Stocks retreated and commodities predictably soared Monday after Federal Reserve Bank Chairman Ben Bernanke told CBS's 60 Minutes that “it's certainly possible” the Fed could create additional “quantitative easing” beyond the $600 billion already announced. “Quantitative easing” is the modern term coined by Federal Reserve officials that means creating hundreds of billions of dollars in currency out of thin air, thereby inflating the currency, but hopefully not raising consumer prices beyond a target two percent per year.
As world leaders have gathered in Asia for the Group of 20 (G-20) summit to discuss measures to revitalize the frail global economy, tensions have risen over struggling currencies and trade. Likewise, President Obama and other world leaders in Seoul, South Korea for the two-day summit are having to contend with one another's opposing strategies for fostering a more stable economic environment and preventing a looming financial meltdown.
The United States would never, ever consider devaluing the dollar for export advantage, Treasury Secretary Timothy Geithner assured an audience of Silicon Valley business leaders in Palo Alto on October 18. “It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive,” Geithner said. “It is not a viable, feasible strategy and we will not engage in it.” Geithner’s words appeared timed to allay concerns about the U.S. dollar before this weekend’s G-20 meeting in South Korea.
The Associated Press reports that a government investigator has discovered that 89,000 stimulus payments of $250 went to people who were either dead or in prison. The 89,000 payments were among nearly 52 million sent to Social Security recipients and federal retirees as part of the mammoth economic recovery (stimulus) package enacted in 2009. In making the $250 payments, the government simply failed to confirm that the recipients were not incarcerated and not deceased.
Nobel prize-winning economist and Princeton Professor Paul Krugman provided the Associated Press with some unpleasant commentary on the huge debt that Americans and their institutions owe now. Krugman argues that eventually default on these loans is inevitable. That would mean bankruptcies for individuals and corporations and defaults by governments — or, if the Krugman approach is followed, this would mean calculated govenrment inflation of the money supply, which would make it easier to pay off debts.
In the midst of speculation over possible changes to President Obama’s economic team, the chair of the National Economic Council, Lawrence Summers, announces his plans to resign his position at the end of the year. Considered the “chief architect” of Obama’s economic policies, Summers now plans to return to his position as a professor at Harvard University.
The global regulation of banks took a major leap forward with the conclusion on September 12 of a round of talks held at the Bank of International Settlements (BIS) in Basel, Switzerland. Present were central bankers and regulators from 27 countries, trying to come up with tougher international regulations to prevent another banking crisis like the one we have been enduring for the past couple of years.
The Federal Reserve has been a nightmare for the American people. It inflates the money supply, thereby devaluing already-existing money and placing a massive hidden tax on the people via rising prices. It also uses its monopoly power to cause interest rates to go up or down, usurping the rightful place of the market and causing massive malinvestment and generally an improper and unproductive allocation of resources.
If all the advocates of a world fiat currency (a currency not backed by a precious commodity like gold) were to scream at once, workers in world capitals, business centers, colleges, and news media may be deafened. And if global financial elites have their way, America will move quickly toward accepting a planetary fiat currency issued by a world central bank.
Facing more scrutiny than its leaders have ever wanted, the Federal Reserve responded beginning in 2009 with a campaign designed to tell everything the Fed thinks the American people ought to know. How to do this? A series of comic books!
Just one week after James Bullard of the St. Louis branch of the Federal Reserve Bank released his August 6 paper declaring that “the U.S. is closer to a Japanese-style outcome today than at any time in recent history” (meaning that the United States will likely have decades of economic stagnation, which Bullard blames on “deflation”), the news media have taken up a chorus against the bogeyman of “deflation” to explain the need for further social spending by the government and more debasement of the U.S. dollar (causing consumer prices to rise through inflation).