Audit the Fed: Is the Momentum Dying?

By Stefan Gleason – Re-Blogged From The Sound Money Defense League

The Federal Reserve is perhaps the most powerful “public” institution about which the public knows virtually nothing.

The origins and operations of the central bank are mysteries to most people, including most politicians. Top Fed officials and their allies aim to keep it that way by defeating Audit the Fed legislation now pending in the U.S. Senate.

Back in 2010, the Audit the Fed campaign started gaining real traction in Congress. What had been for many years a lonely battle for transparency waged by former Rep. Ron Paul (R-TX) finally reached a critical mass of support. Congressman Paul’s signature Federal Reserve Transparency Act seemed to stand a real chance of passing.

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Fed ‘One and Done’ is a Wall Street Fantasy

By Michael Pento – Re-Blogged From CNBC

One of the current myths promulgated by Wall Street is that the Federal Reserve will raise rates once this year, breathe a sigh of relief, and be done until the “12th of never.” But those who are familiar with our central bank’s history are aware that the Federal Open Market Committee has never tightened the federal-funds rate just once. A quarter-point hiking cycle has no historical basis and is just wishful Wall Street thinking.

In the spring of 1988, fearing a rise in core inflation, the Fed went on a tightening cycle that lasted from April 1988 to March 1989. During that time, the fed-funds rate increased more than 300 basis points (3 percentage points). This episode was followed by a recession beginning in 1990, suggesting that the corrective policy actions may have intensified a weakening economy, and that the Fed is prone to being economically tone deaf.

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Keeping the Bubble-Boom Going

By Thorsten Polleit – Re-Blogged From http://www.mises.org

The US Federal Reserve is playing with the idea of raising interest rates, possibly as early as September this year. After a six-year period of virtually zero interest rates, a ramping up of borrowing costs will certainly have tremendous consequences. It will be like taking away the punch bowl on which all the party fun rests.

Low Central Bank Rates have been Fueling Asset Price Inflation

The current situation has, of course, a history to it. Around the middle of the 1990s, the Fed’s easy monetary policy — that of Chairman Alan Greenspan — ushered in the “New Economy” boom. Generous credit and money expansion resulted in a pumping up of asset prices, in particular stock prices and their valuations.

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Fixing America’s Economy

cropped-bob-shapiro.jpg   By Bob Shapiro

There are numerous Economic truths. One of these is that, in a Free Market, interest rates are set by borrowers and lenders based on each group’s perceptions of the urgency of their need to take action.

A borrower may have a business opportunity which will yield an expected profit. If it is a longer term project, such as building a new factory, the cost of money may need to be in a relatively narrow band to make the plan feasible. A shorter term project horizon, such as a 6 month loan to finish off 20 new homes, which are almost completed, might withstand a much higher interest rate. The “combined” need for money for these projects will constitute the demand for loans.

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An Interview Worth Watching

cropped-bob-shapiro.jpg   By Bob Shapiro

Michael Pento is an stock market money manager who follows the Austrian School of Economics (as do I). For those of you unfamiliar with what that is, Austrian Economics is Free Market Economics, as opposed to Keynesianism and other names for Socialism.

Michael was interviewed recently, and I’d like to share the video with you. It’s one of the few lucid, straightforward pieces that I’ve seen recently. But, understand that some of what he says is scary, so if you have a bad ticker, you’d better take a pill before watching.

 

Prices, the FED, and Elections

cropped-bob-shapiro.jpg   By Bob Shapiro

I came across a web site which has a comparison of food & gasoline costs over the last 60 years: the same staple items in 1954, 1984, and 2014. Not surprisingly, prices are up – way up.

The same basket of goods which today costs $28.38, cost $11.26 in 1984. And, it cost only $3.68 in 1954! Prices for these items have gone up almost 8 times during the last 60 years – that’s a compounded annual rate of about 3.5%!

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WSJ Reports CPI Under-Reporting

cropped-bob-shapiro.jpg   By Bob Shapiro

I’ve mentioned several times that our government under-reports the rate of rising prices. Prices are up about 30 times (that’s not 30%) since the Federal Reserve (FED) received the monopoly to print paper dollars in 1913. (The FED has printed well over 100 times as many dollars, but as innovation increases productivity, it keeps prices from rising as much as monetary debasement would call for.)

www.ShadowStats.com has a pair of alternate measures to the CPI. One is calculating today’s numbers using the way they would have been calculated in 1990. That shows the CPI rising at around a 5.5% annual rate, versus the reported CPI figure of 1.8% over the last 12 months.

ShadowStats other calculation uses the BLS methodology from 1980, which shows price inflation of 9.5% since a year ago.

CPINov 14

I read on Yahoo! This morning of a Wall Street Journal report (paywalled) also indicating that the CPI grossly understates price inflation. (See Yahoo!’s article: Fed says ‘no inflation’ but middle class reality says otherwise.)

But, whether you accept the “Official” CPI numbers, prefer the WSJ’s study results, or think that one of ShadowStats’ inflation recaps is correct, all of them show prices going up year after year, decade after decade, at least since Eisenhower was President.

In a Capitalist country (that’s what our Founding Fathers originally set up) using Free Markets, prices should decline continuously as new and better ways of doing things improves productivity.

With over-regulation and other government tinkering with the US Economy, productivity gains will be slower, but prices still should decline over the long haul.

Monopoly Money

It is only with the FED’s continuous misuse of its role as the nation’s paper dollar printer, only with the FED’s debasement of the currency, only with the FED’s counterfeiting of Americans’ store of value, that prices can go up all the time.

Action Item: End the FED!

QE Ends, QE Begins – Now What?

cropped-bob-shapiro.jpg   By Bob Shapiro

The US Federal Reserve (FED) has stopped Quantitative Easing (QE). Japan and the Eurozone have started QE. Buying of various securities, Bonds and Stocks, around the world will be continuing, although which stock and bond markets are manipulated higher will change.

The Japanese stock market took off almost 5% on the news, and debt throughout Europe now carries lower interest rates. This applies even to Spain and Greece, countries on the brink of default.

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When Money Dies: Germany and Paper Money After 1910

Reblog from Silver Phoenix 500

Marcia Christoff-Kurapovna October 31, 2014

The story of the destruction of the German mark during the hyper-inflation of Weimar Germany from 1919 to its horrific peak in November 1923 is usually dismissed as a bizarre anomaly in the economic history of the twentieth century. But no episode better illustrates the dire consequences of unsound money or makes a more devastating, real-life case against fiat-currency: where there is no restraint, monetary death will follow.

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Will the FED Raise Rates Next Year?

The FED has said it has ended its Quantitative Easing (QE) and will begin raising interest rates around summer of 2015. Some analysts disagree, saying that the FED is too set on micromanaging every wiggle on Wall Street to carry out their promise.

Read Michael Pento’s evaluation of the FED’s current dilemma,

A Funny Thing Happened On The Way To Raising Rates.

The Markets vs The Economy

cropped-bob-shapiro.jpg   By Bob Shapiro

Fiscal and Monetary policies, we are told, are supposed to stimulate and protect the US Economy. Nothing could be further from the truth.

Taxing & spending reduce the profits available to replace and grow our country’s productive capacity. Printing (or the “electronic equivalent”) makes this worse by making the tax bite more
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