Our Current Illusion of Prosperity

By Frank Hollenbeck – Re-Blogged From http://www.Gold-Eagle.com

President Obama and Fed Chair Janet Yellen have been crowing about improving economic conditions in the US. Unemployment is down to 5.5 percent and growth in 2014 hit 2.2 percent.

Journalists and economists point to this improvement as proof that quantitative easing was effective.

Continue reading

Advertisements

FED Policy & Government Spending

cropped-bob-shapiro.jpg   By Bob Shapiro

During the 1970s, inflation, as measured by the CPI, started to reemerge as a national problem. By the end of the decade, the US had “Double Digit Inflation.”

Paul Volker, the FED chief at the time, observed a steep rise in long dated Treasury Bonds, and slowly raised the short term Fed Funds interest rate, to keep the “spread” between the two rates reasonably close together. At the time, Volker was roundly criticized in the financial press for being “behind the curve” for being late consistently in raising the FED Funds rate.

Continue reading