Fed's rise to tyranny has no end in sight

The Fed is not the solution, it is the problem

By Noureddine Krichene 

A country needs a constitution for the sole purpose to protect citizens against totalitarian government. Confiscating wealth of citizens via money inflation is totalitarian power. To protect against this power, the US Constitution entrusted congress with the authority to coin and regulate the value of money. The US Constitution sought to protect citizens against totalitarian power of government. 

The US Federal Reserve, founded in late 1913, acquired the power to create money. Its original purpose was modest; namely to provide an elastic money supply for the economy. Soon after, it monetized the US debt; it extended its powers to subsidize traders in capital markets, abolish the gold standard, and then to assume the mandate of full-employment of labor. 

Now it is the central planner of the economy with unlimited power to create money and manage all segments of the economy. It observes no rules. It bails out banks at the expense savers and workers. It is a tool of politicians seeking votes. Speculators in capital markets earn fortunes on Fed's cheap liquidity and the government relies on it to force near-zero interest rate and monetize monumental fiscal deficits. 

Through its negative real interest rate and money expansion it inflicted severe financial crises in the 1930s, 1970s, 1980s, and recently the 2008 financial crisis. It has impoverished masses of people and pushed food prices to forbidden levels - in 2013, close to 50 million US citizens live on food stamps. It caused trillions of dollars in fiscal deficits to cope with bailouts and welfare spending caused by the crisis. 

At present, its policy of massive money printing and near-zero interest is setting off bubbles in the stock markets, housing markets, and a currency war among leading industrial countries. Its pillar achievements are: debauching money, impoverishing workers and fixed-income recipients, economic disintegration, and financial crises and disorders. 

The mathematical menace

Mathematical models, far from being tools to increase knowledge and understanding, can be tools of obfuscation

By Martin Hutchinson 

Far from being tools to increase knowledge and understanding, mathematical models are tools of obfuscation. 

The brouhaha about the spreadsheet error in Carmen Reinhart and Kenneth Rogoff's 2010 paper "Growth in a time of debt" brings home an important economic truth. Not that Reinhart and Rogoff were in error; their overall conclusion is clearly true, not to say obvious, and correction of the error in their spreadsheet merely softened the conclusion without invalidating it. However the economic truth is that the invention of computer modeling has for the last 40 years allowed charlatans to peddle spurious models in the service of their political agendas, and policy makers and the general public are all too ready to be fooled by these devices.

The attempt to model mathematically complex scientific and sociological interactions is popularly thought to have begun with the computer model of nuclear interaction used in the 1942-45 Manhattan Project, but the techniques and thought processes involved go back well beyond this. Perhaps the most significant pre-computer use of model theorizing came from Rev Thomas Malthus, who postulated that the increase over time in food supply was arithmetical, that in population geometrical, and therefore population would always outrun the food supply. 

Multiculti U.

The budget-strapped University of California squanders millions on mindless diversity programs

by Heather Mac Donald

In the summer of 2012, as the University of California reeled from one piece of bad budget news to another, a veteran political columnist sounded an alarm. Cuts in state funding were jeopardizing the university’s mission of preserving the “cultural legacy essential to any great society,” Peter Schrag warned in the Sacramento Bee:

Would we know who we are without knowing our common history and culture, without knowing Madison and Jefferson and Melville and Dickinson and Hawthorne; without Shakespeare, Milton and Chaucer; without Dante and Cervantes; without Charlotte Brontë and Jane Austen; without Goethe and Molière; without Confucius, Buddha, Gandhi and Martin Luther King, Jr.; without Mozart, Rembrandt and Michelangelo; without the Old Testament; without the Gospels; without Plato and Aristotle, without Homer and Sophocles and Euripides, without Tolstoy and Dostoyevsky; without Gabriel García Márquez and Toni Morrison?

Schrag’s appeal to the value of humanistic study was unimpeachable. It just happened to be laughably ignorant about the condition of such study at the University of California. Stingy state taxpayers aren’t endangering the transmission of great literature, philosophy, and art; the university itself is. No UC administrator would dare to invoke Schrag’s list of mostly white, mostly male thinkers as an essential element of a UC education; no UC campus has sought to ensure that its undergraduates get any exposure to even one of Schrag’s seminal thinkers (with the possible exception of Toni Morrison), much less to America’s founding ideas or history.

Cop out

New York pays more police in retirement than to patrol our streets

By NICOLE GELINAS

Last week, Mayor Bloomberg scolded the NYPD’s critics, from The New York Times to the Democratic mayoral candidates. The mayor said that “the attacks most often come from those who play no constructive role in keeping our city safe.”

The mayor is right — but there’s another threat to the NYPD’s crime-fighting success, too. We now have more retired cops than active police officers, and the multibillion-dollar bill for their pension and health benefits harms our ability to hire new ones.

In December 2001, a month before Bloomberg took office, New York had 39,297 cops. Today, the city has 34,510 to protect us — and by the time the mayor leaves office in eight months, we’ll have 34,483 — a cut of nearly 5,000 pairs of eyes.

Yet spending has increased. During Bloomberg’s final year, city will spend $8.7 billion on the police department, nearly double the 2002 figure and more than three times the rate of inflation.

A common sense solution to immigration

Lets Cut Benefits, Not Immigration

By Diana Furchtgott-Roth

A misleading Heritage Foundation report by economists Robert Rector and Jason Richwine concludes that legalizing undocumented workers will cost America $6.3 trillion over the immigrants' lifetimes.

The report is deceptive because it assumes, contrary to empirical evidence, no increased economic efficiency from immigration and no economic mobility. It doesn't discuss numerous benefits to national security from legalizing and making it easier to track America's11 million undocumented workers.

Yes, as the authors point out, America has a welfare problem. Over 47 million people, the vast majority native-born Americans, are on food stamps almost four years after the beginning of the economic recovery. Means tested benefits, healthcare under the Affordable Care Act, and retiree benefits are increasingly expensive, and these costs need to be brought under control for everyone.

But that's not the same as an immigration problem. If we're concerned that benefits are keeping people in poverty and impeding upward mobility, we should cut benefits, not immigrants.

Guess Who Is A Shocking Fan Of Austrian Economics

One also wonders just how they really feel about gold...

By Tyler Durden

The statement below, coined by Friedrich Hayek in his 1931 "Prices and Production", is well-known by any fans of the Austrian school of economics (and by implication, loathed by all Keynesians):

“There can be no doubt that besides the regular types of the circulating medium, such as coin, notes and bank deposits, which are generally recognised to be money or currency, and the quantity of which is regulated by some central authority or can at least be imagined to be so regulated, there exist still other forms of media of exchange which occasionally or permanently do the service of money. Now while for certain practical purposes we are accustomed to distinguish these forms of media of exchange from money proper as being mere substitutes for money, it is clear that, other things equal, any increase or decrease of these money substitutes will have exactly the same effects as an increase or decrease of the quantity of money proper, and should therefore, for the purposes of theoretical analysis, be counted as money.”

One may usually find it in letters of the few renegade hedge fund managers who dare to call out the Chairsatan for his utter bubble pumping insanity, in the writings of those who have not been indoctrinated into the fallacies of the Keynesian pseudo-religious dogma, and generally discussed by those who actually do understand real credit and thus, monetary creation.

Of Owls and Richard the Third

The law of unintended consequences is one of the hardest for people to learn

by Theodore Dalrymple 
Not long ago at a conference I was asked whether I thought that boredom was an important cause of bad, and worse than bad, behaviour. I said that I thought that it probably was, though I could not positively prove it. At any rate, those who behave badly often claim to do so because they are bored, and no one claims to behave well because he is bored.

But even if it is accepted that boredom causes, or rather explains, bad behaviour, it cannot be the final explanation: for why are people bored? Is not the world interesting enough for them? What would a world be like that they found sufficiently interesting to keep them on the straight and narrow path that leads to good behaviour? It is a terrible fate for a creature endowed with consciousness and self-consciousness to find the world uninteresting.

My problem is the opposite: I find the world too interesting. This means that I am all too easily distracted, like a child confronted with too many good things to eat. I pursue things that interest me until something else distracts me, which means that I master nothing. But at least I am not bored.

They’re all Mr Less- Than-Ten-Per-Cent

No UK party won even 30 % of the votes last week marking a new low of the old order

by Mick Hume 

The most remarkable result in last week’s local elections was not that the United Kingdom Independence Party (UKIP) achieved 23 per cent of the votes cast. It was that, for the first time, none of the major parties managed to claim even 30 per cent of the total vote.

On an estimated overall turnout of about 31 per cent, that means no party persuaded even 10 per cent of those eligible to vote that it was worth ticking their box on the ballot paper.

Britain is not in a new era of multi-party politics so much as no-party politics. The Conservatives, Labour and Liberal Democrats are all suffering a terminal-looking crisis. None of them has a clear set of political principles to stand on or a solid base of support. They are political parties in name alone. The sudden emergence of UKIP is simply a symptom, the rash that expresses the sickness at the heart of the body politic.

Senior Eurozone Official: "As Spain Goes, So Goes Slovenia"

And Slovenia is going the same way Cyprus, Ireland, Greece, and Portugal went

By Mike "Mish" Shedlock

The spotlight is once again on Slovenia. Olli Rehn, the European commission’s economic chief is unhappy with economic progress in Slovenia and is threatening to put the country into an "excessive imbalances procedure" by the end of the month.

The problem is, Spain is in a similar "excessive imbalance" state prompting an unnamed eurozone official to state "As Spain Goes, So Goes Slovenia".

Please consider Brussels trains its sights on Slovenia.

 The European Commission is being pushed to take a tougher line with Slovenia amid mounting concerns that infighting is hampering the country’s ability to overhaul its banking sector and avoid becoming the next rescue target in the eurozone crisis.

According to two senior eurozone officials, concerns have focused on “non-cooperation” between Slovenia’s finance ministry and central bank, which is responsible for supervising the financial sector. One of the officials said the central bank was being “obstructionist” towards the new government’s clean-up efforts.

Single mothers are the have-nots in income and education

Single moms are making us broke

By Joe Soucheray

It was reported the other day on an inside page of the Pioneer Press, and without nearly enough fanfare, that more than six out of 10 women who give birth in their early 20s are unmarried. That is census data, from census demographers, from the very government that then becomes responsible for many, if not most, of those unmarried women and children.

If that isn't an astonishing statistic, it should be. Why, to any logical person's way of thinking, it explains everything in terms of government at all levels bloating out of control.

Supposing that even angels might fear to tread here, it being liberal dogma that I shouldn't be telling women what to do, or men, either, for that matter, I would submit that marriage would solve virtually every economic issue facing this country.

The census demographers said that single motherhood, on the increase since the 1940s, has accelerated mindblowingly. The birth rate for unmarried women in 2007 was up 80 percent in the almost three decades since 1980. Just between 2002 and 2007, it was up 20 percent.

The census people didn't use the word mindblowingly. I have chosen it because these numbers are chilling and so telling of the true nature of the government's insatiable spending. Just think of entitlement spending the next time the hypocrites in Washington want to take a snowplow off the road in Yellowstone or take a few flight controllers out of a tower because of this so-called sequestration. Who do they think they are fooling?

Statistically, you can avoid poverty in America by getting a high-school degree and waiting to get married before having a child. It's really that simple.

Carla del Ponte’s Faux Pas

Good war propaganda is nothing if not flexible

By Justin Raimondo 

Poor Carla del Ponte – as soon as she let the cat out of the bag on the Syria “sarin gas” hoax a flurry of articles appeared in the mainstream media reporting panicked denials by UN officials and reminding us all of her past sins.

John Hudson, writing in Foreign Policy, led off with a piece entitled “UN Investigator on Syria: Out Over Her Skis Yet Again?” Did you know she once said it was her duty to investigate war crimes committed by NATO, as well as by the Serbs, in the course of the Kosovo war? Since everyone knows the Western powers never commit war crimes – they’re inherently incapable of it – her office had to “walk back” her comments.

It happened again with the publication of her book, The Hunt: Me and the War Criminals, in which the famed war crimes investigator gave credence to widespread allegations of organ-farming by the criminal gang that took over Kosovo after the “liberation.” “Appalling!” screeched the critics – not in response to the considerable evidence that the “Kosovo Liberation Army” and allied Albanian Mafia did indeed harvest organs from Serb prisoners, but in reaction to her being so impolitic as to mention it.

Germany Under Pressure To Create Money

The next asset class to experience a bubble could be fiat money itself

By John Browne

Currently, central banks around the world are walking in lock step down a dangerous path of money creation. Led by the Federal Reserve and the Bank of Japan, economic policy is driven by the idea that printed money can be the true basis of growth. The result is an unprecedented global orgy of currency creation. The only holdout to this open ended commitment has been the hard money bias of the German-dominated European Central Bank (ECB). However, growing political pressure from around the world, and growing dissatisfaction among domestic voters have shaken, and perhaps cracked, the German resolve. While German capitulations in the past have been welcome occurrences, in this instance the world would be better served if the Germans could stick to their guns.

Last week the statement issued by the Federal Open Market Committee (FOMC) put to rest any expectations that Quantitative Easing in the United States would be coming to an end anytime soon. With an ambiguous, but decidedly dovish statement, the stage appears to be set for an expansion of the $85 billion per month program.  The statement further obscured the criteria that the Fed is supposed to rely on to begin a winding down of the program, leaving market participants increasingly uncertain.

The Federal Reserve Is A Perpetual Debt Machine

11 Reasons Why The Federal Reserve Should Be Abolished

by Michael Snyder

If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately.  It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people.

The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. 

The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy.  But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place?  Wouldn't our economy function much more efficiently if we allowed the free market to set interest rates? 

And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".  So why is the Federal Reserve doing it?  Sadly, this is the way it works all over the globe today.  In fact, all 187 nations that belong to the IMF have a central bank.  But the truth is that there are much better alternatives.  We just need to get people educated.

The following are 11 reasons why the Federal Reserve should be abolished...

Would legalizing undocumented workers really cost $6.3 trillion?

Big policy changes don’t exist in a vacuum, isolated from the rest of the economy

By James Pethokoukis 

Even if US budgets were deep in the black, it would be perfectly legitimate to examine the fiscal costs of legalizing millions of currently undocumented workers. But such analysis should provide as full an economic picture as possible for policymakers. A new Heritage foundation study, while providing some useful data points, is frustratingly incomplete.

Certainly pundits and activists with axes to grind will run hard with Heritage’s claim that “former unlawful immigrants together …  would generate a lifetime fiscal deficit (total benefits minus total taxes) of $6.3 trillion.” Quite a talking point — one researchers arrive at via a fairly straightforward calculation. They simply determine the difference between their forecast of futures taxes paid and benefits received. Fair enough and good to know.

The study, however, fails to capture indirect but important economic impacts of immigration such as increasing economic activity or positively affecting American employment. Both of those would lead to higher tax revenues and reduced transfer payments. Surely every effort should be given to factoring in such dynamic impacts of immigration reform. The Heritage study says, for instance, that “taxes and benefits must be viewed holistically.” So, too, immigration overall. Big policy changes don’t exist in a vacuum, isolated from the rest of the economy. (And, of course, the study only focuses on a single part of comprehensive immigration reform.)

What amnesty for illegal immigrants will cost America

US is a nation of immigrants, but ...

By Jim DeMint and Robert Rector

The economist Milton Friedman warned that the United States cannot have open borders and an extensive welfare state. He was right, and his reasoning extends to amnesty for the more than 11 million unlawful immigrants in this country. In addition to being unfair to those who follow the law and encouraging more unlawful immigration in the future, amnesty has a substantial price tag.

An exhaustive study by the Heritage Foundation has found that after amnesty, current unlawful immigrants would receive $9.4 trillion in government benefits and services and pay more than $3 trillion in taxes over their lifetimes. That leaves a net fiscal deficit (benefits minus taxes) of $6.3 trillion. That deficit would have to be financed by increasing the government debt or raising taxes on U.S. citizens.

For centuries immigration has been vital to our nation’s health, and it will be essential to our future success. Yet immigrants should come to our nation lawfully and should not impose additional fiscal costs on our overburdened taxpayers. An efficient and merit-based system would help our economy and lessen the burden on taxpayers, strengthening our nation.

Conservative group warns immigrants could cost US $6.3tn

This assumes that people are just costs and don’t contribute anything

By Anna Fifield

The 11m unauthorised immigrants in the US could cost taxpayers $6.3tn if they were allowed to become American citizens, according to a study from the conservative Heritage Foundation .

The think-tank’s study, which is out of sync with the vast majority of other economic analyses, was immediately criticised for being ideologically driven and selective with the facts.
But Heritage hopes for a repeat of 2007, when it used a similar economic report to motivate opponents of immigration reform during the final year of George W. Bush’s presidency and helped kill a proposed bill.

Berlin demands treaty change for bank reforms

A banking union only makes sense if mechanisms for the restructuring and resolution of banks are in place

By Alex Barker

Germany laid down a big barrier on the fast track to European banking union, insisting a revision of EU treaties is necessary to create a single authority to wind up banks, even if it took several years to accomplish.

Wolfgang Schäuble, the German finance minister, strongly voiced his legal concerns at an informal meeting of EU finance ministers Dublin over the weekend. His comments point to the high political stakes involved in forging a common institution to shut down troubled financial groups.

His intervention in Dublin was a shot across the bows of the European Commission as it prepares to publish a blueprint for the resolution reforms in June – as well as a reality-check for reformers pushing for the full banking union framework to be agreed in the coming 12 months.

By throwing his weight behind the need for a treaty revision in the medium term, Mr Schäuble also raised Britain’s hopes of opening a path to an eventual repatriation of powers from the EU.

George Osborne, the UK finance minister, made clear that Britain’s backing for treaty change would come at a price. “That sent a chill around,” said one person in attendance.

Differences put aside as Berlin and Paris seek common ground

Next Step - Banking Union 

By Quentin Peel in Berlin

Sniping between France and Germany has been almost constant in recent months.

In Paris, politicians have accused Berlin of bullying their European partners into excessive austerity at the expense of economic growth. The Germans have retorted, usually off the record, that the pusillanimous French have failed to reform their economy and revive their ailing competitiveness.

But when Wolfgang Schäuble and Pierre Moscovici, the two countries’ finance ministers, met on Tuesday to celebrate the 25th anniversary of the Franco-German economic and financial council, they came to praise the partnership, not to bury it.

“We are not here to expand on our differences,” the Francophile Mr Schäuble told a gathering of students from both countries at Berlin’s Free University. “We are here to seek common solutions.”

Can Egypt's Islamist finance minister cut a deal with the IMF?

How should the money supply be organized in Islamic thought ?

By David Kenner

The big news in Cairo is that a long-awaited cabinet reshuffle has finally become a reality. President Mohamed Morsy swore in nine new ministers today in a move that increases the Muslim Brotherhood's representation in the government. The shakeup comes as Egypt is deep in talks with the International Monetary Fund (IMF) about a $4.8 billion loan intended to help the country jumpstart its stagnant economy.

The IMF talks mean that the replacement of Egypt's finance minister is the most important change to come out of the reshuffle. The new finance minister is Fayyad Abdel Moneim, who previously worked as an economics professor at al-Azhar University, the oldest Sunni Muslim educational institution in the world.

France: End of the affair

France’s share of world trade had fallen by a third since 2002

By Hugh Carnegy 

One year into office, François Hollande’s economic management has sparked fears of a social breakdown

Hanging off lampposts, waving flags, lighting flares and cheering wildly, tens of thousands of supporters of François Hollande crammed into the Place de la Bastille in Paris at midnight to greet France’s first socialist president for almost two decades.

“I will live up to your hopes,” he promised the exuberant crowd.

How things have changed in the space of a year.

Waiting at the Bastille in a milling throng of trade unionists for the start of the traditional May Day workers’ parade, Emmanuelle, a civil servant who declines to give her family name, recalls the victory scenes with a resigned sigh.

“I was here that night,” she says. “There was an atmosphere of great hope. Now we are all very disappointed. All the promises – especially to stop companies laying off workers – have not been met.”

Amadou Diop, a student, echoes the sentiment. “I am very disappointed. His social record is bad. He hasn’t stopped the job losses. There is a feeling that the country is plunging into decline and there is a lack of hope.”

Problems have only mounted for Mr Hollande since he took power last May from Nicolas Sarkozy.