Shah Gilani: The Federal Reserve System is a government-sanctioned private enterprise that functions as a socialist tool.
It was conceived in 1910 and constructed for the benefit of the private bankers who control it. Congress blessed the scheme in 1913 with passage of the Federal Reserve Act.
These days the Fed doesn’t just backstop America’s too-big-to-fail banks. It has expanded its doctrine of socializing banking losses globally.
The Fed helped bail out private businesses, foreign big banks and central banks in Europe and Japan in the credit crisis of 2008 and is the model for the European Central Bank, as well as the ECB’s primary backstop.
To understand how the Fed gets taxpayers around the world to pay the losses its member banks routinely incur, let’s pull back the curtain on the Fed and explain how it operates.
Read More at etfdailynews.com . By Shah Gilani.
The National Inflation Association says the Federal Reserve is wrong about inflation: U.S. food prices are spiraling out of control, jumping 2.4 percent in March, the largest leap in 24 years.
Combined with the highest unemployment in decades, higher food prices have caused huge numbers of Americans to turn to the food stamp program for help.
After the 14th consecutive monthly food price increase, 39.4 million Americans are now enrolled in the program, up 22.4 percent from one year ago.
The U.S. government is now paying out more in entitlement programs than it collects in taxes.
Year-over-year, fresh and dry vegetables are up 56.1 percent, fresh fruits and melons are up 28.8 percent, eggs for fresh use are up 33.6 percent, beef and veal are up 10.7 percent and dairy products are up 9.7 percent.
Read More: – By Julie Crawshaw, Moneynews
Bernanke again urged the White House and Congress to come up with a credible plan to reduce the nation’s red ink, which hit a record $1.4 trillion last year.
Failing to do so would push interest rates higher — not only for Americans buying cars, homes and other things — but also for Uncle Sam to service its debt payments, he said.
All that would sap national economic activity and could cause employers to cut back on hiring, Bernanke said.
The Fed chief made his most urgent call yet to get the nation’s fiscal house in order. His plea came in prepared remarks to the first meeting of President Barack Obama’s commission to tackle the soaring deficit.
Read More: – the Associated Press
The Great Recession that may have just ended will amount to nothing compared to the next one, says commodities expert Jim Rogers.
The huge fiscal and monetary stimulus is what will cause the crisis, he says. Rogers notes that the United States suffers a recession every four to six years on average.
“When it (the next one) comes, it’s going to be much worse, because Washington can’t quintuple its debt again,” he told Newsmax.TV Money.
Federal Reserve Chairman Ben Bernanke is a big part of the problem, says Rogers, chairman of Rogers Holdings. “Mr. Bernanke can’t print much more money again. The world is going to run out of trees.”
Read More: – By Dan Weil, Moneynews
The attention of policymakers and economists is trained mostly on a looming inflation threat, the drawback you typically associate with enormous amounts of liquidity pumped into the financial system and an economy rebounding from a severe recession. A negligible 0.1% rise in the March consumer price index and comments from the Federal Reserve that interest rates will remain very low for an extended time don’t appear to confirm that risk, however. Some economists and analysts see reasons to worry about the opposite scenario — a period of deflation if companies feel compelled to lower prices to jump-start demand in a sluggish economic recovery burdened by high unemployment. Consumers initially embrace falling prices, but if it becomes deep and pervasive enough, deflation will eventually push employers to cut wages and ax jobs, driving worried consumers into complete retreat. Perhaps most dangerous, deflation hikes the cost of repaying debt by boosting the value of the dollar. That the value of the U.S. dollar
is down 30% from its peak several years ago should have been sufficient to restore the U.S. to a fairly competitive trade position, even given the euro’s recent decline, says Barry Bosworth, senior fellow at the Brookings Institution in Washington. But U.S. exports, which were robust in the first half of 2009, have disappointed since then. “For the U.S. to have a positive outlook, we have to have an export-led economy,” he says. “We can’t expect [domestic] construction to come back any time soon.”
Read More: – By David Bogoslaw, BusinessWeek
Federal Reserve Chairman Ben S. Bernanke said joblessness, home foreclosures and weak lending to small businesses pose challenges to the economy as it recovers from the worst recession since the 1930s.
“We are far from being out of the woods,” Bernanke said today in a speech in Dallas. While the financial crisis has abated and economic growth will probably reduce unemployment over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing, a “troubled” commercial real estate market and “very weak” hiring, he said.
The remarks reflect concerns by Fed officials at their meeting last month that the job market and tight credit would restrain consumer spending. At the session, Bernanke and his colleagues reiterated interest rates will stay very low for an “extended period.” He didn’t repeat that in today’s speech, while saying the Fed’s “stimulative” rates will aid growth.
“The economy has stabilized and is growing again, although we can hardly be satisfied when one out of every 10 U.S. workers is unemployed and family finances remain under great stress,” Bernanke said in prepared remarks to the Dallas Regional Chamber.
Read More: – By Scott Lanman and Darrell Preston, Bloomberg
Former Federal Reserve Chairman Alan Greenspan, whose legacy has been tarnished by the global financial crisis, on Thursday laid out a scholarly defense of why Fed policy did not fuel the housing bubble.
Greenspan did offer somewhat of a mea culpa, though, noting that the regulatory system failed by not demanding financial firms hold much larger capital buffers.
Greenspan, who led the U.S. central bank from 1987 to 2006, has been criticized by some analysts who argue he kept short-term, benchmark interest rates too low for too long in the early 2000s.
The former Fed chief defended the central bank’s actions, saying that the seeds of the housing boom were sown by geopolitical events that were out of the Fed’s control, an argument he has presented a number of times in the past.
Read More: – Moneynews
Housing starts in the U.S. fell in February as record snowfall in parts of the country hampered construction, while fewer building permits signaled demand is stagnating.
Builders broke ground on 575,000 homes at an annual rate last month, down 5.9 percent from January’s revised 611,000 pace that was higher than initially estimated, Commerce Department figures showed today in Washington. February starts reflected declines in the Northeast and South and compared with a median estimate of 570,000 in a Bloomberg News survey of economists.
Mounting foreclosures are making it harder to clear inventories, keeping pressure on prices and discouraging new construction. The economy has yet to create the sustained job growth that could invigorate housing demand and is one reason Federal Reserve policy makers will probably keep interest rates near zero after their meeting today.
The report “definitely reflects the severe weather effect,” said Ellen Zentner, senior U.S. macroeconomist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Housing has now got enough support that it has stabilized. With or without support, the housing recovery will be slow going.”
Read More: – By Shobhana Chandra, Bloomberg
Household wealth in the U.S. grew in the fourth quarter at a slower pace, limited by a drop in home values that indicates the recovery in consumer spending will take time to gain speed.
Net worth for households and non-profit groups rose by $700 billion to $54.2 trillion, marking a third consecutive gain, according to the Federal Reserve’s Flow of Funds report issued today in Washington. Wealth increased by $2.78 trillion in the third quarter.
American consumers cut borrowing at a record pace last year, the figures showed, in a bid to repair the damage from overextended balance sheets and the loss of wealth during the recession. The need to replenish savings combined with the loss of 8.4 million jobs means spending, the biggest part of the economy, will be restrained.
Read More: – By Timothy R. Homan, Bloomberg