at every turn, possible annulment of the first, and second amendment by a liberalized Supreme Court, and continued federal debt with fewer and fewer working citizens to carry the load.
I for one, will take a chance on Donald Trump. He’s the only one who even looked at running for President who has ever had to sign a pay check and hire real workers (all colors, all sexes, and all education levels), fought government regulation, and still manages to make a profitable bottomline. Sounds like the perfect applicant for CEO of America.