Economics

Banking group warns there’s too much ‘easy money’ in global economy

"An influential group of leading world banks warned Thursday that central banks are pumping out too much easy money and markets risk becoming dangerously addicted to ultra-low interest rates. The Institute of International Finance, which groups 450 banks, said if central banks continue to flood money into the global economy then any future bid to get it under control could itself destabilize the financial system. 'These conditions — quantitative easing, very low interest rates — cannot last forever, but the risk is that financial markets have become addicted to them,' it warned." Continue reading →

Continue ReadingBanking group warns there’s too much ‘easy money’ in global economy

What Could Go Wrong with the Housing Recovery in 2013? Plenty.

"Given the preponderance of housing in bank assets, household wealth, and the perception of wealth, the key policies of Central Planning largely revolve around housing: keeping interest rates (and thus mortgage rates) low, flooding the banking sector with liquidity to ease lending, guaranteeing low-down-payment mortgages via FHA, and numerous other subsidies of homeownership. At least three aspects of this broad-based support are historically unprecedented." Continue reading →

Continue ReadingWhat Could Go Wrong with the Housing Recovery in 2013? Plenty.

What Could Go Wrong with the Housing Recovery in 2013? Plenty.

"Given the preponderance of housing in bank assets, household wealth, and the perception of wealth, the key policies of Central Planning largely revolve around housing: keeping interest rates (and thus mortgage rates) low, flooding the banking sector with liquidity to ease lending, guaranteeing low-down-payment mortgages via FHA, and numerous other subsidies of homeownership. At least three aspects of this broad-based support are historically unprecedented." Continue reading →

Continue ReadingWhat Could Go Wrong with the Housing Recovery in 2013? Plenty.

Former Fed Banker: Debunking the Myths About Central Banks

"Pursuit of price stability is the one goal that nearly everyone agrees is a central bank responsibility. Yet it is the one on which the Fed and other central banks have failed miserably. Since the Fed's founding in 1913, consumer prices have increased by a factor of 23 times. If the U.S. can extricate itself from fiscal deficits, price stability would be an attainable goal for central banks. Otherwise, central banking is nothing but mythology." Continue reading →

Continue ReadingFormer Fed Banker: Debunking the Myths About Central Banks

Larger Spending Cuts Would Help the Economy

"The $825 billion stimulus program cost hundreds of thousands of dollars per job, even based on the administration's own inflated job estimates. Cash for Clunkers cost $3 billion merely to shift car sales forward a few months. The PPIP to buy toxic assets from the banks to speed lending generated just 3% of the $1 trillion that the program planners anticipated. And now? Mr. Obama proposes universal preschool ($25 billion per year), 'Fix it First' repairs to roads and bridges, plus an infrastructure bank ($50 billion), 'Project Rebuild,' refurbishing private properties in cities ($15 billion), endless green-energy subsidies, and a big hike in the minimum wage." Continue reading →

Continue ReadingLarger Spending Cuts Would Help the Economy

America’s Great Depression Quote of the Week: A Visit with ‘Dr. Hoover’

"The recovery in the early 1920s is an example of an economy rapidly recovering as government spending and taxes were cut. Another example is 'The Austerity of 1946', which despite Keynesian economists’ predictions of doom and gloom, was in fact was a period of rapid return to relative prosperity following the massive reduction in government spending which followed the end WW II. Given how poorly the economy has fared following the ‘treatment’ proscribed by Dr. Bernanke and Dr. Obama isn’t it time to try a Dr. Rothbard’s natural cure?" Continue reading →

Continue ReadingAmerica’s Great Depression Quote of the Week: A Visit with ‘Dr. Hoover’

Italian newcomer Grillo predicts collapse in six months

"Italy's comedian turned protest politician, Beppe Grillo, has told German news magazine 'Focus' that he believes the country's political system could crumble within the year. 'I'd give the old parties another six months - then it will be all over here,' Grillo said in excerpts of the interview released on Saturday ahead of Focus' publication. 'Then they won't be able to cover pension payments or public sector salaries anymore.' Grillo, a populist who pledged a referendum on Italy withdrawing from the euro during the country's recent election campaign, said that Italy's national debt was becoming unsustainable and that its terms had to be renegotiated." Continue reading →

Continue ReadingItalian newcomer Grillo predicts collapse in six months

Paul Craig Roberts: The Missing Recovery

"The recovery exists only in the official measure of real GDP, which is deflated by an understated measure of inflation, and in the U.3 measure of the unemployment rate, which is declining because it does not count discouraged job seekers who have given up looking for a job. No other data series indicates an economic recovery. Neither real retail sales nor housing starts, consumer confidence, payroll employment, or average weekly earnings indicate economic recovery. Neither does the Federal Reserve’s monetary policy. The Fed’s expansive monetary policy of bond purchases to maintain negative real interest rates continues 3.5 years into the recovery." Continue reading →

Continue ReadingPaul Craig Roberts: The Missing Recovery

Peter Schiff: The Fed’s Tightening Pipe Dream

"The Fed Chairman has been talking about tightening for some time. In 2010, he said, 'As the expansion matures, the Federal Reserve will need to begin to tighten monetary conditions to prevent the development of inflationary pressures.' Back then, the same mainstream analysts were predicting recovery and a reversal of quantitative easing (QE). Instead, we have subsequently seen QE2, Operation Twist, and now QE3 to eternity. While these mainstream commentators are at best guessing as to why or when the Fed might reverse course, I understand that it is extremely unlikely to do so for the foreseeable future. In fact, I've bet my net worth on it." Continue reading →

Continue ReadingPeter Schiff: The Fed’s Tightening Pipe Dream