Governments can do two basic things to fix an ailing economy.
1. They can fund projects (like highways and bridges) and buy things (like military planes). The companies that sell these things to the government will employ people. That reduces unemployment.
2. They can reduce interest rates. That’s Bernanke’s job. He believes that low interest rates will stimulate companies to borrow money, invest in new factories and employ more people. This is rubbish. No businessman ever borrowed because interest rates were low. They borrowed because they had a sound business idea and needed money to fund it. In an ailing economy, there simply aren’t that many great business ideas. Which is one reason so many people can’t get a job.
Keeping interest rates low has one major consequence: It screws retirees who are trying to live on their savings. Bernanke has hurt millions of them. No one thinks of them. They are the forgotten newly-poor. Not one reporter asked about them at yesterday’s press conference.
Keeping interest rates low has other consequences:
+ It keeps the dollar weak. I’m earning 6.3% on a bank CD in Australia. I can’t even earn 2% in America. Why would anyone leave their money here? The Australian dollar is climbing and climbing. It’s now $1.08 — a record, I believe.
+ As the dollar declines, everyone desperately looks for anything that will hold value — gold, silver, stocks, Internet startups (e.g. Groupon) and collectibles. Bernanke is encouraging yet another boom — one that will end in yet another nasty bust. The last time the Fed kept interest rates low for too long was in housing. And we know how that ended. today’s two biggest bubbles are in silver and a handful of recent highfliers, like the ones I mentioned yesterday — NFLX, TZOO, AAPL, AMZN, PCLN, UA, CMG, OPEN and SINA.
+ The dollar’s decline stimulates commodity bubbles which leads to inflation — which of course, hurts everyone, especially those of who are not rich — the bulk of the population. Have you seen the price of gas or bread recently?
+ Keeping interest rates ultra-low is charity for the banks. No one is limiting what they can lend money at — as much as 30% on credit cards — but Bernanke is setting what they can borrow at. This is government sanctioned price-fixing. If any other industry tried this, they’d be in jail. Bernanke loves banks. He sprinkles money over them as if it were Pixie Dust and free. I guess it is free since his government endlessly prints the stuff. He seems to believe in trickle-down economics. What’s good for the banks is good for all of us.
+ Keeping interest rates low also discourages banks from lending long-term, because they figure that, one day, interest rates will rise. So why lend now at low rates for long-term? Some projects can only be financed with long-term money. Like big factories. So they don’t get built. Of course, this is precisely the opposite effect of what Bernanke is trying to achieve — i.e. stimulate the economy and grow jobs.
I’m not a big fan of Bernanke. You can read the transcript from yesterday’s press conference. Click here. You won’t learn much.
Bernanke’s latest FOMC statement — click here — says he’ll keep interest rates at basically zero for as long as he feels. While they’re low, I’m guessing stock prices will continue to rise. Gold still looks cheap. I like SGOL and GLD.
Domain Registry of America is a scam. I have a few web sites. These guys sent me a “Domain name Expiration Notice” and psuedo-invoice. It’s a scam. My web sites are not expiring and if I gave them money I’d be moving my web sites over to them and be paying a much higher price.
Meanwhile Quest “slammed” my long distance from my carrier to them, and sent me a bill which I never authorized.
There are too many of these heady scams and fake invoices floating around. Be wary.
The Pakistan AAA saves a car. Watch till the end of this short video. You’ll die laughing. Click here.
Harry Newton who is enjoying New York’s Springtime. Here are the cherry blossoms on Roosevelt Island under the 59th Street Bridge.
Cherry blossoms with Roosevelt Island Tram and Manhattan skyline.
Closeup of cherry blossoms.
Park Avenue is exploding with cherry blossoms and tulips.
Sculptures on Park Avenue.
Whimsical metal bug on flower.
Shades of Paris. A New York East side restaurant, with its doors flung open for the nice Spring weather.
Photos courtesy my iPhone4.
Harry, you are missing by far the biggest thing the government can do “to fix an ailing economy”, get the hell out of the way! Taxes, regulations, rules, licensing, harassment, playing favorites with rules, funding and such, and all that crap does far more to restrict business initiations, business growth and business inventiveness than anything they can hope to do. Or unfortunately have any understanding of. Legal practice, where all too many of our elected folks come from, is not only not a good training ground in economics and company building, it's a horribly negative one. Get the government out of our way at the federal, state and local level and human nature driving innovation and entrepreneurship will “fix an ailing economy” in short order. Even President Kennedy understood that. And as Pres. Reagan said, “Governments not the solution, it's the problem”. To which I say “Amen”.
How much you wanna bet “Pahowley” and “RonaldReagan” are the same person? Same nonsensensical, simplistic approaches (“all we have to do is get government and those darn regulations out of the way” … or words to that effect, and “the biggest problem with the US economy is [lack of] confidence”); same lock-step adherence to Republican talking points; same slavish worshipping at the altar of Ronald Reagan.
The purpose of the Republican Party is to maintain and enhance the wealth of those who already have it. All else – the divisive social issues; the character attacks, false charges and lies hurled at Presidents (Obama, Clinton) and Presidential candidates (Kerry), and any other public figure in their way; the adoration of the modern-day Father Caughlin (Rush Limbaugh); the racism covert and overt … all serve the purpose of manipulating what is left of a struggling middle class to serve the ends of a miniscule number of super-wealthy. All is aided and abetted by a media that is corporate-owned and no longer delivers the news, and a Supreme Court whose majority determinations are totally predictable by anticipating what serves best the Conservative cause.
The Republican Party and the Conservative movement have no solutions. Nothing to address the millions of jobs shipped overseas while corporate earnings grow apace; nothing about monstrous military spending and global enterprises that we can no longer afford; nothing about a slavish and destructive addiction to petroleum that has prevailed for decades. Only “get that dern gov'ment out of the way” and “be happy – that'll create jobs!”
“Today just 400 Americans have more wealth than half of all Americans combined.
“Let me say that again. 400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer 'bailout' of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can’t bring yourself to call that a financial coup d’état, then you are simply not being honest about what you know in your heart to be true.” {Michael Moore}
Reaganhood: take from the poor; give to the rich.
don't mention it……….Have you ever actually formulated a thought that you could honestly call your own? Their was a time when I would have actually felt sorry for you, now I can care less that you live a life of anger and delusion. You'll get no help from me, go forth and live in your demented world. I know eventually it will eat you alive. You are living a lie and have absolutely no chance for recovery. With the grace of God, you and the likes of you will suffer a monumental crushing defeat next Nov. If not, then we conservatives will do what we have to. This country was founded by conservatives, we are the ones who kicked the Brits asses out. We conservatives fought and won the Civil War lead by the great conservative Abraham Lincoln. We conservatives won the Cold War and removed the Soviet Union from Europe lead by the great conservative Ronald Reagan. We conservatives love this country, our families, our children far more than any candy-ass liberal could ever possibly comprehend. In the end you may win, but to claim that ultimate victory you're going to have to kill me, first. Best of luck.
There was a time you actually felt sorry for me? I've only had about three chances to clean up after the silly, bombastic stuff you post here – hardly time for you to muse about way-back-when. In any case, when did your empathy cease – when you re-read that chapter about John Galt to stiffen your resolve?
Each time I post here, I rhetorically kick the crap out of you, and you have no factual comeback … only the delusions and insults to be expected from the Right, because you've learned so well from your idols. Ronald Reagan, the master of delusion who sold America on the horse-and-sparrow mythology of gorging the horse, so that as the beast relieved itself there might be some pickings for the sparrows. The Ronald Reagan who brought us modestly-good growth … via a phony economic theory that piled up more debt than that accumulated by all prior presidents down to George Washington. Then come your lies: America was founded by conservatives. No, it was founded by LIBERALS: read Locke vs. Hobbes. Then the stream of historical events from the American revolution to the demise of the Soviet Union – all achieved not by all Americans, as one nation, indivisible … but by CONSERVATIVES. Do you really expect anyone reading this arrogant, posturing, deluded shit to accept it?
Then the obligatory insults – after all, any good Conservative worthy of his stripes must emulate his gods – Rush Limbaugh, Ann Coulter and the rest of the pantheon of charlatans whose stock and trade consists of insults, half-truths and lies. So, in Limbaugh-like style you contend that I must live a life of anger and delusion in some demented world; and assert (by implication) that, as a Liberal (and candy-ass, to boot), I don't love this country, my family, or my child the way YOU do. And you question whether I'm capable of original thought.
Oh, I'm so hurt. Here's an original thought or two for you: I don't give a shit what you think, or what you do. I manage my own 7-figure portfolio. In the past dozen years or so, my net worth has grown almost exponentially because, since the time of the Amiable Dunce (i.e., Ronald Reagan), I've made the correct assumptions on the troubled and agonizing path that our Nation would take: (1) we'd be too freakin' stupid – and our politicians too corrupted by Big Oil – to do anything sensible about energy – therefore, load up on oil and natural gas stocks. (2) Reaganomics and foolhardy wars would result in budget deficits beyond the wildest dreams of most – therefore, be sure to hold a good number of gold/precious metals stocks. (3) As a further counter-balance to the eroding dollar, overweight overseas – especially our next-door and energy-rich neighbor, Canada. I've navigated my way through the dot-com collapse and the near-Depression engineered by that monumental failure, George W. Bush, and emerged stronger financially than ever because I've understood the fundamental trend of wealth, as accelerated by Conservative political power, and the necessity of aligning one's investment portfolio accordingly.
Finally, the threats and ominous warnings. If you should fail to take over the White House next November, “ … then we conservatives will do what we have to.” Whatever the f-ck that means. And in some final Armageddon you dredge from your Atlas-Shrugged dreamworld, you warn that, “In the end you may win, but to claim that ultimate victory you're going to have to kill me, first.” I wouldn't bother – shoot yourself; don't ask me to lend a hand. After all, you're a Conservative – let's see that vaunted self-reliance as your final act.
Reaganhood: take from the poor; give to the rich.
Harry,
By far the biggest problem with the US economy is confidence, or shall I say “lack their of.” And we all know who's responsible for that, yea, your buddy Obama. It's really as simple as that. Business people are looking at the calendar and counting the days. Hopefully by this time next year the Tea Party will have a solid conservative candidate emerging and registering above Obama in the polls. Should that happen only then will we begin to see some confidence return. If the opposite happens and Obama is reelected then the country as we know it is gone for the rest of our lives and probably our children''s lifetimes as well. Obama must be stopped!
Oh my.. And you don't possibly feel that GWB and anything to do with this lack of 'so called' confidence? I'm agnostic with regards to politics but Obama is not the the only culprit here. The tea party has some very good points but I'd guess if one of their candidates won we would simply go back to bush era politics where deficits grow exponentially (as with Obama) and useless wars continue. We need some complete honesty here with regards to the state of the USA.
Guest………you say…..”bush era politics where deficits grow exponentially”……..I say, prove it.
When Bush took office, the national debt was $5.73 trillion. When he left, it was $10.7 trillion.
How much you wanna bet “Pahowley” and “RonaldReagan” are the same person? Same nonsensensical, simplistic approaches (“all we have to do is get government and those darn regulations out of the way” … or words to that effect, and “the biggest problem with the US economy is [lack of] confidence”); same lock-step adherence to Republican talking points; same slavish worshipping at the altar of Ronald Reagan.
The purpose of the Republican Party is to maintain and enhance the wealth of those who already have it. All else – the divisive social issues; the character attacks, false charges and lies hurled at Presidents (Obama, Clinton) and Presidential candidates (Kerry), and any other public figure in their way; the adoration of the modern-day Father Caughlin (Rush Limbaugh); the racism covert and overt … all serve the purpose of manipulating what is left of a struggling middle class to serve the ends of a miniscule number of super-wealthy. All is aided and abetted by a media that is corporate-owned and no longer delivers the news, and a Supreme Court whose majority determinations are totally predictable by anticipating what serves best the Conservative cause.
The Republican Party and the Conservative movement have no solutions. Nothing to address the millions of jobs shipped overseas while corporate earnings grow apace; nothing about monstrous military spending and global enterprises that we can no longer afford; nothing about a slavish and destructive addiction to petroleum that has prevailed for decades. Only “get that dern gov'ment out of the way” and “be happy – that'll create jobs!”
“Today just 400 Americans have more wealth than half of all Americans combined.
“Let me say that again. 400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer 'bailout' of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can’t bring yourself to call that a financial coup d’état, then you are simply not being honest about what you know in your heart to be true.” {Michael Moore}
Reaganhood: take from the poor; give to the rich.