News Journal: Number 27, October 16, 2010: Cracking Communist Chinese Currency–Float The Yuan/RBN or Devalue Your Currency Via U.S. Dollar 10% Per Year For Next Five Years Or Face U.S. Import Ban–No Pressure–Your Choice–Videos

Posted on October 16, 2010. Filed under: Globalization, International Trade, Issues, News, Politics, Print Media, Speech | Tags: , , , , , , , , , , , , , |

“The valuation of the monetary unit depends not upon the wealth of the country, but upon the ratio between the quantity of money and the demand for it, so that even the richest country may have a bad currency and the poorest country a good one.”

~Ludwig von Mises, The Theory of Money and Credit, page 278.

“The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.”

~Friedrich A. Hayek, The Use of Knowledge in Society

September, 1945, American Economic Review. XXXV, No. 4. pp. 519-30. American Economic Association

http://www.econlib.org/library/Essays/hykKnw1.html

Capitalism in China: Should We Trade With Them? – Ayn Rand Center for Individual Rights

Dr. Milton Friedman speaking about Free Trade

The looming China-U.S. showdown

Battling over the Yuan – F24 101001

China’s Wen Jiabao: ‘Dont pressure us to raise RMB rates’

Lee Says China Will Appreciate Yuan to Prevent Trade War: Video

Eurozone troika urges ‘broad-based’ currency appreciation in China

Inside Look: China Currency Controversy

China Currency and Trade Wars

Peter Schiff – June 21 2010 – Appreciation Of The Chinese Currency Means The Implosion Of The Dollar

Mar 24 10 Hearing on China’s Exchange Rate Policy, Niall Ferguson Opening Statement

Mar 24 10 Hearing on China’s Exchange Rate Policy, C. Fred Bergsten Opening Statement

Mar 24 10 Hearing on China’s Exchange Rate Policy, Clyde Prestowitz Opening Statement

Mar 24 10 Hearing on China’s Exchange Rate Policy, Philip Levy Opening Statement

The U.S. and China (Ted Galen Carpenter)

Government intervention into markets always requires even more government intervention to correct past mistakes.

The central bank of the People’s Republic of China (PRC) would be well advised to just let their currency freely float against the currencies of the world.

This would mean the PRC’s official currency the renminbi or RMB and its unit of currency the yuan would rise in value against both the U.S. dollar and the Euro.

Yes, this would mean the PRC’s export goods would be more expensive for both Americans and Europeans and conversely American and European goods and services would be cheaper to purchase for the PRC.

The result would be a decline in the growth of exports to the United States and Europe.

The Chinese people need to be able to increase their level of consumption and reduce their savings rate to absorb the production that currently goes almost entirely abroad as exports.

Should the PRC implement such a strategy, it would be advised to stop purchasing United States Treasury debt and as the U.S Treasury obligations mature use the dollar payments to purchase natural resource assets in the United States.

In other words diversify your portfolio out foreign government obligations into natural resources that your economy needs to manufacture goods.

As a second best solution, gradually appreciate the renminbi against the U.S. dollar at 10% per year for five years and then freely float the yuan.

Since the U.S unemployment rate is expected to exceed 8% for at least the next three years, the appreciation of the renminbi at 10% a year for five years would lead to a decline in U.S. unemployment due to increase in U.S. exports and and a rise in the demand for Chinese exports as the U.S economy recovers from the recession.

Absence an improvement in the U.S. employment situation, demand for Chinese exports would be flat or even decline.

Therefore, it is in the interest of both countries governments to have an appreciation of the renminbi.

The U.S. Federal Reserve should also abandon its practice of intervening in the U.S money market by attempting to set target Federal fund rates to expand the money supply and in turn credit.

Will any of the above actually happen?

Not likely.

The ruling classes of United States and the People’s Republic of China actually believe they are have the intelligence and knowledge exceeding that of free markets.

Both ruling classes are only fooling themselves.

Both are wrong.

Let the currency wars begin.

Let the ruling class of both parties demonstrate they care less for the welfare of their people.

Let the American and Chinese people determine the fates of their ruling class.

Increasing unemployment in both countries will lead to a revolution and the overthrow of both ruling classes.

The free market will over time prevail and the ruling class control freaks with their failed government interventionist economic policies will be replaced.

Power of the Market – How to Cure Inflation 1

Power of the Market – How to Cure Inflation 2

Power of the Market – How to Cure Inflation 3

“We shall not grow wiser before we learn that much that we have done was very foolish. “

~Friedrich A. Hayek

“Perpetual vigilance on the part of the citizens can achieve what a thousand laws and dozens of alphabetical bureaus with hordes of employees never have and never will achieve: the preservation of a sound currency.”

~Ludwig von Mises, The Theory of Money and Credit, page 495

Background Articles and Videos

China’s Economy in the Post-Crisis World

Obama Pressed On New Global Currency At Presidential News Conference

Related Posts On Pronk Palisades

Chinese Communist State Company–China National Offshore Oil Corp.(CNOOC)–Invests In Texas Oil–Videos

Printing More Money (Quantitative Easing) and The Coming Currency War and Decline In The Purchasing Power of The U.S. Dollar–Robbing The American People–Videos

The Monetarization of The Debt and Quantitative Easing: The Federal Reserve is printing $1,000,000,000,000!–Run-Away Inflation Coming Soon!

 

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News Journal: Number 26, October 15, 2010: Printing More Money (Quantitative Easing) and The Coming Currency War and Decline In The Purchasing Power of The U.S. Dollar–Robbing The American People–Videos

Posted on October 15, 2010. Filed under: Audio, Books, Communications, Digital Communication, Issues, Law, Magazines, Mass Media, News, Newspapers, Politics, Print Media, Recordings, Society, Sound, Television | Tags: , , , , , , , , |

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.”

“The gold standard alone makes the determination of moneys purchasing power independent of the ambitions and machinations of governments, of dictators, of political parties, and of pressure groups.”

~Ludwig von Mises

Jim Rogers Currency Wars

“IMF Meeting Stokes Fear of Currency War”

Grant Says Quantitative Easing Is Just Money Printing: Video

Global Currency War Brewing

Is The World On The Verge Of A Currency War?

Daniel Rosen: Currency War

IMF Meeting Stokes Fear of Currency War

Webster Tarpley: “There’s a currency war!”

Heller Says `Very Difficult’ for Fed to Boost Growth: Video

Feldstein Predicts Dollar to Weaken, Boosting Exports: Video

Japan cooperates with US on international currency issues – NHK 101010

US House committee approves China currency bill – NHK 100925

US criticizes China, Japan over currency interventions – NHK 100917

Clyde Prestowitz discusses valuation of Chinese currency

Mar 24 10 Hearing on China’s Exchange Rate Policy, C. Fred Bergsten Opening Statement

Mar 24 10 Hearing on China’s Exchange Rate Policy, Clyde Prestowitz Opening Statement

The Truth About The Economy: Total Collapse

Ron Paul in September 14, 2007

The Federal Reserve System is a banking cartel that benefits the large banks at the expense of the American people.

Cartel economists and so-called experts cannot replace the market by attempting to fix the price of money or the dollar.

Abolish the Federal Reserve System.

Abolish fiat paper currency.

Establish a new United States currency backed by gold.

Milton Friedman on Monetary Policy – 1/3

Milton Friedman on Monetary Policy – 2/3

Milton Friedman on Monetary Policy – 3/3

This is necessary to stop the financing of massive Federal Government deficits by the Federal Reserve that is purchasing U. S. Treasury bills and notes with Federal Reserve Notes by printing money or the monetarization of government debt.

Money printing or quantitative easing decreases the purchasing power of the money supply–debasing of the currency– robbing the American people.

Will the Federal Reserve System and fiat paper money be abolished?

Not any time soon.

The result will first be a longer and deeper recession lasting well into 2013.

In 2013 the Federal Reserve System will be 100 years old.

The Federal Reserves System will celebrate by achieving by then the devaluation of the dollar by 99%.

In other words one dollar in 1913 will be worth 1 cent in 2013.

If this is monetary stability, one wonders what inflation really is.

Time to do away the Federal Reserve System for incompetence.

I do not expect the unemployment rate to fall below 8% for U-3 until 2013 at the earliest.

As unemployment slowly declines in 2011 and 2012, there will be at first a gradual increase in the general price level that will accelerate in 2013.

This will be due the inability of the Federal Reserve to reverse quickly enough its very aggressive expansive monetary policy.

In 2011 and 2012 import prices will rise as the Federal Reserve attempts to devalue the dollar compared with other national currencies in an attempt to expand exports by making them cheaper.

The price of a gallon gasoline in the United States will first rise above $3 in 2011 and $4 in 2012 mainly due to the devaluation of the U.S. dollar.

As Communist China gradually lets the value of its currency rise in value relative to the U.S. dollar, exports from China will rise in price. This means higher prices for goods imported into the U.S. from China.

The decline in the value or purchasing power of the dollar in 2011 and 2012 combined with unemployment rates exceeding 8% will mean further losses for the Democratic Party in 2012 including the Presidency.

The American people are rightfully mad as hell at the ruling class and political elites in Washington D.C.

Power of the Market – How to Cure Inflation 1

 

 

Power of the Market – How to Cure Inflation 2

 

Power of the Market – How to Cure Inflation 3

 

Ron Paul on the Federal Reserve and Government Deficit Spending

The Gold Standard in Theory and Myth by Joseph Salerno

“The gold standard has one tremendous virtue: the quantity of the money supply, under the gold standard, is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments.”

“Inflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.”

~Ludwig von Mises

9. Consolidated Statement of Condition of All Federal Reserve Banks

Millions of dollars
Assets, liabilities, and capital Eliminations from
consolidation
Wednesday
Oct 6, 2010
Change since
Wednesday
Sep 29, 2010
Wednesday
Oct 7, 2009
Assets  
Gold certificate account   11,037 0 0
Special drawing rights certificate account   5,200 0 0
Coin   2,114 + 3 + 124
Securities, repurchase agreements, term auction
credit, and other loans
  2,101,199 + 7,113 + 216,329
Securities held outright 1   2,051,716 + 7,403 + 456,429
U.S. Treasury securities   819,072 + 7,403 + 49,887
Bills 2   18,423 0 0
Notes and bonds, nominal 2   752,832 + 7,390 + 52,364
Notes and bonds, inflation-indexed 2   42,318 0 – 2,270
Inflation compensation 3   5,499 + 13 – 207
Federal agency debt securities 2   154,105 0 + 20,294
Mortgage-backed securities 4   1,078,539 0 + 386,248
Repurchase agreements 5   0 0 0
Term auction credit   0 0 – 178,379
Other loans   49,483 – 290 – 61,721
Net portfolio holdings of Commercial Paper
Funding Facility LLC 6
  0 0 – 41,059
Net portfolio holdings of Maiden Lane LLC 7   28,510 + 40 + 2,206
Net portfolio holdings of Maiden Lane II LLC 8   15,674 – 201 + 1,213
Net portfolio holdings of Maiden Lane III LLC 9   22,782 – 258 + 2,616
Net portfolio holdings of TALF LLC 10   601 0 + 601
Preferred interests in AIA Aurora LLC and ALICO
Holdings LLC 11
  26,057 + 324 + 26,057
Items in process of collection (84) 463 + 98 + 310
Bank premises   2,222 – 7 + 1
Central bank liquidity swaps 12   61 0 – 49,770
Other assets 13   95,313 + 2,248 + 11,389
 
Total assets (84) 2,311,231 + 9,358 + 170,016

Note: Components may not sum to totals because of rounding. Footnotes appear at the end of the table. 9. Consolidated Statement of Condition of All Federal Reserve Banks (continued)

Millions of dollars
Assets, liabilities, and capital Eliminations from
consolidation
Wednesday
Oct 6, 2010
Change since
Wednesday
Sep 29, 2010
Wednesday
Oct 7, 2009
Liabilities
Federal Reserve notes, net of F.R. Bank holdings 918,609 + 4,849 + 42,489
Reverse repurchase agreements 14 64,440 – 2,930 + 1,540
Deposits (0) 1,253,413 + 6,593 + 113,645
Term deposits held by depository institutions 2,119 0 + 2,119
Other deposits held by depository institutions 1,000,014 + 15,875 + 33,477
U.S. Treasury, general account 49,530 – 8,299 + 18,525
U.S. Treasury, supplementary financing account 199,962 + 1 + 70,006
Foreign official 1,345 – 1,066 – 540
Other (0) 444 + 84 – 9,940
Deferred availability cash items (84) 2,598 + 410 – 182
Other liabilities and accrued dividends 15 15,029 + 91 + 6,468
Total liabilities (84) 2,254,089 + 9,014 + 163,961
Capital accounts
Capital paid in 26,687 + 1 + 1,798
Surplus 25,881 + 6 + 4,500
Other capital accounts 4,575 + 338 – 242
Total capital 57,142 + 344 + 6,055

Note: Components may not sum to totals because of rounding.

1. Includes securities lent to dealers under the overnight and term securities lending facilities; refer to table 1A.

2.Face value of the securities.

3. Compensation that adjusts for the effect of inflation on the original face value of inflation-indexed securities.

4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the remaining principal balance of the underlying mortgages.

5.Cash value of agreements, which are collateralized by U.S. Treasury and federal agency securities.

6. Includes the book value of the commercial paper, net of amortized costs and related fees, and other investments held by the Commercial Paper Funding Facility LLC.

7. Refer to table 4 and the note on consolidation accompanying table 10.

8. Refer to table 5 and the note on consolidation accompanying table 10.

9. Refer to table 6 and the note on consolidation accompanying table 10.

10. Refer to table 7 and the note on consolidation accompanying table 10.

11. Refer to table 8.

12. Dollar value of foreign currency held under these agreements valued at the exchange rate to be used when the foreign currency is returned to the foreign central bank. This exchange rate equals the market exchange rate used when the foreign currency was acquired from the foreign central bank.

13. Includes other assets denominated in foreign currencies, which are revalued daily at market exchange rates, accrued dividends on the Federal Reserve Bank of New York’s (FRBNY) preferred interests in AIA Aurora LLC and ALICO Holdings LLC, and the fair value adjustment to credit extended by the FRBNY to eligible borrowers through the Term Asset-Backed Securities Loan Facility.

14. Cash value of agreements, which are collateralized by U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities.

15. Includes the liabilities of Maiden Lane LLC, Maiden Lane II LLC, Maiden Lane III LLC, and TALF LLC to entities other than the Federal Reserve Bank of New York, including liabilities that have recourse only to the portfolio holdings of these LLCs. Refer to table 4 through table 7 and the note on consolidation accompanying table 10.

Minutes of the Federal Open Market Committee September 21, 2010″…At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive:

“The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to maintain the total face value of domestic securities held in the System Open Market Account at approximately $2 trillion by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability.”

The vote encompassed approval of the statement below to be released at 2:15 p.m.:

“Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

Voting for this action: Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Sandra Pianalto, Eric Rosengren, Daniel K. Tarullo, and Kevin Warsh.Voting against this action: Thomas M. Hoenig.Mr. Hoenig dissented, emphasizing that the economy was entering the second year of moderate recovery and that, while the zero interest rate policy and “extended period” language were appropriate during the crisis and its immediate aftermath, they were no longer appropriate with the recovery under way. Mr. Hoenig also emphasized that, in his view, the current high levels of unemployment were not caused by high interest rates but by an extended period of exceptionally low rates earlier in the decade that contributed to the housing bubble and subsequent collapse and recession. He believed that holding rates artificially low would invite the development of new imbalances and undermine long-run growth. He would prefer removing the “extended period” language and thereafter moving the federal funds rate upward, consistent with his views at past meetings that it approach 1 percent, before pausing to determine what further policy actions were needed. Also, given current economic and financial conditions, Mr. Hoenig did not believe that continuing to reinvest principal payments from SOMA securities holdings was required to support the Committee’s policy objectives.It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, November 2-3, 2010. The meeting adjourned at 1:10 p.m. on September 21, 2010. …”

http://www.federalreserve.gov/monetarypolicy/fomcminutes20100921.htm

Background Articles and Videos

Marc-Faber– FedsPrinting to Create Final Crisis 8-3-2010

Quantitative easing

Marc Faber Sees Fed Introducing `Massive’ Quantitative Easing

Ron Paul: If You Care About The Poor You Have To Look At Monetary Policy

The Gold Standard Before the Civil War | Murray N. Rothbard

Monetary Policy, Deflation, And Quantitative Easing

“…Aren’t the excess bank reserves inflationary?

Potentially yes, but currently no. Even though banks are earning a meager 25 basis points on their reserves, that is not sufficient incentive to keep large quantities of excess reserves uninvested or unloaned. As they were in the mid-1930s, massive excess reserves are the result of banker fear and uncertainty. The banking system has been saved, but it hasn’t been made whole yet. Bankers continue to worry about reserve levels and liquidity levels and capital levels. They are willing to lend, but only very conservatively to credit-worthy borrowers. Also, much of the slowdown in bank lending comes from low demand for loans by highly qualified borrowers.

The idea that the excess reserves held on banks’ balance sheets should be “mopped up” to prevent them being used in inflationary ways later is a very dangerous idea. They are there voluntarily because bankers feel they are needed. To remove them would cause further bank retrenchment, as it did in the 1930s when the Fed decided to “mop up” the excess reserves of that time.

As the economy and confidence improves, banks will begin using their excess reserves more aggressively. At that point, the Fed will have to be very careful not to stifle that desirable activity on the one hand or let it get out of hand and become inflationary on the other hand. Since they have lots of good, two-handed economists, I think they can pull it off. ..”

http://www.dailymarkets.com/economy/2010/07/30/monetary-policy-deflation-and-quantitative-easing/

The Founding of the Federal Reserve | Murray N. Rothbard

If you work to earn money you need to watch this

Quantitative Easing

“…The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

A central bank implements QE by first crediting its own account with money it creates ex nihilo (“out of nothing”).[1] It then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus hopefully induce a stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.

Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]

“Quantitative” refers to the fact that a specific quantity of money is being created; “easing” refers to reducing the pressure on banks.[2] However, another explanation is that the name comes from the Japanese-language expression for “stimulatory monetary policy”, which uses the term “easing”.[3] Quantitative easing is sometimes colloquially described as “printing money” although in reality the money is simply created by electronically adding a number to an account. Examples of economies where this policy has been used include Japan during the early 2000s, and the United States, the United Kingdom and the Eurozone during the global financial crisis of 2008–the present, since the programme is suitable for economies where the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

Concept

Ordinarily, the central bank uses its control of interest rates, or sometimes reserve requirements, to indirectly influence the supply of money.[1] In some situations, such as very low inflation or deflation, setting a low interest rate is not enough to maintain the level of money supply desired by the central bank, and so quantitative easing is employed to further boost the amount of money in the financial system.[1] This is often considered a “last resort” to increase the money supply.[4][5] The first step is for the bank to create more money ex nihilo (“out of nothing”) by crediting its own account. It can then use these funds to buy investments like government bonds from financial firms such as banks, insurance companies and pension funds,[1] in a process known as “monetising the debt“.

For example, in introducing its QE programme, the Bank of England bought gilts from financial institutions, along with a smaller amount of relatively high-quality debt issued by private companies.[6] The banks, insurance companies and pension funds can then use the money they have received for lending or even to buy back more bonds from the bank. The central bank can also lend the new money to private banks or buy assets from banks in exchange for currency.[citation needed] These have the effect of depressing interest yields on government bonds and similar investments, making it cheaper for business to raise capital.[7] Another side effect is that investors will switch to other investments, such as shares, boosting their price and thus creating the illusion of increasing wealth in the economy.[6] QE can reduce interbank overnight interest rates, and thereby encourage banks to loan money to higher interest-paying and financially weaker bodies.

More specifically, the lending undertaken by commercial banks is subject to fractional-reserve banking: they are subject to a regulatory reserve requirement, which requires them to keep a percentage of deposits in “reserve”,[citation needed]: these can only be used to settle transactions between them and the central bank.[7] The remainder, called “excess reserves”, can (but does not have to be) be used as a basis for lending. When, under QE, a central bank buys from an institution, the institution’s bank account is credited directly and their bank gains reserves.[6] The increase in deposits from the quantitative easing process causes an excess in reserves and private banks can then, if they wish, create even more new money out of “thin air” by increasing debt (lending) through a process known as deposit multiplication and thus increase the country’s money supply. The reserve requirement limits the amount of new money. For example a 10% reserve requirement means that for every $10,000 created by quantitative easing the total new money created is potentially $100,000. The US Federal Reserve‘s now out-of-print booklet Modern Money Mechanics explains the process.

A state must be in control of its own currency and monetary policy if it is to unilaterally employ quantitative easing. Countries in the eurozone (for example) cannot unilaterally use this policy tool, but must rely on the European Central Bank to implement it.[citation needed] There may also be other policy considerations. For example, under Article 123 of the Treaty on the Functioning of the European Union[7] and later the Maastricht Treaty, EU member states are not allowed to finance their public deficits (debts) by simply printing the money required to fill the hole, as happened, for example, in Weimar Germany and more recently in Zimbabwe.[1] Banks using QE, such as the Bank of England, have argued that they are increasing the supply of money not to fund government debt but to prevent deflation, and will choose the financial products they buy accordingly, for example, by buying government bonds not straight from the government, but in secondary markets.[1][7]

HistoryQuantitative easing was used unsuccessfully[8] by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s.[9] During the global financial crisis of 2008–the present, policies announced by the US Federal Reserve under Ben Bernanke to counter the effects of the crisis are a form of quantitative easing. Its balance sheet expanded dramatically by adding new assets and new liabilities without “sterilizing” these by corresponding subtractions. In the same period the United Kingdom used quantitative easing as an additional arm of its monetary policy in order to alleviate its financial crisis.[10][11][12]

The European Central Bank (ECB) has used 12-month long-term refinancing operations (a form of quantitative easing without referring to it as such) through a process of expanding the assets that banks can use as collateral that can be posted to the ECB in return for Euros. This process has led to bonds being “structured for the ECB”[13]. By comparison the other central banks were very restrictive in terms of the collateral they accept: the US Federal Reserve used to accept primarily treasuries (in the first half of 2009 it bought almost any relatively safe dollar-denominated securities); the Bank of England applied a large haircut.

In Japan’s case, the BOJ had been maintaining short-term interest rates at close to their minimum attainable zero values since 1999. With quantitative easing, it flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves, and therefore little risk of a liquidity shortage.[14] The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It also bought asset-backed securities and equities, and extended the terms of its commercial paper purchasing operation.[15]

RisksQuantitative easing is seen as a risky strategy that could trigger higher inflation than desired or even hyperinflation if it is improperly used and too much money is created.

Quantitative easing runs the risk of going too far. An increase in money supply to a system has an inflationary effect by diluting the value of a unit of currency. People who have saved money will find it is devalued by inflation; this combined with the associated low interest rates will put people who rely on their savings in difficulty. If devaluation of a currency is seen externally to the country it can affect the international credit rating of the country which in turn can lower the likelihood of foreign investment. Like old-fashioned money printing, Zimbabwe suffered an extreme case of a process that has the same risks as quantitative easing, printing money, making its currency virtually worthless.[1]

…”

http://en.wikipedia.org/wiki/Quantitative_easing

Federal Open Market Committee

“…About the FOMCThe term “monetary policy” refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

Structure of the FOMC

The Federal Open Market Committee (FOMC) consists of twelve members–the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee’s assessment of the economy and policy options.The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.For more detail on the FOMC and monetary policy, see section 2 of the brochure on the structure of the Federal Reserve System and chapter 2 of Purposes & Functions of the Federal Reserve System.

2010 Members of the FOMC

  • Members
    • Ben S. Bernanke, Board of Governors, Chairman
    • William C. Dudley, New York, Vice Chairman
    • James Bullard, St. Louis
    • Elizabeth A. Duke, Board of Governors
    • Thomas M. Hoenig, Kansas City
    • Sandra Pianalto, Cleveland
    • Sarah Bloom Raskin, Board of Governors
    • Eric S. Rosengren, Boston
    • Daniel K. Tarullo, Board of Governors
    • Kevin M. Warsh, Board of Governors
    • Janet L. Yellen, Board of Governors …”

http://www.federalreserve.gov/monetarypolicy/fomc.htm

FEDERAL RESERVE statistical release
H.4.1
Factors Affecting Reserve Balances of Depository Institutions and
Condition Statement of Federal Reserve Banks

Why Chinese Currency Manipulation Is America’s Fault by: Ian Fletcher April 15, 2010

“…Unfortunately, the token appreciation that is probably now in store won’t help very much. For one thing, Beijing has played this game before. China first started diversifying its currency reserves away from the dollar (which weakens currency manipulation) in July 2005, and from then until July 2008 allowed the yuan to rise from 8.28 to the dollar to 6.83, where it has since been held nearly steady. But this appreciation, while showcased by China, was purely nominal; after adjusting for inflation, the change was far smaller: about two percent.

How does China manipulate its currency? Mainly by preventing its exporters from using the dollars they earn as they wish. Instead, they are required to swap them for domestic currency at China’s central bank, which then “sterilizes” them by spending them on U.S. Treasury securities (and increasingly other, higher-yielding, investments) rather than U.S. goods. As a result, the price of dollars is propped up — which means the price of yuan is pushed down — by a demand for dollars which doesn’t involve buying American exports.

The amounts involved are astronomical: as of 2008, China’s accumulated dollar-denominated holdings amounted to $1.7 trillion, an astonishing 40 percent of China’s GDP. The China Currency Coalition estimated in 2005 that the yuan was undervalued by 40 percent; past scholarly estimates have ranged from 10 to 75 percent.

Why is this America’s fault? Because China’s currency is manipulated relative to our own only because we permit it, as there is no law requiring us to sell China our bonds and other assets. We could, in fact, end this manipulation at will. All we would need to do is bar China’s purchases, or just tax them to death.

This would be neither an extreme nor an unprecedented move. It is roughly what the Swiss did in 1972, when economic troubles elsewhere in the world generated an excessive flow of money seeking refuge in Swiss franc-denominated assets. This drove up the value of the franc and threatened to make Swiss manufacturing internationally uncompetitive. To prevent this, the Swiss government imposed a number of measures to dampen foreign investment demand for francs, including a ban on the sale of franc-denominated bonds, securities, and real estate to foreigners. Problem solved. (It did not even damage Switzerland’s standing as an international financial center, a key worry at the time.) …”

“…So the real underlying problem is that America doesn’t generate enough savings on its own to meet its voracious appetite for borrowing. China’s savings rate, thanks to deliberate suppression by the Chinese government of its people’s opportunities to spend what they earn, is an astonishing 50 percent. Ours was negative four percent in the last Federal Reserve report on the subject. We are—Oh, how Mao would have loved this!—decadent. …”

http://seekingalpha.com/article/198825-why-chinese-currency-manipulation-is-americas-fault


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News Journal: Number 25, October 9, 2010: Obama Depression: 20 Months Of Unemployment Over 8% For Official U-3 Rate and Over 15% For Total U-6 Rate–Over 26 Million Americans Looking For A Full Time Job and 41.8 Million On Food Stamps!–Followed By 36 More Months Of Over 8% Official Unemployment U-3 Rate and 15% Total Unemployment U-6 Rate!

Posted on October 9, 2010. Filed under: Audio, Communications, Digital Communication, Ethics, Globalization, Issues, Law, Politics, Print Media, Public Relations, Society, Web | Tags: , , , , , , , , , , , , , , |

“Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other.”

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.”

~Ludwig von Mises

Economy Sheds 95,000 Jobs; 14.8 Million out of Work

RECORD 41.8 MILLION PEOPLE ON FOOD STAMPS 9-15-2010

Sept 2010 Employment Report

U.S. Recovering Jobs But Pace Has Slowed, Analyst Says

Goolsbee Sees Need to Get ‘Job Engine’ Growing Faster: Video

“Traders will look at the U6 unemployment rate…on Friday”

President Obama on September, 2010 Jobs Numbers

Ron Paul: Obama Stimulus Package Will Turn Recession Into Depression

The U.S. jobless ” recovery” continues and is getting worse.

While the official unemployment rate of 9.6% as measured by U-3 did not go up in September, the real total unemployment rate went from 16.7% in August to 17.1% in September 2010.

The official unemployment level is currently at 14,767,000 unemployed Americans and exceeds the 13 million unemployed during the worse year of the Great Depression, 1933.

The total unemployment level calculated as 17.1% of the civilian labor force of about 154,158,000 is over 26 million, twice the number of unemployed during the worse year of the Great Depression, 1933.

The Obama Depression is not over or improving but is in fact getting worse.

The Keynesian economics recipe for economic disaster of more and more stimulus spending, larger and larger budgetary deficits, financed by layer upon layer of government debt has been a big failure.

A failure made even worse by the Federal Reserves’ quantitative easing monetary policy of monetization of the debt by “printing” more and more money in exchange for the Federal Government’s debt.

Neither the fiscal policy of stimulus spending nor the monetary policy of quantitative easing will create more jobs.

Obama”s economic policies only increase the belief among consumers and business owners that the Federal Government is completely out-of-control.

Only when President Obama’s economic policies are reversed and the current regime in Congress and the President are elected out of office will you finally see job creation and low full employment rates of 2%% to 3% This will take not months but at least five years.

Dixion Says Fed Quantitative Easing Won’t Create New Jobs

http://www.youtube.com/watch?v=85Olz2h6ehM

The immediate result is the devaluing of the dollar

The Federal Reserves’ policy is a massive tax increase on all Americans as the purchasing power of their money declines daily.

This will only result in higher prices for all imports including gasoline and the costs of all goods and services to the extent they require imported goods and services such as petroleum.

Ron Paul vs. Ben Bernanke

Peter Schiff–Dollar Collaspse–Gold As A Hedge Against The Fed’s Committment To Raise Inflation

Who reappointed The Federal Reserve Chairman, Ben Bernanke,–President Barack Obama.

Ron Paul : We Can’t Say Cut Spending For Food Stamps But NOT For The Military Industrial Complex!

http://www.youtube.com/watch?v=whfopF8Xj8I

All Labor and Unemployment Statistics Are From

The Department of Labor, Bureau of Labor Statistics

http://data.bls.gov/cgi-bin/surveymost?ln

As Of October 2010

The Numbers In Red Are For The Obama Administration

U-3

Series Id: LNS14000000
Seasonally Adjusted
Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 years and over

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 4.0 4.1 4.0 3.8 4.0 4.0 4.0 4.1 3.9 3.9 3.9 3.9
2001 4.2 4.2 4.3 4.4 4.3 4.5 4.6 4.9 5.0 5.3 5.5 5.7
2002 5.7 5.7 5.7 5.9 5.8 5.8 5.8 5.7 5.7 5.7 5.9 6.0
2003 5.8 5.9 5.9 6.0 6.1 6.3 6.2 6.1 6.1 6.0 5.8 5.7
2004 5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4
2005 5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9
2006 4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4
2007 4.6 4.5 4.4 4.5 4.4 4.6 4.6 4.6 4.7 4.7 4.7 5.0
2008 5.0 4.8 5.1 5.0 5.4 5.5 5.8 6.1 6.2 6.6 6.9 7.4
2009 7.7 8.2 8.6 8.9 9.4 9.5 9.4 9.7 9.8 10.1 10.0 10.0
2010 9.7 9.7 9.7 9.9 9.7 9.5 9.5 9.6 9.6

U-6

Series Id: LNS13327709
Seasonally Adjusted
Series title: (seas) Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers
Labor force status: Aggregated totals unemployed
Type of data: Percent or rate
Age: 16 years and over
Percent/rates: Unemployed and mrg attached and pt for econ reas as percent of labor force plus marg attached

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 7.1 7.2 7.1 6.9 7.1 7.0 7.0 7.1 7.0 6.8 7.1 6.9
2001 7.3 7.4 7.3 7.4 7.5 7.9 7.8 8.1 8.7 9.3 9.4 9.6
2002 9.5 9.5 9.4 9.7 9.5 9.5 9.6 9.6 9.6 9.6 9.7 9.8
2003 10.0 10.2 10.0 10.2 10.1 10.3 10.3 10.1 10.4 10.2 10.0 9.8
2004 9.9 9.7 10.0 9.6 9.6 9.5 9.5 9.4 9.4 9.7 9.4 9.2
2005 9.3 9.3 9.1 8.9 8.9 9.0 8.8 8.9 9.0 8.7 8.7 8.6
2006 8.4 8.4 8.2 8.1 8.2 8.4 8.5 8.4 8.0 8.2 8.1 8.0
2007 8.3 8.1 8.0 8.2 8.2 8.2 8.3 8.5 8.4 8.4 8.5 8.8
2008 9.1 8.9 9.0 9.2 9.7 10.0 10.5 10.9 11.2 11.9 12.8 13.7
2009 14.0 15.0 15.6 15.8 16.4 16.5 16.4 16.8 17.0 17.4 17.2 17.3
2010 16.5 16.8 16.9 17.1 16.6 16.5 16.5 16.7 17.1

Series Id: LNS13000000
Seasonally Adjusted
Series title: (Seas) Unemployment Level
Labor force status: Unemployed
Type of data: Number in thousands
Age: 16 years and over

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 5708 5858 5733 5481 5758 5651 5747 5853 5625 5534 5639 5634
2001 6023 6089 6141 6271 6226 6484 6583 7042 7142 7694 8003 8258
2002 8182 8215 8304 8599 8399 8393 8390 8304 8251 8307 8520 8640
2003 8520 8618 8588 8842 8957 9266 9011 8896 8921 8732 8576 8317
2004 8370 8167 8491 8170 8212 8286 8136 7990 7927 8061 7932 7934
2005 7784 7980 7737 7672 7651 7524 7406 7345 7553 7453 7566 7279
2006 7059 7185 7075 7122 6977 6998 7154 7097 6853 6728 6883 6784
2007 7085 6898 6725 6845 6765 6966 7113 7096 7200 7273 7284 7696
2008 7628 7435 7793 7631 8397 8560 8895 9509 9569 10172 10617 11400
2009 11919 12714 13310 13816 14518 14721 14534 14993 15159 15612 15340 15267
2010 14837 14871 15005 15260 14973 14623 14599 14860 14767

In order to reduce the U.S. official unemployment rate by .1% in a single month requires the creation of between 250,000 and 300,000 jobs per month depending upon the number of new entrants into the labor market due to population growth and the labor participation rate or those seeking employment.

The labor participation rate goes down as an economy goes into a recession and goes up as the economy grows and prospers. The labor participation rate is currently 64.7%, well below the more normal range of 66% to 67.5% .

A higher labor participation rate means more individuals are actively seeking full-time employment and more jobs need to be created each month to absorb both new entrants and re-entrants into the labor market.

This is the reason why between 250,000 and 300,000 jobs need to be created each month to reduce the unemployment rate just .1%.

Series Id: LNS11300000
Seasonally Adjusted
Series title: (Seas) Labor Force Participation Rate
Labor force status: Civilian labor force participation rate
Type of data: Percent or rate
Age: 16 years and over

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 67.3 67.3 67.3 67.3 67.1 67.1 66.9 66.9 66.9 66.8 66.9 67.0
2001 67.2 67.1 67.2 66.9 66.7 66.7 66.8 66.5 66.8 66.7 66.7 66.7
2002 66.5 66.8 66.6 66.7 66.7 66.6 66.5 66.6 66.7 66.6 66.4 66.3
2003 66.4 66.4 66.3 66.4 66.4 66.5 66.2 66.1 66.1 66.1 66.1 65.9
2004 66.1 66.0 66.0 65.9 66.0 66.1 66.1 66.0 65.8 65.9 66.0 65.9
2005 65.8 65.9 65.9 66.1 66.1 66.1 66.1 66.2 66.1 66.1 66.0 66.0
2006 66.0 66.1 66.2 66.1 66.1 66.2 66.1 66.2 66.1 66.2 66.3 66.4
2007 66.4 66.3 66.3 66.0 66.0 66.0 66.0 65.8 66.0 65.8 66.0 66.0
2008 66.2 66.0 66.1 66.0 66.2 66.1 66.0 66.1 66.0 66.0 65.8 65.8
2009 65.7 65.7 65.6 65.8 65.8 65.7 65.4 65.4 65.1 65.0 64.9 64.6
2010 64.7 64.8 64.9 65.2 65.0 64.7 64.6 64.7 64.7

It takes at between 100,000 and 150,000 jobs to employ new entrants into the labor market mostly high school and college graduates.

There are currently over 1.1 million new entrants into the labor force that have not found their first job.

Series Id: LNS13023569
Seasonally Adjusted
Series title: (Seas) Unemployment Level – New Entrants
Labor force status: Unemployed
Type of data: Number in thousands
Age: 16 years and over
Unemployed entrant status: New entrants

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 394 420 429 406 466 427 433 499 415 402 419 490
2001 444 396 378 457 468 467 448 485 473 481 495 515
2002 484 507 538 527 497 549 545 612 536 479 591 535
2003 599 584 630 635 630 661 669 652 686 636 593 693
2004 676 666 631 652 718 649 702 704 695 734 700 702
2005 621 753 712 764 710 650 630 626 607 638 673 633
2006 618 710 635 590 522 644 638 647 612 573 583 588
2007 628 599 614 621 536 634 599 590 668 700 661 688
2008 685 660 705 631 807 771 829 826 811 826 735 820
2009 792 1016 881 919 977 969 994 1096 1134 1114 1270 1270
2010 1235 1238 1197 1231 1206 1140 1188 1259 1187

The unemployment rate for the young, ages 16 to 19, is 26%!

The unemployment rate for the young is currently nearly double the usual unemployment rate for ages 16 to 19 of between 12% and 16% when the economy is growing.

Series Id: LNS14000012
Seasonally Adjusted
Series title: (Seas) Unemployment Rate – 16-19 yrs.
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 to 19 years

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 12.7 13.8 13.3 12.6 12.8 12.3 13.4 14.0 13.0 12.8 13.0 13.2
2001 13.8 13.7 13.8 13.9 13.4 14.2 14.4 15.6 15.2 16.0 15.9 17.0
2002 16.5 16.0 16.6 16.7 16.6 16.7 16.8 17.0 16.3 15.1 17.1 16.9
2003 17.2 17.2 17.8 17.7 17.9 19.0 18.2 16.6 17.6 17.2 15.7 16.2
2004 17.0 16.5 16.8 16.6 17.1 17.0 17.8 16.7 16.6 17.4 16.4 17.6
2005 16.2 17.5 17.1 17.8 17.8 16.3 16.1 16.1 15.5 16.1 17.0 14.9
2006 15.2 15.3 16.1 14.6 14.0 15.7 15.9 16.1 16.3 15.2 14.9 14.7
2007 14.8 14.9 14.9 15.6 15.9 16.2 15.3 16.0 16.0 15.5 16.2 16.9
2008 17.8 16.5 16.0 15.6 18.9 19.0 20.8 18.9 19.3 20.3 20.3 20.8
2009 20.9 21.8 22.0 21.8 23.2 24.3 24.5 25.7 26.1 27.6 26.8 27.1
2010 26.4 25.0 26.1 25.4 26.4 25.7 26.1 26.3 26.0

Both high school graduates and those who either dropped out or failed to graduate from high school are finding it very difficult to find their first job.

Illegal immigrants, mainly from Mexico and Latin America, of between 10 million to 20 million, has made it even more difficult for young inexperienced American citizens to find entry-level jobs.

Also the Federal minimum hourly wage law prevents many small businesses from hiring young workers.

Good Intentions 2 of 3 Minimum Wage, Licensing, and Labor Laws with Walter Williams

Good Intentions 3 of 3 The Welfare System and Conclusions with Walter Williams

It currently takes between 100,000 and 150,000 new jobs in addition to the 100,000 to 150,000 jobs for new entrants to reduce the unemployment rate by .1%.

The civilian labor force is currently about 155 million.

Series Id: LNS11000000
Seasonally Adjusted
Series title: (Seas) Civilian Labor Force Level
Labor force status: Civilian labor force
Type of data: Number in thousands
Age: 16 years and over

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 142267(1) 142456 142434 142751 142388 142591 142278 142514 142518 142622 142962 143248
2001 143800 143701 143924 143569 143318 143357 143654 143284 143989 144086 144240 144305
2002 143883 144653 144481 144725 144938 144808 144803 145009 145552 145314 145041 145066
2003 145937(1) 146100 146022 146474 146500 147056 146485 146445 146530 146716 147000 146729
2004 146842(1) 146709 146944 146850 147065 147460 147692 147564 147415 147793 148162 148059
2005 148029(1) 148364 148391 148926 149261 149238 149432 149779 149954 150001 150065 150030
2006 150201(1) 150629 150839 150915 151085 151368 151383 151729 151650 152020 152360 152698
2007 153117(1) 152941 153093 152531 152717 153045 153039 152781 153393 153158 153767 153869
2008 154048(1) 153600 153966 153936 154420 154327 154410 154696 154590 154849 154524 154587
2009 154140(1) 154401 154164 154718 154956 154759 154351 154426 153927 153854 153720 153059
2010 153170(1) 153512 153910 154715 154393 153741 153560 154110 154158

Multiply the civilian labor force of about 155 million by .1% and the result is 155,000.

This is approximate number of jobs that need to be created to reduce the unemployment rate by .1 with no growth in the labor force.

When you add in the natural growth of the labor force by new entrants from population growth you arrive at an estimate of between 250,000 to 300,000 new jobs that need to be created each month to reduce the unemployment rate by .1%.

In a robust economic recovery the private sector should be creating 500,000 to 600,000 jobs per month.

Unfortunately, the private business sector and particularly small and medium size businesses, are not creating anywhere near 250,000 to 300,000 per month.

In September the private sector created only a net total of 75,000 new jobs. This is far short of the 250,000 to 300,000 jobs needed to reduce the U-3 official unemployment rate by just .1%.

Even if 250,000 new jobs were being created each month and the unemployment rate declined 1.2% per year and over 3 million jobs were created in a year, it would take over five years to bring the official unemployment rate ( U-3) down to under a 3% rate of unemployment or a near full employment level.

The stimulus package of over $789 billion plus billions in interest payments was supposed to keep the unemployment rate under 8% and not above 8%!

Stimulus II: A Sequel America Can’t Afford

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/white-houses-stimulus-math-doesnt-add-up-100456089.html

The stimulus package has been an abject failure of the Keynesian economists including Romer and Berstein who advised Obama that this was what was needed.

Series Id: LNS12000000
Seasonally Adjusted
Series title: (Seas) Employment Level
Labor force status: Employed
Type of data: Number in thousands
Age: 16 years and over

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 136559(1) 136598 136701 137270 136630 136940 136531 136662 136893 137088 137322 137614
2001 137778 137612 137783 137299 137092 136873 137071 136241 136846 136392 136238 136047
2002 135701 136438 136177 136126 136539 136415 136413 136705 137302 137008 136521 136426
2003 137417(1) 137482 137434 137633 137544 137790 137474 137549 137609 137984 138424 138411
2004 138472(1) 138542 138453 138680 138852 139174 139556 139573 139487 139732 140231 140125
2005 140245(1) 140385 140654 141254 141609 141714 142026 142434 142401 142548 142499 142752
2006 143142(1) 143444 143765 143794 144108 144370 144229 144631 144797 145292 145477 145914
2007 146032(1) 146043 146368 145686 145952 146079 145926 145685 146193 145885 146483 146173
2008 146421(1) 146165 146173 146306 146023 145768 145515 145187 145021 144677 143907 143188
2009 142221(1) 141687 140854 140902 140438 140038 139817 139433 138768 138242 138381 137792
2010 138333(1) 138641 138905 139455 139420 139119 138960 139250 139391

President Bush’s Federal income tax rate cuts of 2001 and capital gains and interest rate cuts of 2003 worked and the negative impact on the economy of the September 11, 2001 Islamic Al-Qaeda Jihadist terrorist attack was mostly minimized and avoided.

However, President Bush failed to control Federal Government spending by not vetoing the massive Government spending increases of both the Republican controlled House and Senate in 2005 and 2006 and the Democratic controlled House and Senate in 2007 and 2008.

President Obama followed the lead of President Bush and the Democratic controlled Congress by more than doubling the Federal budget deficits in 2009 and 2010.

Dan Mitchell on the Deficit

Dan Mitchell discusses Reagonomics vs. Obamanomics

The result is the Obama Depression with more than twice the number of Americans looking for a full-time job than the 13 million Americans that were unemployed in March, 1933, the worse month of the Great Depression.

President Obama is following in the footsteps of Presidents Herbert Hoover, Franklin D. Roosevelt, and George W. Bush by pursuing both the expansion of government with huge budgetary deficits (2009 was over $1,400 billion and 2010 is over 1,340 billion) and tax rate increases by letting the Bush tax rate cuts expire, supporting a massive cap-and-trade energy tax and imposing a mandatory health care plan on Americans that they must purchase or pay a tax penalty.

Feldstein Predicts Dollar to Weaken, Boosting Exports: Video

News Update: CBO Deficit estimates

The result is the same–massive unemployment–over 26 million seeking a full-time job and 41.8 million Americans on food stamps.

My recommendation made February 1, 2009 was to first have a six month payroll tax holiday on payroll and capital gains taxes and at the end of the six month period switch from the current Federal income tax system to the FairTax, which is a national sales consumption tax on the sale of all new goods and services.

American People’s Plan = 6 Month Tax Holiday + FairTax = Real Hope + Real Change!–Millions To March On Washington D.C. Saturday, July 4, 2009! Revised and Updated

The FairTax would replace all Federal personal and corporate income taxes, payroll taxes, Social Security taxes, Medicare taxes, capital gains taxes, interest and dividend taxes, alternative minimum taxes, estate and gift taxes.

The FairTax requires the repeal the 16th Amendment that gave the Federal government the power to collect an income tax.

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The FairTax is also progressive for it provides a prebate or check each month to every American to pay the sales tax on necessities of living such as food, clothing, housing, and energy (electricity and gasoline).

Had the FairTax been implemented with a six month payroll and capital gains tax holiday, the unemployment rate would have been significantly below 8% by now and the economy growing at a rate above 5%.

The FairTax: It’s Time

The recommended economic policy of cutting both Federal taxes and Federal Government spending and regulation had been tried and proved successful in the past when the United States entered the roaring twenties:

Why You’ve Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.

Keynesian Predictions vs. American History | Thomas E. Woods, Jr.

While the above economic policy recommendations would still work, it will never happen under the existing ruling political class.

Unfortunately, the political ruling class based in Washington, D.C., both Democrats and Republicans, vigorously opposed those proposing the FairTax.

Comprehensive tax reform is opposed by the lobbyist and special interests on K Street in Washington D.C. who benefit from the complicated Federal Income Tax.

Professional politicians of both political parties need the campaign contributions of these special interests and lobbyists to run for re-election.

The real problem is simply too much Federal Government spending.

The high levels of Federal Government spending is what is driving the need for new and higher Federal taxation, every increasing borrowing to finance the deficits, and a reckless expansionary credit and monetary policy.

The solution is to cut Federal government spending by eliminating entire Federal Departments, agencies and programs.

That is why I recommended that Federal Government spending be limited to 80% of FairTax collections with the remaining 20% used to pay down the National Debt and fund entitlement (Social Security and Medicare) unfunded liabilities.

A Common Sense Political Agenda For A New Conservative and Libertarian Party: American Citizens Alliance Party (ACAP)–A CAP On Government Spending, Taxes, Debt and Regulations!

It’s Simple to Balance The Budget Without Higher Taxes

This solution is anathema to the progressive radical socialist of the Democratic Party led by President Obama.

Instead President Obama went with the failed economic policies of the Keynesian economists who always advocate more and more Federal Government spending, which is precisely what the progressive radical socialists want to impose on the American people.

Keynesian Economics Is Wrong: Bigger Gov’t Is Not Stimulus

As a direct result of President Obama and the Democratic Party controlled Congress failure in cutting Federal Government spending, closing permanently many Federal Departments and agencies and ending hundreds of Federal Government programs, while proposing even more and higher taxes, more Americans are now unemployed and seeking full-time employment than any time in the history of the United States.

The number of unemployed are twice that of the Great Depression!

The U-3 official unemployment rate will remain above 8% and the U-6 total unemployment rate will remain above 15% for at least another 36 months.

By then the American people will vote President Obama out of office.

By then the American people will vote those Democratic and Republican Senators and Representatives who failed to institute deep and permanent cuts to the Federal budget, a balanced or surplus budget and the FairTax.

President Obama is a progressive radical socialist ideologue.

Obama wants to grow the size and scope of the Federal Government and use coercion and government intervention in the form of higher taxes and pervasive government regulation to redistribute wealth and limit consumer sovereignty and the liberties of the American people.

Paul Ryan on how to break the capital strike

Krauthammer: “We Are Having A Capital Strike”

President Obama’s economic policies created massive economic uncertainty for consumers and businesses resulting in tens of millions of unemployed and underemployed Americans.

President Obama is a regime that must be changed if there is any hope for the tens of millions of unemployed Americans to find a full-time job.

On November 2, 2010 the American people will vote the Democrats out of office who were responsible for this economic disaster by massive government intervention into the economy and expansion of the size and scope of government.

Most Americans cannot wait to vote President Obama out of office in 2012.

Mr. President, you know you are an economic illiterate.

Do the right thing Mr. President, resign for the good of the country and the American people.

Just think, Mr. President, you will have more time to play golf, smoke and be with your family.

Everbody wins.

Good-Bye and Good Luck.

“Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individual’s life and the unrestricted supremacy of the government in its capacity as central board of production management.”

~Ludwig von Mises

Background Articles and Videos

Christina Romer explains a new report about job creation

The Job Impact of the American Recovery and Reinvestment Plan

By Christine Romer and Jared Bernstein

January 9, 2009

http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

Christie Romer: The Only Surefire Way for Policymakers to Substantially Increase Aggregate Demand in the Short Run Is for the Government to Spend More and Tax Less

“…In a report that Jared Bernstein and I issued during the transition, we estimated that by the end of 2010, a stimulus package like the Recovery Act would raise real GDP by about 3 1⁄2 percent and employment by about 31⁄2 million jobs, relative to what otherwise would have occurred. As the Council of Economic Advisers has documented in a series of reports to Congress, there is widespread agreement that the Act is broadly on track to meet these milestones…. What the Act hasn’t done is prevent unemployment from going above 8 percent, something else that Jared and I projected it would do. The reason that prediction was so far off is implicit in much of what I have been saying this afternoon. An estimate of what the economy will look like if a policy is adopted contains two components: a forecast of what would happen in the absence of the policy, and an estimate of the effect of the policy. As I’ve described, our estimates of the impact of the Recovery Act have proven quite accurate. But we, like virtually every other forecaster, failed to anticipate just how violent the recession would be in the absence of policy, and the degree to which the usual relationship between GDP and unemployment would break down.

By February 2009, before the Recovery Act was passed, unemployment was already over 8 percent; and by June, before the Recovery Act could have had much of an impact, it was 9 1⁄2 percent… our projection turned out to be wrong even before the Recovery Act had a chance to get off the ground, which is about as clear-cut evidence as one could imagine that the problem was in our assessment of the baseline, and not in the effects of the Act….

I certainly don’t regret having done the study. During the Transition, the little paper helped to build the case both internally and externally for a stimulus of unprecedented proportions. Only in retrospect does saying that our best guess was that unemployment would rise to 9 1⁄2 percent without aggressive action look rosy. At the time, it was scary as hell. It helped convince both our team and the Congress to go for as big a program as possible. And laying down a firm marker that the legislation had to save or create 3 1⁄2 million jobs helped prevent the package from shrinking greatly during Congressional negotiations….

The thing I do regret is that there is still so much unfinished business. I would give anything if unemployment really were down to 8 percent or lower…. That the economy remains as troubled as it is despite aggressive action reflects the fact that this has not been a normal recession. Just as the downturn was uncharted territory, so is its recovery. Because the recession began with interest rates at low levels, we can’t just have interest rates fall and housing, investment, and other interest-sensitive sectors come roaring back as they typically do in recoveries….”

http://delong.typepad.com/sdj/2010/09/christie-romer-the-only-surefire-way-for-policymakers-to-substantially-increase-aggregate-demand-in-the-short-run-is-for-the.html

Democratic Pollster: GOP Poised to Seize House and Senate

By: David A. Patten

“…Republicans are on the brink of pulling off a landslide “of potentially epic proportions” that would bring them control of both Houses of Congress and a majority of governorships, Democratic pollster and Fox News commentator Douglas Schoen says.

In an exclusive Newsmax interview, Schoen says he now sees several indications that matters are going from bad to worse for Democrats in this election cycle.

He points to a RealClearPolitics.com analysis that now shows Republicans picking up a net gain of nine seats in the Senate, which would deadlock the upper chamber 50 to 50. And polls show several other GOP candidates, including Carly Fiorina in California and Dino Rossi in Washington state, remain within striking distance, he says.

Schoen, a pollster for former President Bill Clinton, is co-author of the new book “Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System.”
…”

http://www.newsmax.com/Headline/gop-polls-lead-democrats/2010/10/08/id/373121?s=al&promo_code=AF37-1

Monetization

“…Monetization is the process of converting or establishing something into legal tender. It usually refers to the printing of banknotes by central banks, but things such as gold, diamonds and emeralds, and art can also be monetized. Even intrinsically worthless items can be made into money, as long as they are difficult to make or acquire. Monetization may also refer to exchanging securities for currency, selling a possession, charging for something that used to be free or making money on goods or services that were previously unprofitable. …”

“…Monetizing debtIn many countries the government has assigned exclusive power to issue or print its national currency to independently operated central banks. For example, in the USA the independently owned and operated Federal Reserve banks do this.[1] Such governments thereby disavow the overly convenient ‘slippery slope’ option of paying their bills by printing new currency. They must instead pay with currency already in circulation, or else finance deficits by issuing new bonds, and selling them to the public or to their central bank so as to acquire the necessary money. For the bonds to end up in the central bank it must conduct an open market purchase. This action increases the monetary base through the money creation process. This process of financing government spending is called monetizing the debt.[2] Monetizing debt is thus a two step process where the government issues debt to finance its spending and the central bank purchases the debt from the public. The public is left with an increased supply of base money.

Effects on inflation

When government deficits are financed through this method of debt monetization the outcome is an increase in the monetary base, or the money supply. If a budget deficit persists for a substantial period of time then the monetary base will also increase, shifting the aggregate demand curve to the right leading to a rise in the price level.[3] When governments intentionally do this, they devalue existing stockpiles of wealth of anyone who is holding assets based in that currency. It is in essence a “tax” as the overall value of their assets decrease due to a loss in spending power. This is known as “inflation tax“.

To summarize: a deficit can be the source of sustained inflation only if it is persistent rather than temporary and if the government finances it by creating money (through monetizing the debt), rather than leaving bonds in the hands of the public.[4]

Examples

Monetizing the debt can be used as a component of quantitative easing strategies, which involve the creation of new currency by the central bank, which may be used to purchase government debt, or can be used in other ways.

However, there can be an insidious effect. As one observer noted:

When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a sovereign Ponzi scheme. Ponzi schemes have a way of ending unhappily. To get out of the Ponzi trap, governments will have to increase tax revenues, or cut spending, or monetize the debt–or most likely do some combination of all three. [5] …”

http://en.wikipedia.org/wiki/Monetization

Quantitative Easing

“…The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

A central bank implements QE by first crediting its own account with money it creates ex nihilo (“out of nothing”).[1] It then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus hopefully induce a stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.

Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]

“Quantitative” refers to the fact that a specific quantity of money is being created; “easing” refers to reducing the pressure on banks.[2] However, another explanation is that the name comes from the Japanese-language expression for “stimulatory monetary policy”, which uses the term “easing”.[3] Quantitative easing is sometimes colloquially described as “printing money” although in reality the money is simply created by electronically adding a number to an account. Examples of economies where this policy has been used include Japan during the early 2000s, and the United States, the United Kingdom and the Eurozone during the global financial crisis of 2008–the present, since the programme is suitable for economies where the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

http://en.wikipedia.org/wiki/Quantitative_easing

Consumer Sovereignty

“…Consumer sovereignty is a term which is used in economics to refer to the rule or sovereignty of consumers in markets as to production of goods. It is the power of consumers to decide what gets produced. People use this term to describe the consumer as the “king,” or ruler, of the market, the one who determines what products will be produced. [1] Also, this term denotes the way in which a consumer ideologically chooses to buy a good or service. Furthermore, the term can be used as either a norm (as to what consumers should be permitted) or a description (as to what consumers are permitted).

In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers as what to produce (and how much). Customers do not necessarily have to buy and, if dissatisfied, can take their business elsewhere, while the profit-seeking sellers find that they can make the greatest profit by trying to provide the best possible products for the price (or the lowest possible price for a given product). In the language of cliché, “The one with the gold makes the rules.”

To most neoclassical economists, complete consumer sovereignty is an ideal rather than a reality because of the existence—or even the ubiquity—of market failure. Some economists of the Chicago school and the Austrian school see consumer sovereignty as a reality in a free market economy without interference from government or other non-market institutions, or anti-market institutions such as monopolies or cartels. That is, alleged market failures are seen as being a result of non-market forces.

The term “consumer sovereignty” was coined by William Hutt who firstly used it in his 1936 book “Economists and the Public”. …”

http://en.wikipedia.org/wiki/Consumer_sovereignty

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News Journal: Number 24, October 5, 2010: President Obama’s Massive Tax Hikes Will Wreck The Economy, Destroy More Jobs and Kill The American Dream–Stop Stupidity, Spending, and Socialism!–Videos

Posted on October 5, 2010. Filed under: Communications, Digital Communication, Issues, Law, Mass Media, Newspapers, Politics, Print Media, Radio, Regulations, Society, Television, Web | Tags: , , , , , , , |

Obama vs. JFK on taxes

Richard Rahn: Double-Dip Recession Imminent, If Bush Tax Cuts Arent Renewed

Keynesian Economics Is Wrong: Bigger Gov’t Is Not Stimulus

Who Pays Income Taxes and how much?

Tax Year 2007

Percentiles Ranked by AGI

AGI Threshold on Percentiles

Percentage of Federal Personal Income Tax Paid

Top 1%

$410,096

40.42

Top 5%

$160,041

60.63

Top 10%

$113,018

71.22

Top 25%

$66,532

86.59

Top 50%

$32,879

97.11

Bottom 50%

<$32,879

2.89

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

http://www.ntu.org/tax-basics/who-pays-income-taxes.html

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It is not the Federal Government’s money, it is the money or income of the American people.

President Obama wants to increase taxes on the top 3% of U.S. tax payers that currently pay over 50% of all taxes and create most new jobs.

By increasing taxes on the wealth and job creators–small and medium size businesses, the Federal Government is destroying jobs in the private business sector to pay for more government spending.

The Federal Government should stop spending and close down permanently entire Federal Departments and agencies.

Milton Friedman on Libertarianism (Part 4 of 4)

Instead, President Obama is expanding the Federal Government while those in the private sector cannot find jobs or are losing their jobs.

Cutting spending by closing down whole departments and agencies is what needs to done–not borrowing or taxing the American people to pay a monster Federal Government.

President Obama’s economic policies have been a disaster.

Increasing taxes on the job creators when there are over 25,000,000 Americans looking for a full time jobs is simply crazy and irresponsible.

How dare President Obama do this?

He actually believes he can lie to you and you are stupid and not paying attention.

On November 2, 2010 vote all the Democrats out of office and do the same in November 2012.

Send a message to President Obama by giving the Republicans majorities in the House and Senate and in the state houses and governor offices.

BAAAMM!!—Rush Limbaugh Calls Obama a ‘Jackass’, an ‘Economic Illiterate’ 

Stop stupidity.

Stop spending.

Stop socialism.

Presidents Kennedy and Bush tax cuts were right.

President Obama and Keynes stimulus spending were wrong.

Free markets and small government produce economic growth, prosperity and job creation.

Free Markets and Small Government Produce Prosperity

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