This blog was inspired by MSNBC, “UP: with Chris Hayes”, Saturday, June 9, 2012.
And a segment discussing the Federal Reserve Board, particularly the chairman and their low rate monetary policy
But the answer to the question posed is not something to blame on the Fed; the blame lies with those that retail the free money that the Fed is making available:
(I) at what price to the lender, i.e., what is the % (interest) of retail markup
(II) is that price or % of retail markup justified and
(III) how Holy and Sacred are these monetary retailers in terms of political protection and de facto immunity.
As a preliminary, ordinary people don’t get any of this “supply” unless they pay the retail price in the form of the interest rate for a loan or the same in regard to a credit card.
(A) the National Average Credit Card rate as of June 13, 2012 is 14.92% lQQk
(B) The national average for unsecured loans cf. (compare) the rate in this nice article for February 2011 lQQk
(C) The National Average for mortgages maybe found here lQQk
Two things to remember about the banks that you get “your” money from is
(1) That they’re retailers, like WalMart, Walgrens, whatever and they’re in it for profit
(2) And they lend you money on their terms so that you may buy susbsistence
US Citizens, in the so called greatest richest nation in the history of the Universe, shouldn’t have to borrow money for subsistence: but the fact is, we do: because the Democratic-republicans adamantly insist that that’s the way it has to be because they say so. Consequently, they have no intention of devising any other way that would allow you to make your life more pleasant and agreeable: so the promise to pursue happiness has become a privilege of which only Daddy Warbucks and business are allowed to enjoy. So instead of changing this arrangement, which was never designed to do anything in regard to you except assist in your ruthless exploitation by virtue of your subsistence needs: government, and those aspiring to recognition in this regard, attempt to make a system designed to ruthlessly exploit you, work better - e.g., lQQk
With a cool sober disposition, there are several ways of mentally processing these irresistible and unavoidable facts.
From the political perspective, the position of the republican faction is to make this arrangment work better - that is - to maximize the marginal profits of all retailing - viz., in this case the rate at which banks lease money commensurate with the highest possible rate they can achieve in selling it to you.
This is the only reason you are tied to a lifetime of debt, thereby making a life of labor necessary in order to purchase your subsistence from business and then if any remains to pay back your loan(s) that are your only means for doing so.
The position of the Democratics is to ensure 1st above all, a fair rate of return to such businesses while mitigating the misery of those ruthlessly exploited: at least to the extent that they don’t take to the streets where both factions agree they must then receive pepper spray to the eyes, nightstick to the head, into the gut, crotch, breaking of knees under whatever official municipal policy is officially made executed and deployed for the purposes of protecting business because afterall “America’s business is business” you ungrateful bastard all we’ve tried to do for you, don’t they sound like your parents.
Either the retailers claw their way above you, in order to ruthlessly exploit you, or they remain your equal and get ruthlessly exploited along with you by someone else.
Your only choice is the greater or lesser of the same evil or else communism.
Now the various boards of directors of the media companies, in their neo-synonymous horizontal price fixing ways (they all report the same stories) have the various reporters/journalists discuss the Federal Reserve Board. On the one hand, this is just one more example of, behind the evolutionary curve, in this case by about 30 years, and another 30 before that; but on the other hand it persists because it has a purpose - viz., it places blame for the arrangement on the Fed and above all it takes all attention away from the Holy and Most Sacred in all of US society - retailing institutions that ruthlessly exploit you.
I seldom discuss the whole Fed/banking thing, not because it’s boring, but because USA capitalism is all about the ruthless exploitation of humanity for profit which is enormously depressing to think about and that’s what the Fed feeds or is directed to feed.
But the pertinent conclusory fact, is that the foregoing arrangment is not what the Fed creates. Here’s some useful data FRB stats
Now back in the mid 1970s the Humprhrey Hawkins Bill was made into a law which requires that the Fed report to Congress from time to time regarding
particular aspects of a full employment policy which that law purportedly creates; and this reporting event, in conjunction with the various news
corporations, is still hyped as a big deal, of enormous consequence, even though Humphrey is long since dead. At best, it’s a sort of USA version of Regal
Ritual: the Fed comes to Capitol Hill, all Wall Street equity, bonds, futures, options, all trading, purportedly stops, to listen !! When did Mr Volcker
light his cigar, did Grenspan seem a bit coquettish and coy when they asked …
I just stopped paying attention.
Fellini should have used this in a film. Particularly the Volcker cigar deal.
The practical idea behind Humphrey-Hawkins is to assist Congress in coordinating fiscal (tax and spend) and monetary (supply side) policy in conjunction with a further hypothesis that a lower unemployment rate might be realized if the Fed places full employment as a priority in regard to economic activity by being less strict about controling inflation. The idea seems to be based on the idea of wage and price spirals - e.g., the economy is cooking like the d-rs like and then business hires people who have money to buy things allowing labor for subsistence to demand higher wages, which the “reasoning” goes, leads to higher prices, with one feeding off the other. So the d-r(s) decided that 5% unemployment is full employment and when that number is achieved that the Fed has to start raising rates to cause an economic slowdown but not so much as to create a price recession.
Price recessions are theoretically good for you because it lowers your subsistence costs, which is bad for retailers because it makes it more difficult for them to make payments on the money they borrowed to buy your subsistence needs that they markup (at a rate geometrically greater than any tax) and then resell to you.
When FDR was President he introduced a communist concept - viz., a living wage, not based on an hourly rate or renumeration for the completion of a contract but enough to buy subsistence. Had the d-r(s) followed his prescription, then the present arrangement of you having to lease money from retailers for your subsistence would have never come into being. And this is perhaps the most important point of all:
Because in the reality of banking, these kinds of loans, along with mortgages, are bad business, and the only way they work is when the Proletariat is forced into a life of indentured servitude and debt.
At around this same period of time the US Senate refused to ratify the original International Labour Organization Treaty because it required that the signatories could no longer use or consider Labor as a commodity, so FDR, in lieu of Senate ratification agreed to it by Executive order. As a result of this, inconjunction with Humphrey-Hawkins, an ideology developed from whence the expression arose - “to take away the punch bowl” - as described above in conjunction with wage and price spirals, the Fed will raise interest rates, causing banks to buy the higher yielding instruments in lieu of making new loans thereby relieving inflationary pressures.
What has been ignored in all of this is the principal known as diseconomy of scale, which describes the price cost benefits of -e.g., mass production - the more you can produce and sell the lower the costs - e.g., you can buy in volume, invest to increase efficiency altogether yielding a higher marginal return but eventually you will reach the point where investment costs will increase and marginal return will decrease - too big to NOT fail. So if banks are charging high retail rates and essentially getting the money to retail for free, then the Fed will have to increase rates quite dramatically in order to slow down banks from lending or, Banks seeing that they are essentially making bad loans, will prefer risk aversion by taking a lower rate, backed by the full faith and credit of the Federal Government unless the republicans destroy Public Credit by refusing to allow for necessary taxation.
The fact of the matter is, loans for subsistence are bad loans. Paradoxically republicans see that but don’t care, you’re just an indentured servitude cog widget to them, you might as well drop dead while the Democratics seem to think that they’re the greatest thing since White sliced bread.
Just get a job borrow money and buy things btw here’s your list of thou shall nots.
The other side of (supply side - viz., monetary policy) is fiscal policy - e.g., stimulus through government spending (to create demand); and taxation,
collecting money to pay for it.
So it doesn’t take much thought to see that if fiscal policy is abandoned - as the republicans insist - then supply side functions utilize money that is already in the private sector, which is what they want - i.e., they want all of the money to be in private hands and none of it to be in the hands of The People.
So if you’re thinking to yourself, yeah they’re all scumbags, I don’t want any part of it, just remember, the only way you can ever have subsistence aside from borrowing it is through your government’s ability to do fiscal policy. Abandon that and there is no possible escape from being at the absolute mercy of private business and the republican Police State that protects them.
But Mittney has correctly informed us, that “Government doesn’t create jobs, the private sector does”; which begs the question, what is Congress doing or what could Congress do in conjunction with or without the purportedly independent Fed that will lower unemployment? And if they can’t do anything then how is this Barack Obama’s fault that whatever Mittney &co wants, isn’t happening? That question has already been answered, republicans want all the money in private sector hands except for war spending
So the supply side idea is to just make money available and then all sorts of great things will happen and when they don’t it’s because of the Jew Merchant Leach Commie Socialist conspiracy who have sunk their tallons into the wholesome, White virginally pristine private sector depriving White Christian males of creating a good clean decent living and the creation of opportunities for a life of indentured servitude for you me and your family.
In Germany it was the Aryan race, here it’s the order of Cincinnati, Daughters of the Revolution or more accurately the so called “federalist society”. The antifederalists who were opposed to the US Constitution in the 1st place. They’re the real “Americans”, indigenous people, corral them off in reservations, and those imported for labor (my grandparents) - get your lazy ass to work you Honky bastard you.
The whole thing goes back to my previous blog “Opening the American Mind” June 8, 2012 wherein I refer to several of the most well known and d-r approved propaganda conclusions regarding USA problems reported by the Media and the number (I) in that list is this:
“(I) Every problem you have regarding, property, money and an inability to afford things is directly attributable to a Jew merchant leach conspiracy that duped the Crown into Chartering the Bank of England and now the bastards came over here as the Federalist Party and made “The Banksters” - i.e., the Bank of the United States and the Federal Reserve Board”
In that blog I also refer to the Capitalist Revolution, the same as did Marx, in his “The Communist Manifesto”, et al. The observation and reporting of this fact is incontrovertibly correct. All one need do is study economic history.
Jews were not allowed to own land and feudalism, was the reigning means whereby the produce of earth was generally distributed.
Under feudalism, those owning production property were known as “The Landed Gentry”. The basis of their wealth was the possession of Land for agricultural production under privilege and title conferred by the Crown. And that this Landed Gentry opposed the Crown, in Chartering the Bank of England, because it would create a competing class of persons having the power and privileges of wealth without holding and having responsibility of production property. It is likely true that many of the early Merchant Finaciers and capitalists were Jews or else adopted Merchant custom which Jews developed in the course of protecting whatever savings they had from confiscation, sending proceeds to family and fellow displaced Jews in far off lands and thus the appellation “Jew Merchant Leach” viz., the idea being that their wealth was derived from the exploitation of the Landed Gentry. Thomas Hart Benton put it this way “If there was ever a chosen people it’s the White Christian farmer because he does with the land what the good Lord intended. He cultivates it”. This type of rhetoric which is frequently found in the US debates by Thomas Jefferson and his Democratic-republicans all of whom opposed the Bank of the United States chartered under the Federal government, as it had similarly been chartered under the Articles of Confederation.
It made sense in terms of majoritarian politics because many wealthy persons Left England for the prospect of more Land !! the New World Landed Gentry Elysium !! But then again, like his republicans of present, once he was elected President he signed the Bill renewing the charter because the Bank was and is necessary and feudalism isn’t, in fact it is expressly proscribed by the US Const (article I, sections 8 and 9).
Previous to Jefferson’s election as US President his method for agitating the mob against the Federalist party was to use all of the debating points used by the Landed Gentry, in opposition to capitalism “to save [feudalism]” hence Jefferson, the Conservative, as opposed to the revolutionaries, those that allowed capitalism as a function of Liberty and due process; but with the addition of a new American twist:
According to Thomas Jefferson and his Democratic-republicans, the Federal government is prohibited by the US Constitution to charter a Bank because it’s not expressly allowed, but that States would be free to charter their own State Banks. This latter point about State banking is always omitted by the present day anti-banksters, carrying on the Jeffersonian tradition of blame it on the Central Bankstas (sung to the tune of “Blame it in the Bossa Nova”), notably, Ron Paul, and his so called “Libertarians”
Apparently they prefer feudalism over capitalism.
In any event, this is the origin of, the Jews control the world through Banking, rhetoric. It’s the Jew Banksters and their Jew Media, “they have a stranglehod on America”:
This anti-central bank, the Fed is evil, tradition, is the essential component part of USA “populist” politics. Because of the Jeffersonian Twist
At one time a State or locality used to print it’s own money and somebody might borrow money from a ‘Merchant’ - some people hold their wealth in cash and securities; but the plan goes bad so the borrower goes to the State and says - now look here, I borrowed some money from the Jew, and I really meant to pay him back, nudge nudge wink wink, but can’t, so please print some more money for me so I can pay him back before his Merchant Leach Conspiracy ruins my credit. This sort of activity causes the creditor to be paid back in money that is worth-less than when he lent it - e.g., the prinicipal he lent, $100, could buy one whole apple but now after he’s paid back the principal it only buys half of one apple - this is known as monetary inflation - and it’s uneconomical and forbidden by law to sell apples in halves - and that’s government regulation.
So by this foregoing example, monetary inflation is obviously a big advantage to entrepreneurs who borrow money to buy something to resell and then pay back the loan with money equal in face value but worthless in purchasing power - hence needing no money of their own, they reap an additional windfall.
Since the entire principal behind finance is to lend out more money than actually exists as reserve, credit is created by the promise that loans outstanding shall be repaid in order to cover principal deposits: the idea is to control monetary inflation to the point where people will still be willing to lend money (banks and depositers) with the addition of a modest interest rate, as insurance, so that the return of principal will at least equal the amount of purchasing power lent and hopefully giving the creditor some reward for presumably helping out the borrower -
Inflation therefore creates an additional cost and risk to the people you get your money from which they either pass on to you in the form of higher interest rates or else won’t lend you money: either because interest rates are sufficiently high where they don’t need to or else it’s just bad business.
Subsistence ought not to be about business, but the d-r(s) adamantly insist that it is; and they will more often than not pressure these retailers to make bad business decisions - lend at a higher rate with greater costs and risks and then bitch and complain about it when things go bad - e.g., it’s the Fed’s fault !!
So who’s the most likely candidate to get these forced loans? Most likely some poor hapless social parasite trying to make a living off someone else’s poverty, misfortune and subsistence needs, who probably hooked up with an equally hapless woman, by now, aside from the one or more across town with a nest of hungry disfunctional mouths to feed because the whole lot of them are encouraged by republicans to hate the idea of same sex or birth control
Would you lend them money?
No, of course not, you heartless conservative cur.
But this is the way the GOPstapo will sell their States Rights/destroy the Federal government, policy to you. In essence, restore the Confederacy - i.e., fiscal policy is represented as an assortment of Socialist spending sprees, to aid and assist good for nothing Nigras, sex perverts and imported labor honkeys too lazy to work and dirtying up the sidewalks waiting for a hand out: which again deprives good decent clean living White Christian Heterosexiual Males of the the dear precious money they need so their business can feed Mater and Pater and their gaggle of little children that all go to church together on Sunday.
In other words, keep the money in the hands of White Christian Heterosexual businessmen and out of the hands of those filthy Nigra Loving Commie Jews in government. OMG one of them is president.
Under eternal optomism, a State could conceivably control inflation by fiscal policy, since they have no monetary policy, but under a very limited sort of innercommerce; but as interstate commerce increases and with the various differring circumstances, in and of the various States, that becomes impossible, hence, a more perfect union with the ability to regulate commerce, is required, which Europe failed to do - as recently echoed by an astute representative of Italy - and with an institution having the basic functionality of a Central Banking system.
Which is what the Fed essentially does for the entire USA.
Since the GOPstapo really haven’t a clue about much of anything and therefore appear to be incredibly inarticulate about anything other than cut spending and cut taxes any Federal government is too big all that business needs is all the money and International military protection - from the best I can discern - their position seems to be well ok we’ll allow the Fed to exist as long as Humphrey-Hawkins is abolished and all money is relegated to circulation within business whom thereby solely controls how much money individual members of the Proletariat shall ever have.
In other words, the whole schlemiel works fine for them and everyone else aren’t really Americans anyway and they can all go drop dead, which is without hesitation and pretty much exactly what the GOPstapo is. Nonetheless:
Article I, section 10 of the US Const, makes a State Central Bank pretty much impossible cf Article 1, section 8: but States could still have small State chartered banks lending money for simple local purposes - that is - within the confines of Art 1 Sec. 10. But private unregulated entities evolved; either unregulated because someone like Mittney got elected as Governor of a State and gave a nudge nudge wink wink to business, don’t worry about ever being prosecuted by us; or else there was some sort of Von Mises in a Time Machine that went back and imposed all of his various views on them.
It’s all of these various private entities doing what States and Federally chartered institutions can’t do that makes what political factions expect of the Fed practically impossible, because with deregulation, it has no real control over what these various institutions demanding money do with it except to make it cheap enough so that they can lend it at a practical rate and still get a fair return; and all of the private means whereby credit is created, under the insistence and adamant refusal of republicans to allow any of this to be regulated. It’s the free market. Hands off !!
So if you destroy the Fed and gut the Federal government so that all it is, is a war machine - all of these private entities will determine whether anyone outside of business will have money and if so how much. This is already being done in competition with the Federal government and to some degree the State(s) governments through their direct business agent the republican party.
For example, you can barely pay for subsistence with consumer credit - e.g., credit cards, but what is the retail % you pay to the private sector for borrowing that money.
Ironically, it was another Mormon, Mariner Eccles, that was the head of the Fed during FDR’s stint and used to bitch and complain to Congress, Hey the war is over, Hello, I really don’t like being used as “an engine for inflation”, it’s making a farce out of my duties and responsibilioties as a Central Banker:
So what does this mean? Because it’s a Very Important component part to any real and useful policy that government might create in this regard.
Call it, the Juggler
The purpose and goal of any financial scheme even the equity markets is to make available through credit more money or inherent value than is held in reserve
- buy the inherent value sell the credit. With Banks the two component objects are deposits and loans. There will always be more money outstanding in the
form of credit as there will be reserves. This works as long as loans are made for legitimate purposes and it is apparent that the lender is reasonably certain that the loans shall be repaid.
So the less risky the loan the better, especially if they are secured. The market mechanism in this regard is the price of the loan and the degree of economic activity in the form of
demand. So as long as the flow of repayments remains consistent with the flow of loans, then the apparent magic of money creation is realized - i.e., credit,
Rather than an invisible hand, there is an invisible juggler; but if there is any distruption to that flow, to the extent where it seems that the risks of loans puts in doubt their repayment, then depositers will in one way or the other demand their money either in higher rates of interest or else, the classic “bank run”, in which case the Fed is there for emergency lending.
The greater likelihood of that sort of run or sell off happening is where there is greater risk. So if there is orderly liquidity and diversity of investment, a prudent investor will be satisfied with modest gains or where greater gains are made by greater risk a diversity of investments will off set such losses. But all of these models assume economic situations of the past, which monetarism, itself, is based on - e.g., a “growth economy” is like a “growth stock” dividends are forgone on the bet of greater capital/principal appreciation - viz., capital gains. In this light economic activity is always present because there is so much to do - e.g., we’re importing a community of cheap immigrant labor. O dear we’ll need housing, clothing, food stuffs, blah, clear the trees make new highways drill for water, drill for oil &c. In the past there were actual shortages of money and thus a greater supply was needed and demanded - e.g., silver augmenting gold, reduction in reserve requirements, reduction in interest rates; such things would facilitate growth and expansion because the demand and need was there.
The situation of the USA today, which no Democratic-republican will ever admi,t is that it is no longer a “growth economy” and consequently they’re still waiting for the growth of the past to resurrect itself like the metaphor of Jesus Christ, simply in order to maintain what has already been created. The prime indicater of this situation is lack of demand. Consequently, how do banks remain profitable if interest rates are low and no one is demanding the sorts of loans characteristic of a growth economy? They assume riskier investments; but those riskier investments themselves are subject to the same invisible juggler - e.g., velocity and float - as is any form of financing.
So getting back to Mariner Eccles and the engine of inflation:
If existing industries or new industries are renewed or first brought into use, costs and prices are low and Public Credit made available for the purchase of raw materials to be fashioned into tangible form is not inflationary but is a value added to the inherent worth of those products and thus new industries and a growth of non inflationary commerce is realized. There is greater economic activity. But when that production is no longer needed and subsides yet the spigot of supply is still cranked wide open, and unless something else is provided to sop it up you will have too many dollars chasing too few goods. Prices increase because the monetary stock is diluted
But the Real fallacy, in this whole idea behind monetarism or supply side economics, is that you somehow get any of this money. Well presently there is only three ways that can happen
(a) business pays some to you [jobs, jobs, jobs]
(b) you borrow it from a retailer business with a credit card or loan or
(c) by fiscal policy - i.e., your government gives it to you instead of giving it to business who is going to end up with it anyway.
Under the republican dream cream, there is “(a)”, (b)” and that’s it. Under the Democratics, they might want to use fiscal policy, generally the tax code, to e.g., lower lending rates - viz., have the Fed make more money available through deficit spending which is raised by the sale of Treasury Securities and/or “pay as you go” taxation.
But if there is no demand, then those sorts of policies don’t accomplish anything because supply does not - under a non-growth economy - create it’s own demand.
The root of this problem is that Government serves the Bourgeoisie and protects their way of life. Look at them, 1964 is forever. Time stands still, because their “way of life” is preserved at your expense.
They are living in the past because that’s where and when their protection began. They believe that they still live in a growth economy.
So alas the real
problem, is the Democratic-republican single party monolith - and their Mantra, by unanimous consent, that “America’s Business is Business”. The only way
it’s unanimous consent is because I am not heard. I am ignored; and it’s not because I cannot afford to buy access it’s because they don’t want to hear or
read what I have to say. It’s against their beliefs, translated into American? It’s against their interests because their only interests are their own
beliefs. This is their fate
When prices are low and purchasing power is great all of these details on finance and banking aren’t recognized and are generally irrelevant. The reason
people are noticing them now is that it is increasingly difficult to live and we the Proletariat have been robbed of our government. The only choice before
us is the Streets - OWS - or blind faith: twist your head all around until you force yourself to beleve in all of this “hope”, which is no different than
religion “the opiate of the masses”. It’s the same as National Socialism
People are afraid to know what I’ve just explained or else they force it out of their minds. O he’s a communist O The Tower, that must mean 911, off to the concentration camp for him; and that’s how all of this got so fucked up in the 1st place - or more accurately - how it didn’t get unfucked up - viz., because there’s enough money to keep the past, living, for the 1% and for those that worship and serve them, at your expense because it’s “their way of life”.
My solution is to provide subsistence to every citizen in the USA, if they don’t want it they don’t have to take it. There are all sorts of programs the Democratics can give away to the republicans in exchange for that and in turn win the confidence of the greater number of people - viz., those of us who can’t pursue happiness but pretend to do so with consumer credit and “hope” where our only source for accounts receivable is working and devoting almost all of our waking hours to give it all back to the company store.