John Williams runs the Shadowstats.com Web site, which calculates inflation, gross domestic product, and other economic indicators by measuring them the way the government would have done decades ago.
He contends the government for several decades has been manipulating its economic indicators to make them look better than they really are, and that inflation is really topping 10 percent rather than the official 3.6 percent. Watch on YouTube (a still picture with audio) for yourself:
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The recent “occupation” of Wall Street has shed light on what is becoming an unfortunate phenomenon in American society; the purposeless protest, the destructive demonstration, movements that serve only to draw attention to an issue without proposing any real degree of reform.
We saw it when unions occupied the Wisconsin capitol building, during the 2001 and 2003 Free Trade Area of the Americas protests in Canada and Miami, the G-20 protest in Montreal in October 2000 and the World Trade Organization protests in Seattle in 1999. Disaffected individuals are turning to increasingly violent, disruptive and thoroughly useless means of effecting change (presumably their goal).
Some seem aware of their lack of direction and, not surprisingly, seem to embrace it. Reuters quotes Jeremy Moss, a 41 Bronx native and mental health counselor who lived in Seattle during the WTO riots and feels the Wall Street protests are different, admitting,
“There’s a lot of naive idealism happening, what’s wrong with that?”
As Bill Buckley would say, “Idealism is fine, but as it approaches reality the cost becomes prohibitive”. Naïve idealism is fine, but it has no business blocking traffic on the Brooklyn Bridge.
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George Will has a great column in the Washington Post. He shreds Rep. Barney Frank (D-MA), who has introduced a bill that attacks discussion and debate inside the Federal Reserve — apparently because three Fed bank presidents recently had the good sense to oppose the Fed’s destructive policies.
Those destructive policies, including price-fixing borrowing costs through interest rate manipulations, are precisely the policies that Frank and other left-wingers in Congress like. Will writes:
Nowadays it is obligatory to present any proposal as a cure for the decline of comity in Washington. So Frank says that “until recently, the tenor of Federal Reserve deliberations was one that promoted consensus,” but now “the Federal Reserve has been affected by the disdain for consensus and the contentiousness that has affected our politics in general.
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This is rich. Federal Reserve Chairman Ben Bernanke this week announced Operation Twist, a program to pour hundreds of billions of dollars of Fed money into long-term debt to drive down long-term interest rates.
This would be the same Ben Bernanke who joined two other Fed economists to write a paper in 2004 that studied the original Operation Twist in the early 1960s and concluded it was a failure. Here’s the report (PDF).
Bernanke and the other authors concluded the first Operation Twist might not have been big enough. The one Bernanke announced this week is many times larger, both in nominal and inflation-adjusted terms, than the one he concluded had failed.
Should we fear this new and far larger Operation Twist will end up being a far larger failure than the first one? Here’s our news analysis with comments from some economists that make me fear the answer is yes.
In today’s New York Times there is an editorial that takes the supposed masters of money at the Federal Reserve to task for their timidity. It’s an almost boundlessly stupid editorial.
The NYT editors chide the Fed for worrying about inflation. They believe we need more of it — lots more.
They write:
A more aggressive strategy would be letting inflation rise above the Fed’s comfort level of 2 percent or so to, say, 4 percent. That could help the economy by easing the repayment of debt.
Read that last sentence again: “That could help the economy by easing the repayment of debt.”
They apparently expect our friends in China, India and other countries that have loaned us money to be happy receiving repayment in dollars that are worth less than the dollars they loaned us. Wouldn’t you want that if you loaned money to someone?
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America’s answer to Soviet central planning — the Federal Reserve — yesterday announced it’s determined to hold interest rates to virtually zero for another two years. This will give savers and people who live within their means at least two more years of punishment by ensuring they receive virtually nothing for their savings.
But there was good news in the announcement, which stated in part: “Economic growth so far this year has been considerably slower than the committee had expected” and added, “The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually . . .”
I take this as the first sign in a long time that true economic recovery could be right around the corner. These clowns haven’t been right since the financial crisis occurred three years ago — indeed, they failed to see the economic train wreck coming.
I figure if they’ve been wrong all along, they’re probably wrong now.
As the debate over raising the national debt ceiling rages, let us mull the insanity behind the government’s debt and money policies.
Here’s the situation: an infinitely increasing amount of debt AND a dollar with an infinitely decreasing value. Either borrow more money to repay the money we’ve already borrowed, say Treasury Secretary Timothy Geithner and others in power, or economic calamity will befall the nation.
The national debt ceiling has been raised 74 times since Congress created it in 1917, supposedly to keep lawmakers from spending the country into oblivion. The original limit was $11.5 billion – that’s $11,500,000,000.
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Something I never thought I would ever see in my former hometown, a wealthy New Jersey suburb of New York City, was a Dollar Store, but one opened recently in a former supermarket. Dollar Stores are giving Wal-Mart, Target, and similar outlets a run for their money and it’s not hard to see why. The local one has just about everything you could need and all for astonishing low prices.
In countless ways people are looking to save money these days. The looming problem, however, is the question of what happens when Americans wake up to learn that even a dollar can no longer buy anything?
“When Faith in U.S. Dollars and U.S. Debt is Dead the Game is over – And that Day is Closer than You May Think” is the cheery title of an article recently posted on The Economic Collapse blog.
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Some folks at The Heartland Institute’s home office thought my little email exchange about Keynesian vs. Austrian economics, the Federal Reserve, etc., with Dick Ewing of Winthrop, Wash., worth publishing for all to see. Here it is.
Mr. Ewing wrote:
I can not find any publications on financial reform that discuss what the pathway from Keynesian economics to the Austrian school of economics as represented by Hyak (sic), Mises etc. It seems that now is the time to discuss disbanding the Federal Reserve central banking system and returning the coining and printing of money to Congress and tying the value of money to the actual capital created by the economy rather than creating artificial wealth out of debt.
Please advise and direct me if my observation is in error and you (sic) position on this matter.
I responded:
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The Federal Reserve does not want the world to know details of “emergency loans” it made to banks in the financial panic of 2008, but the Supreme Court today effectively said the Fed must tell us. It did this by today rejecting an appeal of a lower court ruling to force the Fed to reveal the information. This leaves intact a court order that gives the Fed five days to release the records.
Bloomberg News pushed the case in its demands to see the records. Bloomberg News Editor in Chief Matthew Winkler put the issue well in this statement:
“At some point long before the credit markets seized up in 2007, financial markets collapsed and the economy plunged into the worst recession since the 1930s, the Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny. As only Congress has the constitutional power to coin money, Congress delegates that power to the Fed and the Fed must be accountable to Congress, especially in disclosing what it does with the people’s money.”
John Williams runs the Shadowstats.com Web site, which calculates inflation, gross domestic product, and other economic indicators by measuring them the way the government would have done decades ago.
