SHOULD THE FED EASE MONETARY POLICY FURTHER?
I’ve been fairly clear about my opinion that the Fed is just about out of bullets here. Aside from extreme policy options, most of which will ruffle political feathers, the Fed’s options just aren’t that robust at this point given the uniqueness of the environment. Goldman Sachs, however, has a different perspective. This note, courtesy of FT Alphaville, describes why Goldman believes the Fed should continue to ease:
Q: Should Fed officials ease monetary policy further?
A: Yes, we think so.
“There are two main arguments against further easing, but we don’t find them very compelling. The first is that “QE2 didn’t work, so why should QE3 be any better?” We disagree with the view that QE2 didn’t work. It is true that QE2 failed to ignite a more powerful recovery. However, we would attribute this to the combination of an even more adverse “baseline” pace of growth than we (and the Fed) had expected, and to the increase in oil prices. Moreover, our commodity strategists believe that most of the increase in oil prices was due to the tightening demand/supply situation in the oil market, exacerbated by the turmoil in the Middle East. Our belief that the moves in oil prices have been mainly driven by supply and demand rather than monetary policy is also consistent with the easing in oil prices over the past few weeks–a period in which the economic indicators have deteriorated and expectations of QE3 have grown.
The second argument against further easing is that most of the problems in the economy are not easily addressed by monetary policy but require either fiscal solutions or simply time. We agree that monetary policy is unlikely to be very powerful, but we do think that it would add a few tenths to GDP growth and would not have significant costs in terms of inflation given the large amount of slack in the economy (see “How Much Growth Boost to Expect from QE3?” US Daily, August 24, 2011). Ultimately, the question whether to ease is a cost-benefit calculation, and the benefits exceed the costs in our view.”
This opinion obviously doesn’t mesh with my belief that QE2 did little to help (and in fact may have hurt) or that the Fed is out of bullets. It reminds me a bit of what my father (a former Marine) used to jokingly to say to me and my brothers and sisters when we were little:
“The beatings will continue until morale improves!”
This incessant hope based policy approach is like hoping morale improves via confidence fairy economics, “wealth effects” and other approaches that don’t attack the structural problem and instead target the symptoms. And boy do these beatings hurt (and no morale is certainly not improving if recent consumer confidence figures are any indication). We’re almost 4 years into this recession and it still stings! When will we get the message?
Why do I believe it’s time to give up on monetary policy? Because this incessant praise of the Federal Reserve and this myth of the all powerful man behind the curtain is highly damaging. Not only does it feed the theme of financialization in this country, but it also detracts from the real policy debate we should be having. And that debate should be revolving almost entirely around fiscal policy. Instead, because we think the Fed still has bullets in their water canon, we ignore the other much more powerful options we have. Options, that will actually work in a balance sheet recession….
Excellent description Cullen!
I agree with krb
Even the Fed admits that QE becomes less effective over time.
‘Quantitative Easing and Bank Lending: Evidence From Japan’
http://www.google.com/url?sa=t&source=web&cd=1&sqi=2&ved=0CBoQFjAA&url=http%3A%2F%2Fwww.federalreserve.gov%2Fpubs%2Fifdp%2F2011%2F1018%2Fifdp1018.pdf&ei=QjZdTq2vJOK1sQLI0qUb&usg=AFQjCNFz0Y6d3wdfzFBd2GDu8_92i2K9lg
Great post! Your cheerleading is outstanding! The use of the author’s first name adds so much to the discussion. Thanks again for your contribution.
How is your response any more productive?
What the Goldman team wanted to say but was told not to by their legal counsel:
“Since nearly nobody understands monetary operations QE3 will cause some hysteria from which we plan to profit handsomely from.”
This plus a combination of other responses: recapitalization, benefits in trade account, etc. (which can be resumed as you did in fact).
Crazy world.
Given the collapse in Goldman’s trading profits in the last few quarters they are probably hoping and praying that QE3 will come and that investors will still be suckered into the equity markets by believing that it will work.
What’s good for Goldman is always bad for the country.
Spain moves closer to constitutional budget deficit cap
http://www.bbc.co.uk/news/business-14721843
Spanish politicians have overwhelmingly backed holding a vote on introducing a constitutional cap on budget deficits.
The move all but guarantees that the change will be adopted.
Members of the lower house of Spain’s parliament voted 319 in favour and only 17 against holding the debate and vote later this week. The reform would then go to the upper house next week.
…
The proposed reform calls for the broad principles of a balanced long-term budget to be enshrined in Spain’s constitution.
It adds that the deficit limit could only be breached in times of natural disaster, recession, or extraordinary emergencies – and then only with approval of the lower house.
Given the Fed’s track record, why would anyone think that the monetary policy is designed to address a BS recession? The Fed’s concern is banking health and any spill over effect to the productive economy is bonus.
QE2 primary purpose was to strengthen the weakest banks and improve profitability and stock price capitalization. There is a similar study during Japan’s QE that concludes just this.
ocean, you hit the nail on the head.
this time around, however, i think they may just do something that not only further strengthens the banks, but really does have a direct stimulative effect on the economy.
Right now “strengthening the banks” seems to be conceived as diametrically opposed to strengthening the economy. Banks have been “strengthened” by opacity of the Fed in giving monstrous bridge loans, not requiring adequate regulation to prevent control fraud (a la Wm. Black), and an unwillingness to reintroduce moral hazard into their risk taking actions.
Prescient……..what do you suggest that the FED can do that will both strengthen banks AND address the B/S recession that we lower caste people are dealing with?
rhp, honestly I have no idea what they have planned. Merely that the plan is in action…
Of course, as usual, you’re right, PC. But the problem is that there is profoundly divided gov’t which cannot create a united fiscal policy (a provocative essay a few weeks back by Zakaria on CNN as to why parliamentary gov’t at least is united gov’t, however good or bad the policy it imposes). Because we cannot effect change fiscally, we ^hope^ that monetary policy will work, once again demonstrating that denial is not just a river in Egypt.
It’s a sad day when a complete misunderstanding of our monetary system leads people to believe in wildly extreme positions that make it impossible to work together.
CR – do you think if all parties understood MMT that the system could continue to function? Meaning, if politicians had a true understanding, could they keep themselves from blowing it up? And, if citizens knew how the system worked, and also knew that politicians were likely to act like kids in a candy store, do you think they would lose confidence in the system?
The irony of our monetary system might be that it can work because few understand it.
I find it hard to believe that senior level politicians and fed members do not understand the monetary system. Even, Dick Cheney said deficits don’t matter.
I expect a minority of politicians and fed members the monetary system. And there is a perhaps irrational “fear” of unintentional consequences of issuing fiat.So to avoid the risks of running the fiat system close to the point of instability, they perpetuate the taxes fund spending budget myth.
Ok I sound like a conspiracy theorist, but seriously not one senior person is in the know?
Read Dick Fishers comments. Or even Bernanke’s. He clearly doesn’t adhere to MMT so if you think MMT is accurate then you have to believe Benny and the gang don’t understand.
Cullen,
I tend to think that politicians/fed is scared what would happen if people truly understood monetary policy. And therefore put forth this game of misinformation to obscure reality of what fiat is. Maybe I’m reaching but this helps to explain why the fed/treasury retains its horde of gold when they could simply sell off the useless shiny metal.
“It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning.”
Henry Ford
I think people in key positions understand fully well how it works, they just try to obscure it and follow the spirit and sometimes law of the gold standard in order not to freak people out. So as somebody said above, the irony is that is better politicians and people not know how the system works. It is not important what Bernanke & Co say, but what they do – and it does not necessarily convey that they do not know how the system works.
I think everyone understands that the FED can create limitless reserves. However people construde reserve creation with money or net new financial asset creation. 99.9% of FED operations do not create net new financial assets and therefore is not really money creation. This is where most people fall down. This is why QE failed and why everyone screamed it was money printing. Add in the fact that most economist (Bernake included) think that reserves allow banks to make loans and you have one giant mess of misunderstanding and bad policy.
Not understand, or want to project such a view? Not sure which is worse.
Hi Cullen,
Here is a clip of Greenspan copping to reality on Meet the Press “The US can pay any debt”: http://brianekoenig.com/2011/08/greenspan-u-s-wont-default-we-can-always-print-money/
There must be other people at the top and at the Fed who read you and Warren and other contributors.
Thanks Brian. He still doesn’t get it though. Another reader pointed out a few weeks ago that he has been saying this for a long long time. There’s other screws loose in the Greenspan machinery.
If they TRULY understood MMT, then they would also understand the risks involved in spending money unproductively and how they could blow up the system if they weren’t careful. So, to me, the answer would be: “Yes, the world would be a better place if they understood.” The downside would be an incomplete understanding as we have often witnessed here in the comment section from MMT dilettantes saying things like: “So in MMT you say deficits don’t matter………”
BLEAH!
I still think medicine was improved by Harvey’s elucidation of the circulation of blood. I think economic policy would be served by its practitioners understanding MMT…..
rhp
Gas prices are like daily visits to the whipping post for the average consumer. Any policy that adds to the instability of energy will demoralize the consumer, and zap whatever little disposable income he/she has. My gut says GS has alternative motives when they say additional easing is useful. I greet anything GS says or does with suspicion.
Cullen-
I saw you overroad your algos.
Anything new as of today?
I’m concerned about this rally now up 8.09% ish since 8/8 closing. Our median view is for 12% rally from the lows. Not much more from here…but..I can’t get my hands around how the hell the ISM doesn’t go to contraction territory and how this rally dismisses this data 9/1.
So I suspect any movement up today/tom. I will close out our SPY. This is one trade I hate posting because…It’s driven by my gut to sell before Sept. 1.
I prefer data I’m not the Les Miles gunslinger type. So I’m uncomfortable.
I missed about a 6% move since my signal triggered a buy. It was an amateur mistake to avoid the model. But it is what it is. It’s only a mistake if I never learn from it. The good news is that the algo’s success rate is frighteningly high. The bad news is that I am still undisciplined enough at times to ignore it (I consider myself a highly experienced trader so you rookies out there can take solace in knowing that this business is damn hard). We all make mistakes and I am certainly no exception to the rule.
One time when I was flying under instruction of a crusty old captain, I botched the setup a bit on a practiced forced landing (simulated engine failure), ending up way too high on approach to a farmer’s field, meaning I’d overshoot and crash. So I flung in a cowboy move to lose altitude fast and get back on the right approach (a very tight 360 under glide). It worked perfectly and I was pleased with myself. The captain, a guy with over 10,000 command hours who trained to lob nukes into the USSR, was not:
“son, there are old pilots and bold pilots, but there are no old, bold pilots”.
Stupid old git. If it were a real emergency, my cowboy move would have landed us safely. Had I not done it, we’d have overshot into bad terrain and crashed. But that wasn’t the point. He knew that I knew that the situation was simulated, therefore I should just admit my error, try again and get it right next time. He didn’t want me to get into the habit of being a cowboy, overriding my training and getting somebody killed. He was right.
So what the hell is wrong with ignoring a buy signal in a downtrend with huge storm clouds gathering in Europe? Sure you can ride it and take a quick gain, be a bold trader, get into the habits that ensure you’ll never survive to be an old trader. Or, you can recognize the risks and have treated that long trigger as an opportunity to take profits on shorts and move to neutral, taking time to think, research, and line up the next shorts for when the correction from highly oversold conditions headed back to mid-range. Need more confirmation before saying we’ve bottomed here, right now I’m still seeing a down trend and don’t intend to fight it. The old captain would be happy with that.
thanks mediocritas…pragmatic wisdom.
VII,
Considering the increasing rancor in Germany with dates of Sept 7 and Sep 23rd being very important, I think you are wise in your rectitude. Even if the German High court rules the bailouts are legal, as is apparently widely expected, the Bundestag representing the “proletariat” may not be quite so…..”judicial/judicious” in its judgment.
I can’t see how the resulting turmoil will not affect US markets and think Europe’s “Lehman moment” now has a date that can be assigned….
http://www.eurasiareview.com/german-bundestag-rallies-against-euro-bailout-fund-29082011/
With all this focus on the FED, I think the Titanic may be having difficulties in some other of its water tight compartments……… !!
best,
rhp
VII,
If ISM is bad, this market will drift/rip higher, imho. The Fed will for sure act. Just look at the crazy dismal consumer confidence number.
The votes are there and attitudes are changing towards more accomodation. The economy is too weak to handle serious shocks like a Euro collapse for example.
all imho.
as hussman said this Sunday….”We should all hope that Buffett’s investment is successful-provided there is not future crises-and we should equally hope that Buffett loses the entire investment otherwise”.
Ben and our policy makers are poor stewards.
The baby should be left to soothe and cry. Not picked up. It will be ok little Wall St.
Not that we don’t need certain accomadative policies. But ones implemented with out long term thinking arn’t worth implementing. Knee jerk injections…well the readers here are too smart for me to finish that sentence. They get it.
Lastly,….I’m kind of clueless in some areas(Willy2, intratrader, cassanova think that is the only thing I’ve said correct in the last year) I had to look up IMHO..pretend I only know WTF-FML-OMG..I think I send 3 texts a months…and I still go to blockbuster…Yes my town still has one.
Good thoughts Mediocritas. I asked myself in late April if it really made sense for the stock market to be up 100% since the 2009 bottom, when we hadn’t addressed any of the fundamental issues. Sold more in July when the market was partying while most of my trusted sources (including this website) were taking note of the dark clouds ahead.
I think we all see the clouds and are feeling the breeze kick up – looks like there could be a bad storm this Fall. Late September or October if recent history is any guide…
Hey Med?
My dad was a fighter pilot IP (instuctor pilot) @ Moody, AFB prior to doing hoghsit in `Nam. Dude taught kids how to fly T-38′s (F-5′s – which still seem to be used in Red Dog/Flag exercises today out at Nellis AFB, NV today).
When he trained me to fly a bug-squasher (Cessna POS), I found it almost imposssible to hold altitude doing a simple turn (you gotta rev up the engines!).
Went to the US Air Force Academy in my freshman year. Did some soaring, then did a thingie in a T-37 (Screaming Meemie), the only A/C in the USAF inventory that was legally allowed to be put into a stall condition. After the barrel rolls and the stall dive, I knew what I already knew – this was NOT for me! Left after the 1st year – done.
Hated flying, and made a right choice not doing so (including an airplane accident that was a doozy since I lost 14+ of my work mates on that one – every one was killed on that training flight – ands I was supposed to be on that flight! – you can’t tell me that this story does not shake you in some way). It happened in Dayton, OH on a training flight on an ECN-135 in May of `81, WE lost everyone on that flight – they are all dead. I miss them…
I am only alive today b/c I went to a class and had an excuse NOT to fly that day.
There is no heroics in flying, only idiocy. Don’t go there no more…
PS: My dad just about lost it in `Nam. Was flying the AC-119 “Boxcar” w/ a big ass gun hanging out the side – for use on the Ho Chi Min Trail- They basically lit it up, especially after the the Wild Weasels came in to try and get all the SAM-05′s launched. We call this shit duty. He got nailed, and he ditched his crew on the trail, but still managed to get his boat home on the landing strip. The base manager, wanted him stripped of his command – he was later rewarded w/ a Silver Star.
PPS: Thoughts, do we want our boys in war? IS there a (MUCH BETTER) way to spend fiscally? Methinks so…
Hey Iluvatar,
I was commercial only (but my instructors were ex RAF). Flew charters for a while before realizing it wasn’t for me. Glorified bus driver with short moments of panic between long periods of total boredom. I toyed with air force for a while but stories like yours convinced me not to go through with it. Eventually gave flying (for work) away entirely and became a trader, until the stress got too much and another path got followed.
On the war front, I’m convinced that the USA is following the same script as the Roman Empire. Constant war in the twilight years, needed to maintain domestic cohesion. Could be wrong. It’s sad.
Med:
Then your choice was wisdom. Given your scientific skills, the only place you BELONG is on the ground – doing hard science@
I belong there as well as my math skills and engineering skills result in a force multiplier WHEN they let that HAPPEN! (But that is antoher conversation)
Please be well and wish your fellow comrade scientists the best of luck down in the southland – they are not alone – many MOBILE Americans heve left here.
Hey where does a semi-credentialled EE get a job done in Aussie?
Love to hear!?!!?!?@@
My guess is that his ‘buy’ signal was a ‘cover short’ signal – which means he should have listened to it to become an old pilot. It happens to all of us.
thanks cullen.
When Europe is hanging by a thread I think you are right to ignore your model.
Goverment bond action today is another clear signal that this rally is nothing more than EOM window dressing.
NY Fed currency swaps (on balance sheet!) for the ECB were recently drawn for the first time in 8 months. Settlement fails on MBS dealer transactions has spiked to $1 trillion. Breakeven inflation rates on LT govs are still ridiculously high. There are MA death crosses everywhere. Ratios of risk assets to treasuries all point to a bear market. Those things don’t resolve themselves in one month.
I’d say odds of a sharp correction from these levels are extremely high. QE3 can be announced and we can still see a 20% drop in equities. It has happened before.
And just to add to your argument? Greece 1 YR bonds are trading on the secondary market @ 60%!!!!!!!!!!
We have word for that!
USURY!
The EU is going to implode, they have already dis’ed the EU-bond idea.
Fear trade is ON for October! Egress point! Hint, hint… (what blows me away is */- gold trading since it hit it’s high in Aug – +/- $40/day? What’s up w/ that?)
India is calling you…
It was amaterish only if you know your model was valid under the conditions it was derived. Nothing wrong with overriding the blackbox if you know its limitations. For example, flash crashes and evaporating liquidity should make anyone think twice about their model validity.
The market is in an oversold bear market condition and is responding positively to positive news. You can see this by how the market rallies on weak economic data. Again the weak and strong hands r betting on a messiah…realty is an atheist.
GS demands another fix of heroin, they’re stuck in junkies limbo jumping from delusion to delusion..
Are they not the same guys that called a 4% growth and 1500 SPX for 2011, 8 months ago after QE2?
Why on the earth people still give credit to these wall street zombies?
The Fed can credit bank accounts/lower reserve requirements and treasury can buy every bond, note and bill that floats but if DOMESTIC employment doesn not improve that provides cash flow to consumers which drives demand for goods and services (china’s and india’s consumers demanding US goods is still a decade away), then the cycle of the economy will continue to falter, confidence will contine to erode and demand will fall even further. This is called pushing on a string or deflation or 0 loan demand to build goods and services that increase future productivity.
Is there some divine principle that is known to Bernanke, our 2 branches of gov’t and our ruling class that remains hidden from the populace that governs eonomics beyond the simplified cycle i’ve described above? This is not nearly as complex as we are lead to believe.
Proper action to get the economy back on track does require a governing body that has the CITIZENS best interests in mind. This does not involve political cronyism that results in public servants that are far removed from the populace, private citizens whose wealth allow them special access to non public information resulting in self enrichment, a governing body which fights for the power of the party instead of the wellfare of the citizens, enactment of laws that intimidate citizens and nurtures business leaders to wait for government to provide direction for fear of legislative retaliation, where citizens rights to pursue gainful employment is not blocked by business leaders who have more loyalty to stockholders and foreign governments than their own country.
FED thinks (or want others to believe) that is more powerful than the market, than the forces of supply and demand, just because it is the source of the fiat currency. For this folly, in the end, it will be destroyed with the fiat currency. Unless they stop playing God just about now. One can only hope that our financial system doesn’t get destroyed with them.
“Instead, because we think the Fed still has bullets in their water canon,…”
The Fed never had any real bullets, they never even had a water cannon.
All they have ever had is a bubble machine. And it is now busted!
I will agree with GS on the oil prices part. There were (and still are) fundamental supply problems in the oil industry (Libya) which coupled with strong growth in the BRIC block can put upwards pressure on prices until recession hits the OECD strongly.
As far as QE3 in concerned i think that we should write out the ‘wealth effect’. Fed will buy (using the primary dealers) T-notes basically from banks, primary dealers, mutual and pension funds, maybe foreign central banks and hedge funds. Most of them will just use the cash to buy another T-Note (at auction or in the secondary market) or they will just leave the money in the reserve accounts.
There just aren’t that many private holders of US T-securities that might benefit from a wealth effect (due to QE3 increasing prices). Even if there were the total effect would be near negligible and equal to a few days of the fiscal deficit.
As for the interest rates the Fed has already done most of its part since it has extended zero rates up to 2013. It’s time for some serious fiscal stimulus again.
There we have it.
1) FOMC does NOT believe we are going to have a contraction in the economy.
2) BIG debate on future inflation and output gap.
etc etc.
Nevertheless, additional easing is on the way. WTF? Why the panic?
You are abosulutely right.
The beatings will continue until morale improves.
How about… “treason will continue until morale improves”.
So GS claim that QE2 didn’t work because of high commodity prices due to MENA unrest.
Errrr….
MENA unrest occurred BECAUSE of high commodity prices, which occurred BECAUSE of ZIRP + QE2.
Goldman logic fail. Bigtime.
Causality.
Matters.
Wanted to point the same out – high oil prices as a result of MENA unrest as a result of high food prices, which were the result of QE2 induced speculation.
Yes.
The fiscal is pretty much paralyzed for now.
Cullen a stupid question:
Out of what dose the fed create deposita that Are then swapped into treasuries?
I guess the balance sheet is ballooning but how is this possible without virtual money printing?
Thanks for your time
One thing QE2 did was to put in support for the stock market and force people into risker assets. After losing almost 70% of everything my wife and I had saved and invested for over 30 years; I have been able to crawl back into the “hope to retire” mode with an upside of over 220% since 3/09. And I have been positioned right to take advantage of the volatility and what is coming rolling down the track. I seem to have morphed from an investor into a trader. Hey, whatever it takes. Thank you for this site which has aided me immeasurably the last several years.
1) QE2 didn’t help the real economy
2) QE2 helped Goldman Sachs
Points 1) and 2) can exist at the same time. If one understands the details of QE2, one will understand why Goldman wants to see a repeat of QE2.
Was it Bernanke or Greenspan or someone else that said “qu’ils mangent de la brioche”?
I read article on Prag Cap frequently and find very compelling pieces from time to time, but what I never seem to read is what I think is one of the underlying problems in this country and, for that matter, the world. That is that mostly everyone in the so called developed world is living above their means. Everyone is going to have to ratchet down both their current consumption and future expectations of how they are going to live if they plan on surviving what is happening today regardless of what “theory” you ascribe to.
Bernanke has become Pavlov’s Dog for Wall Street. He salivates easy money every time the stock market has a downturn. Goldman is just doing what Pavlov did; ring the bell to get the desired result.
things are looking bright…close to 4% inflation in the real world
http://bpp.mit.edu/usa/
I have to say that Goldmans arguments for QE3 are almost beneath even them. If thats the best they can come up with I wonder what they are all doing earning their megabucks. The reason to do QE3 is because it might add a few tenths to 2011 GDP ?? And they think it will have no inflation impact ?? I wonder who will be first out with a bullish call on commods as soon as QE3 starts. Makes me angry I have to say, but then I should be used to it by now. The rally from QE3 will be short and sweet and the hangover 2 will be worse than the actual movie !
The FOMC does not realize the absurd incentives they are putting out.
They also do not see the consequences of their actions (or do not want to).
They are most probably on track to cause inflation in Asia to offset their reluctance to revalue their currencies against the dollar.
The Fed is married to the wall street establishment.
In short, we have a dysfunctional set of people who are steering our country into a storm with a blindfold and pedal to the metal.
I read somewhere that “R” is not for recovery, in the current state of the economy it stands for recession. Yep, there will be a QE3, but that’s not what we need; it only prolongs correction. Leave it alone.
Bernanke and FOMC do NOT understand this economy at all. They are just trend following SPX. The economy is bobbing around a 1.75%ish growth rate. every time they bid it up for a quarter or two, it dips below it – why? – BECAUSE THE POLICIES ARE ABOUT BORROWING DEMAND FROM THE NEAR FUTURE. I am beginning to think it is Bernanke’s intention to ram in more QE every time the economy dips.
IF he waits too long, it might come back, AND THEN WHERE WILL HE BE?
the beatings will no doubt continue soon.
its when not if…..why is because the market went up in QE2….damn the price of staples(says them) and who cares exactly how/why their price went up(says me)
ben will do it until when he does, the market goes down instead of up.
faber says the threshold is 9400…..i think higher…..some are pricing it in now…..the DOW and gold are.
http://historysquared.com/2011/08/31/letter-to-the-fed-on-fault-inflation-statistics/
The New World Order is here and the bankstas will do everything to protect their brothers in the banking system.
So, QE infinity will follow. Remember, the Bernank is not creating trillions of new dollars to help the economy. He is doing this to save the banks.
The GAO recently reported that the Bernank lent US$16 trillion to banks in undisclosed loans – US$16 TRILLION!!! Yet, sheeple keep thinking the Fed is run in the best interest of the American people. Keep dreaming; the New World Order will enslave you and then, you will live in George Orwell’s world. All the best!
Cullen,
You run a popular website. So, if you really want to educate and help others, then, PLEASE find out the truth before expressing your views. No doubt, you are an honourable guy and are trying to help. But, you have to understand that the Federal Reserve is neither Federal, nor does it have any reserves.
It is a printing machine run for the benefit of the banks. Go and watch the following video — http://www.youtube.com/watch?v=ZmW3ytfhZ9M
If this is not enough, then read Creature from Jekyll Island and Secrets of the Federal Reserve.
Once you realise that the destruction of the West has been planned by the elite, you will know how to protect yourself and your readers. Bernank is NOT a fool; he is a very smart man carrying out his masters’ agenda.
When you grasp what I am saying, everything will become crystal clear
Thanks for the compliments Paul. You weren’t so nice to me when you first visited, but it’s nice to see that we are seeing eye to eye now. Trust me, I do not think the Fed is some great institution. I think they manipulate the economy and intervene when they shouldn’t. I don’t know if I’d go quite as far as some do (saying they’re a “cartel” or “treasonous”), but I am certainly not their biggest fan. I’ll watch the video you linked to. Thanks.
When next we saw Cullen he was at a campaign rally holding up a “Ron Paul is The Constitution” sign.
)
http://talkingpointsmemo.com/archives/2011/08/yes_he_really_is.php
Actually, the path to a MMT-Paul alliance lies in conceding the Paulite wish that the gold appreciation be exempt from capital gains taxes. That’s simple enough, amend the l031 exchange law to allow the cash proceeds from gold sales to be rolled into T-bills tax-free. If the Secretary was ordered, instead of merely given the discretion, to accept T-bills to satisfy tax payments, goldbugs could live their lives without ever having to use grubby federal reserve notes (that is, by bartering gold with anyone willing to accept it in exchange for goods and services and then buying T-bills when necessary to satisfy tax obligations).
What’s even better, T-bills with a discount of 0.25% or less (why that’s the current IOR/FFR target) can be redeemed or sold tax-free because of the “de minimis tax rule” (“capital gains tax must be paid on a bond if the bond was purchased at a discount to the face value in excess of a quarter point per year between the time of acquisition and maturity”). Which means the concession on the part of the gold bugs is accepting that the natural rate of interest is 0… or they can keep on paying capital gains taxes. Like Milton Friedman said, they’re free to choose.
)
http://www.investopedia.com/terms/d/deminimistaxrule.asp#axzz1Wfou7CdM
Cullen,
PLEASE watch the video and learn about the New World Order.
If you live in the US, take out your one dollar bill and study it -
It says ‘New World Order’ in Latin. It also has a pyramid with an ‘all seeing’ eye at the top. Furthermore, it also has a small owl on it!!!
Ever wondered what a pyramid is doing on a US bank note? Well, let me educate you.
The pyramid and the eye represent the symbol of the illuminati and the new world order is their agenda. Go to youtube and watch the new world order videos.
The illuminati are carrying out the planned destruction of the US Dollar so that they can introduce the new world currency.
This stuff is not a conspiracy theory – it is a fact.
I often tend to liken the Federal Reserve (or most Central Banks for that matter) to the scene in the Wizard of Oz where Dorothy and her entourage finally meet the Wizard who was basically just a lot of smoke and mirrors scaring the wits out of everybody. The Federal Reserve is really just a little guy behind a curtain named Ben Bernanke pulling a bunch of levers trying to control everyone and situations by a lot of convoluted policies that are realy quite scary. My question TPC is this: what happens if someday people won’t respond when their levers get pulled?
There’s a theory that the Wizard of Oz novel was written as an allegory about the monetary system.
In a 1964 article, high school teacher Henry Littlefield outlined an allegory in the book of the late 19th-century debate regarding monetary policy[1] According to this view, for instance, the “Yellow Brick Road” represents the gold standard, and the silver slippers (ruby in the 1939 film version) represent the Silverite sixteen to one silver ratio (dancing down the road).
http://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz
I read a book by Ellen Brown devoted to this concept. Called “Web of Debt” (http://www.webofdebt.com/)
Certainly changed my perception of the Wizard of Oz!