Stocks rose Wednesday following the Federal Reserve’s announcement of the first interest rate increase since 2006. However, stocks fell just two days later. One reason the positive reaction to the Fed’s announcement did not last long is that the Fed seems to lack confidence in the economy and is unsure what policies it should adopt in the future.
At her Wednesday press conference, Federal Reserve Chair Janet Yellen acknowledged continuing “cyclical weakness” in the job market. She also suggested that future rate increases are likely to be as small, or even smaller, then Wednesday’s. However, she also expressed concerns over increasing inflation, which suggests the Fed may be open to bigger rate increases.
Many investors and those who rely on interest from savings for a substantial part of their income cheered the increase. However, others expressed concern that even this small rate increase will weaken the already fragile job market.
These critics echo the claims of many economists and economic historians who blame past economic crises, including the Great Depression, on ill-timed money tightening by the Fed. While the Federal Reserve is responsible for our boom-bust economy, recessions and depressions are not caused by tight monetary policy. Instead, the real cause of economic crisis is the loose money policies that precede the Fed’s tightening.
Some economists and policy makers claim that the way to stop the Federal Reserve from causing economic chaos is not to end the Fed but to force the Fed to adopt a “rules-based” monetary policy. Adopting rules-based monetary policy may seem like an improvement, but, because it still allows a secretive central bank to manipulate the money supply, it will still result in Fed-created booms and busts.
The only way to restore economic stability and avoid a major economic crisis is to end the Fed, or at least allow Americans to use alternative currencies. Fortunately, more Americans than ever are studying Austrian economics and working to change our monetary system.
When the Fed floods the market with artificially created money, it lowers the interest rates, which are the price of money. As the price of money, interest rates send signals to businesses and investors regarding the wisdom of making certain types of investments. When the rates are artificially lowered by the Fed instead of naturally lowered by the market, businesses and investors receive distorted signals. The result is over-investment in certain sectors of the economy, such as housing.
This creates the temporary illusion of prosperity. However, since the boom is rooted in the Fed’s manipulation of the interest rates, eventually the bubble will burst and the economy will slide into recession. While the Federal Reserve may tighten the money supply before an economic downturn, the tightening is simply a futile attempt to control the inflation resulting from the Fed’s earlier increases in the money supply.
After the bubble inevitably bursts, the Federal Reserve will inevitability try to revive the economy via new money creation, which starts the whole boom-bust cycle all over again. The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.
At her Wednesday press conference, Federal Reserve Chair Janet Yellen acknowledged continuing “cyclical weakness” in the job market. She also suggested that future rate increases are likely to be as small, or even smaller, then Wednesday’s. However, she also expressed concerns over increasing inflation, which suggests the Fed may be open to bigger rate increases.
Many investors and those who rely on interest from savings for a substantial part of their income cheered the increase. However, others expressed concern that even this small rate increase will weaken the already fragile job market.
These critics echo the claims of many economists and economic historians who blame past economic crises, including the Great Depression, on ill-timed money tightening by the Fed. While the Federal Reserve is responsible for our boom-bust economy, recessions and depressions are not caused by tight monetary policy. Instead, the real cause of economic crisis is the loose money policies that precede the Fed’s tightening.
Some economists and policy makers claim that the way to stop the Federal Reserve from causing economic chaos is not to end the Fed but to force the Fed to adopt a “rules-based” monetary policy. Adopting rules-based monetary policy may seem like an improvement, but, because it still allows a secretive central bank to manipulate the money supply, it will still result in Fed-created booms and busts.
The only way to restore economic stability and avoid a major economic crisis is to end the Fed, or at least allow Americans to use alternative currencies. Fortunately, more Americans than ever are studying Austrian economics and working to change our monetary system.
When the Fed floods the market with artificially created money, it lowers the interest rates, which are the price of money. As the price of money, interest rates send signals to businesses and investors regarding the wisdom of making certain types of investments. When the rates are artificially lowered by the Fed instead of naturally lowered by the market, businesses and investors receive distorted signals. The result is over-investment in certain sectors of the economy, such as housing.
This creates the temporary illusion of prosperity. However, since the boom is rooted in the Fed’s manipulation of the interest rates, eventually the bubble will burst and the economy will slide into recession. While the Federal Reserve may tighten the money supply before an economic downturn, the tightening is simply a futile attempt to control the inflation resulting from the Fed’s earlier increases in the money supply.
After the bubble inevitably bursts, the Federal Reserve will inevitability try to revive the economy via new money creation, which starts the whole boom-bust cycle all over again. The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.
According to Ron Paul in his video released in 2010 Bernie Sanders, “Switched it. He watered it down, and really, it adds nothing. It’s a possibility that it even makes the current conditions worse.” Paul explains, “The is essentially the bill plus more of the bill we beat in the House financial committee, the Mel Watt’s bill”. I have tried digging up the Mel Watt bill he is talking about, but have not had any luck on finding the exact bill. It is after all 4 years old and never got much publicity at the time. What I am able to find is that it seems to be an amendment to Ron Paul’s bill which would essentially take all the teeth out of it.
Mel Watt had been in Congress nearly as long as Ron Paul, and was a member of the Financial Services Committee. We can learn a bit about his motivations to stop the audit bill from Robert Wenzel at EconomicPolicyJournal.com. Most of the top industries donating to Watt are major beneficiaries of Fed money printing. His top industry donors are at #1 the commercial bankers industry, at #3 the building trade unions (All that Fed money printing benefited the building trade unions probably more so than anyone else), and at #5 the securities and investment industry. The current #1 corporate donor to Watt is Citigroup Inc. Some other highlights are as follows:
During 2007-08 his top contributors were:
#1 Bank of America
#2 Wachovia Corp
#3 American Express
#4 American Bankers Assn
A key gripe in Ron Paul’s original bill was:
More importantly, the Fed's funding facilities and its agreements with the Treasury should be reviewed. The Treasury's supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.This hardy pleases Mel Watt’s donors, or apparently Bernie Sanders’ as well. One of the provisions removed by Bernie Sanders was the provision to disclose arrangements made between the Federal Reserve, and other foreign central banks. As Ron Paul states near the end of the video, this is an issue that most all of us can agree on. Whether we be libertarian, conservatives, liberals, or whatever other political affiliation, we all want to know what they are doing with, and to, our money.
In March of 2009 The Federal Reserve Transparency Act of 2009 (H.R. 1207), introduced (at the time) by 9 term Texas Congressman and two time Presidential Candidate Ron Paul went to the Senate. Paul had been working closely with Bernie Sanders, who was just finishing up his first term in the Senate, and likely wanted to make a name for himself quickly. Sponsored by Benrnie Sanders, the bill was introduced to the Senate under the title of The Federal Reserve Sunshine Act of 2009 (S. 604).
Thanks to the efforts of this growing anti-Fed movement, Audit the Fed had twice passed the House of Representatives, and the Senate is scheduled to vote on it on January 12. Auditing the Fed, so the American people can finally learn the full truth about the Fed’s operations, is an important first step in restoring a sound monetary policy. Hopefully, the Senate will take that step and pass Audit the Fed in January.
Mel Watt had been in Congress nearly as long as Ron Paul, and was a member of the Financial Services Committee. We can learn a bit about his motivations to stop the audit bill from Robert Wenzel at EconomicPolicyJournal.com. Most of the top industries donating to Watt are major beneficiaries of Fed money printing. His top industry donors are at #1 the commercial bankers industry, at #3 the building trade unions (All that Fed money printing benefited the building trade unions probably more so than anyone else), and at #5 the securities and investment industry. The current #1 corporate donor to Watt is Citigroup Inc. Some other highlights are as follows:
During 2007-08 his top contributors were:
#1 Bank of America
#2 Wachovia Corp
#3 American Express
#4 American Bankers Assn
A key gripe in Ron Paul’s original bill was:
More importantly, the Fed's funding facilities and its agreements with the Treasury should be reviewed. The Treasury's supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.This hardy pleases Mel Watt’s donors, or apparently Bernie Sanders’ as well. One of the provisions removed by Bernie Sanders was the provision to disclose arrangements made between the Federal Reserve, and other foreign central banks. As Ron Paul states near the end of the video, this is an issue that most all of us can agree on. Whether we be libertarian, conservatives, liberals, or whatever other political affiliation, we all want to know what they are doing with, and to, our money.
In March of 2009 The Federal Reserve Transparency Act of 2009 (H.R. 1207), introduced (at the time) by 9 term Texas Congressman and two time Presidential Candidate Ron Paul went to the Senate. Paul had been working closely with Bernie Sanders, who was just finishing up his first term in the Senate, and likely wanted to make a name for himself quickly. Sponsored by Benrnie Sanders, the bill was introduced to the Senate under the title of The Federal Reserve Sunshine Act of 2009 (S. 604).
Thanks to the efforts of this growing anti-Fed movement, Audit the Fed had twice passed the House of Representatives, and the Senate is scheduled to vote on it on January 12. Auditing the Fed, so the American people can finally learn the full truth about the Fed’s operations, is an important first step in restoring a sound monetary policy. Hopefully, the Senate will take that step and pass Audit the Fed in January.
With ever person on the planet in debt it will be easy now for the banksters to enslave humanity, the looming global economic collapse will systematically create fear and trauma which our modern society has not yet experienced!
We the people, in our hypnotized comatose state, are given our surrendering our Free Will and consenting to destruction of our world. Humanity, though (possibly) utterly unconscious of the fact, is playing a significant part in the destruction of life! Do not play the blame game by complicity enabling beans and governments. Look at your life and What your doing, How are you complicit in the system?
It is imperative to get off your knees today and make a stand against the fractional banking cabal, for it is far better to stand a sovereign being than to live on your knees and continue to complicity participate in the commission of this crime to enslave humanity!!!
If YOU are Not doing what Libertarians, Voluntarist & Anarchist are doing and your still participating in the System - then you may be part of the problem! You may be seen as an accomplice in years to come by those who will service the debt - including Your Children!!!
We the people, in our hypnotized comatose state, are given our surrendering our Free Will and consenting to destruction of our world. Humanity, though (possibly) utterly unconscious of the fact, is playing a significant part in the destruction of life! Do not play the blame game by complicity enabling beans and governments. Look at your life and What your doing, How are you complicit in the system?
It is imperative to get off your knees today and make a stand against the fractional banking cabal, for it is far better to stand a sovereign being than to live on your knees and continue to complicity participate in the commission of this crime to enslave humanity!!!
If YOU are Not doing what Libertarians, Voluntarist & Anarchist are doing and your still participating in the System - then you may be part of the problem! You may be seen as an accomplice in years to come by those who will service the debt - including Your Children!!!
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