Fed Chairman Says American Economy Is Poised to Grow

[mawilson 2,133]

I'd say you need a new pair of glasses there, Bill. The stimulus is working. As painful of a reality that is for Right Wingers, that's the fact jack. Take a look at France and Germany. The Left was correct on this one.

Well, if you mean the stimulus is working to drive us further and further towards bankruptcy, sure, you are right.

In reality, the stimulus is complete economic shortsightedness. This country needs cruel and hard economic correction, not some dumb Band-Aid to try and keep the greatest Ponzi scheme ever created on life support. The old system was broken and diseased and some people just don't want to let it die.

Despite the stimulus, we are still sinking deeper and deeper into Great Depression II. I've really seen zero evidence the contrary.

[Heracles 417]

Economists like Peter Schiff were laughed at by the mainstream economists when they predicted this crisis back in 2006--And instead of the dime-a-dozen economists' reputations being shattered, they remain economic policymakers. Go figure.

This is truly scary - it's like this guy had a crystal ball!

The other guys looks like a fool now.

[Heracles 417]

I'd say you need a new pair of glasses there, Bill. The stimulus is working. As painful of a reality that is for Right Wingers, that's the fact jack. Take a look at France and Germany. The Left was correct on this one.

Well, if you mean the stimulus is working to drive us further and further towards bankruptcy, sure, you are right.

In reality, the stimulus is complete economic shortsightedness. This country needs cruel and hard economic correction, not some dumb Band-Aid to try and keep the greatest Ponzi scheme ever created on life support. The old system was broken and diseased and some people just don't want to let it die.

Despite the stimulus, we are still sinking deeper and deeper into Great Depression II. I've really seen zero evidence the contrary.

Who is going to do the correcting though? Wall street will not as they benefit from the booms and busts. They benefit from easy credit. They promote and endorse risk. Nearly every major recession in America and around the world is directly linked to Wall Street. So I don't buy that the government is to blame while recession after recession, wall street is the innocent one. Lets not forget the depression of course. You want to fix up America, get rid of wall street and redistribute the financial power around the country. Like anything, one single yet critical point of failure should never be allowed to bring down the system. In the United States case, that is wall street. Where one city gets to call the financial shots for the entire country. This is where the country needs an Andrew Jackson as president again, to set it straight.

We barely manufacture anything here anymore. Why? because someone has figured out rather than making 20 cents per dollar, they can earn 70 cents by moving it to China. Once again something wall street endorses. They're all about profit and don't give a ####### about selling out America's future; let alone America's astronomical trade deficit. Wall street is the epitome of what about me. If someone can walk away with a billion at the expense of a nation, he's a champ there. This hide under free-market yet scam attitude has lead to poverty for the majority and also resulted in half the world chanting death to America because of it.

Edited August 30, 2009 by haza

[mRx 16]

I'd say you need a new pair of glasses there, Bill. The stimulus is working. As painful of a reality that is for Right Wingers, that's the fact jack. Take a look at France and Germany. The Left was correct on this one.

Well, if you mean the stimulus is working to drive us further and further towards bankruptcy, sure, you are right.

In reality, the stimulus is complete economic shortsightedness. This country needs cruel and hard economic correction, not some dumb Band-Aid to try and keep the greatest Ponzi scheme ever created on life support. The old system was broken and diseased and some people just don't want to let it die.

Despite the stimulus, we are still sinking deeper and deeper into Great Depression II. I've really seen zero evidence the contrary.

Who is going to do the correcting though? Wall street will not as they benefit from the booms and busts. They benefit from easy credit. They promote and endorse risk. Nearly every major recession in America and around the world is directly linked to Wall Street. So I don't buy that the government is to blame while recession after recession, wall street is the innocent one. Lets not forget the depression of course. You want to fix up America, get rid of wall street and redistribute the financial power around the country. Like anything, one single yet critical point of failure should never be allowed to bring down the system. In the United States case, that is wall street. Where one city gets to call the financial shots for the entire country. This is where the country needs an Andrew Jackson as president again, to set it straight.

We barely manufacture anything here anymore. Why? because someone has figured out rather than making 20 cents per dollar, they can earn 70 cents by moving it to China. Once again something wall street endorses. They're all about profit and don't give a ####### about selling out America's future; let alone America's astronomical trade deficit. Wall street is the epitome of what about me. If someone can walk away with a billion at the expense of a nation, he's a champ there. This hide under free-market yet scam attitude has lead to poverty for the majority and also resulted in half the world chanting death to America because of it.

Starting from the beginning...

A loan is merely an exchange of saved funds for an agreement that the saved funds will be repaid plus interest. Money, like any commodity, follows the same law of supply and demand, which tells us that an increase in supply will lead to a lowering of price. The interest rate in a country, therefore is a signal to business: the lower the interest rate, the more consumers have cut back consumption, and increased savings. The higher the interest rate, the less consumers are saving. But, when the Federal Reserve creates money out of thin air, it is unrepresentative of actual saved wealth, and this creates false signals.

Consider the following analogy (originated by Ludwig von Mises): You are about to build a brick house. You draw up your architectural plans based on how many bricks you have as resources. If you find that you made an error, and have fewer bricks than originally thought, you will need to restructure your brick house, because it's apparent that you cannot complete it with your current resource supply. Whether you restructure your brick home so it reflects your current resources, or abandon the project completely is immaterial; either way, you will not be able to complete the house with your current resources. It should be apparent that the further you're along in your brick home production, the more resources will have been squandered and the more losses you'll incur.

This analogy perfectly captures the essence of a bust. Investment in production was based on an artificial credit supply that didn't represent real savings. When the errors are revealed, businesses must restructure.

Historically, every recession and depression can be traced to credit expansion. Whether it be Kings diluting gold with base metals, the Greenbacks, Confederate bills, fractional reserve banking, or the current FOMC.

Wall Street represents the investing hub of America. They cannot create business cycles. Booms and busts originate from one reason, and one reason only: artificial credit creation.

For a more scientific and intelligent explanation of business cycles, see here.

Before you cast this aside as an unfounded theory, note that F.A. Hayek won a Nobel in the 70's for his work on business cycle phenomena.

[Heracles 417]

You have an uncanny talent of bringing up theory from many decades ago and trying to use it to explain 2009. Totally different generation, mentality, circumstances, global environment, and market back them. Simply quoting the past would result in a fail if I submitted it as a lecture. Scholarly reviewed Academic journals and research is a must in any decent college.I don't discredit what you are saying I just disagree with the cause. In your mind the free market should be allowed to hand out and self-police the capital. it's their capital after all; wrong, it's the shareholders. Yet when the free market fails because of this, you pick something the government has done and claim that this action is to blame.

The private sector overextended credit and now this house of cards has come crashing down. Nothing else to it. Then you have a range of other private sectors that artificially propped up the prices, such as realtors and property flippers; yes this was a recipe for disaster. Even in Australia where the property market is still in demand, due to a shortage of houses, no one could simply buy a house for $100K renovate it (flip it) and then sell it for $350K. From the seller to the wall street broker, everyone in the private sector encouraged this sort of risky behavior.

As much as I read your posts and always consider your point of view, you have to realize that like many, you do pick and choose facts or articles that support your opinion. Whereas, I try to look at everything objectively. Sometimes I may read something and end up proving myself wrong.

The following article illustrates the logic process and applies to the health care issue.

http://news.yahoo.com/s/livescience/200908...otallackoflogic

The problem: People on both sides of the political aisle often work backward from a firm conclusion to find supporting facts, rather than letting evidence inform their views.

Edited August 30, 2009 by haza

[mRx 16]

You have an uncanny talent of bringing up theory from many decades ago and trying to use it to explain 2009. Totally different generation, mentality, circumstances, global environment, and market back them. Simply quoting the past would result in a fail if I submitted it as a lecture. Scholarly reviewed Academic journals and research is a must in any decent college.I don't discredit what you are saying I just disagree with the cause. In your mind the free market should be allowed to hand out and self-police the capital. it's their capital after all; wrong, it's the shareholders. Yet when the free market fails because of this, you pick something the government has done and claim that this action is to blame.

The private sector overextended credit and now this house of cards has come crashing down. Nothing else to it. Then you have a range of other private sectors that artificially propped up the prices, such as realtors and property flippers; yes this was a recipe for disaster. Even in Australia where the property market is still in demand, due to a shortage of houses, no one could simply buy a house for $100K renovate it (flip it) and then sell it for $350K. From the seller to the wall street broker, everyone in the private sector encouraged this sort of risky behavior.

As much as I read your posts and always consider your point of view, you have to realize that like many, you do pick and choose facts or articles that support your opinion. Whereas, I try to look at everything objectively. Sometimes I may read something and end up proving myself wrong.

The following article illustrates the logic process and applies to the health care issue.

http://news.yahoo.com/s/livescience/200908...otallackoflogic

The problem: People on both sides of the political aisle often work backward from a firm conclusion to find supporting facts, rather than letting evidence inform their views.

I too, look at all perspectives. The Austrian Business Cycle Theory (ATBC), correctly accounts for the current (soon-to-be) Depression, as well as all those preceding. Peter Schiff (the guy in the youtube video I posted) is an adherent of ATBC, who was laughed at by Art Laffer, Ben Stein, and many other respected financial moguls. Schiff was the lone dissenter, and he was dead on! ATBC is having it's due resurgence in the modern economy. It was never outdated, or outmodeled.

There is no "picking and choosing" facts going on here. You mentioned private sector credit overextension, but where your story draws blank, is where that credit originated--Right at the steps of the Federal Reserve. These banks were making loans and they were being packaged, bought, and secured by a government agency. Can you see the moral hazard this creates? Banks have absolutely no means to create credit without first being lent credit by the Federal Reserve (this is how fractional reserve credit multiplying works). Credit institutions are not without blame however, and their errors were punished by looming bankruptcies. But of course, they were bailed out, which set precedent for yet another nice blanket of moral hazard.

Recall, in 2006-2007, the revered financial businessmen saw real estate as a permanent boom and house-flipping as a great career, where Peter Schiff saw it as the artificial facade that it truly was. Yet today, our policymakers are still taking the advice of those who were so dearly wrong the first time...

[Heracles 417]

I don't believe the large banks should have been bailed out, at all. I do agree that in the long term this band-aid has done little to fix America's underlying problem, that is, easy and irresponsible credit policies. The US is probably the only country I have ever heard of where you were able to guess your salary and acquire a mortgage. I couldn't even get a credit card in AUS without providing a month’s worth of payslips and listing all of my assets vs debts.

I've worked in two countries now and I will say you this, I was never as pressed to deliver money as I am here. It's all about the green here and people are encouraged to focus on it; regardless of the consequences. Responsibility to community and the country does not mean much to our executives. Whereas, directors and executives can and will go to prison for pushing unethical behavior over there. Furthermore, if a company goes under due to misconduct, they are personally and directly liable. In essence, they're not telling companies or lenders what to do. However, what they are telling them is that if we find out you played dirty, you will pay for it and go to jail for it. The purpose of that is to set the rules of the game.

This is not a case of big government or any other anti-regulation rhetoric; it’s to ensure that while organizations are encouraged to make a profit and be successful, they understand that an organisation has no voting rights and the community has expectations of them. It actually endorses the free market for all stakeholders, rather than the status quo here were executives, shareholders, and special interests groups get to call the shots.

I remember listening to Peter Schiff. From the get go of moving here I realized that the property boom was not related to (propelled by) natural growth but artificial growth. It is the reason I trusted my gut and did not buy any property here.

Edited August 31, 2009 by haza