China may be facing a looming Inflation problem

Twenty years ago, China’s leaders decided to ditch the disaster of economic communism in favor of privatized, export-focused, industry. The plan largely worked. Over that time, China has arguably moved more people out of poverty in the shortest amount of time in the history of the planet. But somewhere along the way, China’s leaders became addicted to a game plan that......


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China's Inflation Problem

-Peter Schiff, Economist and Financial Advisor

New Bill to Propose major tax changes to help the Economy?

Stimulus to help from entering a depression, bail outs to help from entering a depression, QE1 and QE2 to help us out of the recession, Possible QE3 to help unemployment in the future, And now Newly proposed major tax cuts and extensions to help our weak and fragile economy recover. Sure hope the Government knows what its doing. But if I had to guess Keynesian Economics of spending our way out of this mess might not be working as many had hoped for.


Link to CnnMoney New Tax Bill Stimulus

Spending Someone else's Money on Someone Else...

Although I do not agree with every theory of Milton Friedman's I do think his explanation on how inefficient Government Spending can be is very true.

The 4 ways to spend money

Congress has a deadline to extend the deficit

Congress must come to an agreement before saturday to extend funding to the already overwhelming government deficit.  Many fear that without the extension that more government employees could lose their jobs and more government programs could get cut.  However congress has been in this predicament many times in the past and has always favored an extension but i shouldn't have to point that out the deficit is almost at 14 trillion.  So who cares right we will deal with our debt issues when the time comes?


Today's economic problems are not about what we are doing now.  They are about what we have already done for past few decades. The mistakes we have made were the ideas to inflate credit to excessive levels in the hope of creating Wealth. We continue to bail out the top 3% of the rich and create programs to help the poor.  We watch as the middle class continues to disappear. The FED makes credit easy, and America borrows.  This borrowing inflates the money supply, which later inflates the prices and salaries.  To combat inflated prices we passed laws for minimum wages.  To combat rising costs we create more government programs to help those in need.  With government programs we fix prices so they never decrease.  We continue to repeat this over and over again; tax increases and decreases give illusions of reasonable income so government can continue to borrow and waste money.  We have destroyed the flexibility of free markets and continue to do so when it tries to tell us otherwise. 


We've borrowed from the future always expecting to figure the “big problems” out later. The future is here the future is today!  Its always been said that we were leaving debt for our kids and grandkids to figure out but its become more of a reality that we have created debt for ourselves to figure out. The value of money continues to lose its wealth overtime a hidden tax that no one takes into account.  We are merely borrowing and spending to sustain our unsustainable life styles. This is like trying to pay your credit bills with more borrowed money. Consumer economy is a myth. When the multinational corporations are done robbing America, they will simply move out to suck the blood of other growing nations. They are working hard to create consumer culture elsewhere around the globe, and they want to take as much as they can and pay as little as possible. In America consumers consume, go into debt and become poorer.  Someday if we don’t realize how to correct our bad habits the Governments Free Lunch of a free nation will be over. 

Economic thoughts and Opinions

I feel that recently with all the talk on fed that it is surprising to hear that some economist believe the Fed is not pumping enough money into the system to help a recovery.  How is creating trillions of new dollars out of thin air going to help our country in the long haul? How does increases on taxes for job creators encourage job growth? How many times for how long should unemployment be extended?  If creating more Demand really helps a recovery then why don't we just have the Government give EVERYONE some money so it can create new WEALTH and the economy can flourish.

 "14 trillion dollar deficit but who cares lets give puppies to everyone so they can be happy." -Hugh Jidette

What we should do is create Supply and in order to that we need to encourage Savings and creating jobs through sound investment.  We should cut down on the Government Spending, encourage job creators to stay in the U.S. so they can make profits and keep most of them.  Lets stop assuming that we can stabilize economy with Government spending and that peoples choices can be predicted nothing is perfect but nothing also works better than the free market system.  Let things run there course we continue to try to fix our economic problems and artificially keep prices from falling but this never works and makes things worse.  Our government has a spending problem! i said it they have a spending problem.  How much money are we going to charge on the China Visa Card, Japanese Master Card, Brazil Discovery Card and American Express Cards we have??  Eventually were only going to be able to pay off the interest on this debt each year at the rate of current Government spending.  And at the rate of the FEDERAL RESERVE the dollar is  gonna be able to buy a down-payment on a candy bar ten years from now.  Maybe the Government should seek one of those debt help hotlines and only be given a Paypal card so we can only spend what we take in.

Deficit Reduction/Debt Celling-Ron Paul

Unemployment Rate at 9.8%

The Federal Reserve's dual mandate has not created more jobs for the U.S. and policy makers are not helping the cause.  Its my personal opinion that congress is wrong to want to tax higher rates to those who make more money especially in this fragile economy.  In doing this we are sending a message that we the Government punish job creators and those willing to take large risks to create businesses.  You can argue that those who make over 250,000 may be better off than those who make less but in the long run is 250,000 dollars a year going to have the same purchasing power ten years from now?  Soon at this current rate 250,000 will someday be around the middle class average income, assuming we have a middle class in the future.

Here is interesting article by Peter Schiff economist and CEO of Euro Pacific Capital

Fewer Jobs and More Stimulus

Emergency Overnight Loans made by the Federal Reserve after 2008

Just how bad were some of the Financial Institutions suffering during 2008 to 2009.  Well after the 600 billion dollar bailout the Fed also announced that it had made a special loan program available from 2008 to 2009 in hopes of preventing another financial collapse from any investment bank during that time. This special overnight loan program allowed banks to receive large and I mean large amounts of emergency loans from the Federal Reserve.  Of course the banks would take the loans with the notion they would pay back the Fed plus a minuscule amount of added interest.  It turns out that with this loan program the Fed made over 9 trillion dollars in overnight loans and that is just scary number and truly shows how fragile are banking system got in 2008.

Here is the article from CNN Money describing who received what amount of loan and how many loans were processed. 

CNN Money Reports Fed Overnight Loans Program

Government Plans to Cut back on More Government Jobs Where does Unemployment Stand

Click the link BloomBerg News to read more.

BloomBerg Article on Government Job Cuts

Don't Raise the Debt Ceiling! by Ron Paul

As of November 7th, the total U.S. public debt outstanding reached an astonishing $13.7 trillion. This means that although Congress just raised the debt ceiling to $14.3 trillion back in February, the new Congress will face another debt ceiling vote almost immediately next year. Otherwise, the Treasury will not be able to continue issuing debt to fund government operations.

The upcoming vote will provide an interesting litmus test for the new Republican congressional majority, especially those new members closely identified with Tea Party voters. The debt ceiling law, passed in 1917, enables Congress to place a statutory cap on the total amount of government debt rather than having to approve each individual Treasury bond offering. It also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing.

If the new Congress gives in to establishment pressure and media alarmism about “shutting down the government” by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that Congress, despite the rhetoric of the midterm elections, is doing business as usual. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude.  -For more of the article click on the link below...

November 30, 2010

Dr. Ron Paul is a Republican member of Congress from Texas.

Don't Raise the Debt Ceiling! by Ron Paul

Who likes to Take Your Money?!

Why does American Media Measure Economic Growth with Shopping for the Holidays

Once again the American Media such as NBC and MSNBC are showing "economic growth" in numerous videos of Black Friday shoppers and eager spenders this weekend.  Unfortunately to often is the idea that the economy is coming around being reflected as a result of gift shopping and endless buying.  But this is not economic growth and wealth is not being created.  The American people are simply buying items that are not manufactured or made in the U.S.  

Countries like China are happy to continue making products for us to buy but jobs are not being created for Americans in this process.  This definitely doesn’t encourage savings either and many Americans have very little to spend to begin with.  Most buyers are using credit cards and simply buying things they don’t need.  And those who are using real money may only have it because they are no longer paying a house mortgage because we know the financials have not recovered or simply relying on unemployment subsidies to fund useless purchases. Not to mention many Black Friday shoppers are not buying gifts for others but simply for themselves hoping to receive a good deal?

 I’m not discouraging buying gifts for the holidays or even spending in general but how many flat screen t.v’s, snuggie’s, and ipods does one household need.  Americans need to save money and slow down on credit borrowing.  Through savings maybe the U.S. can began to create real wealth and lead to Return of the Entrepreneur Kings.  

Happy Thanksgiving! Why is it that the U.S, Recovery is slower than the Rest of the World

It seems as though the U.S is on a much slower pace to recovery than other parts of the world. It may be that many people in general are beginning to learn about the Federal Reserve’s ways of “FIXING” the economy with low interest rate policies, which give those who save very little return on interest and give the illusion that borrowing is easy and affordable because there is more wealth available.  Even businesses, now aware of the dangers of a low inflation- sparked economic bubble, may clearly be refusing to fall for the age-old boom-bust trap.


Then again it could clearly be a lag effect that hasn't quite gone into work yet.  We clearly know the banks have yet to recover from their investment losses and with many homes and properties on foreclosure or short sale its a continued loss on their books just hiding within their balance sheets. For many buyers they have began to notice the hassle with dealing with banked owned homes.  The CPI has not changed significantly but its my prediction that as the PPI continues to go up companies will soon have to raise prices therefore costing us the consumer more.  With FED interests rate still remarkably low people may soon began to take risks with starting up companies and creating jobs.  My only fear is that if things do get better we as Americans will began to follow into the same mail invested traps as the past.  Causing even a larger economic downturn. It will be interesting to see how long interest rates remain relatively low.


Here is a brief article by Peter Schiff explaining his theory on why the Dual Mandate by the Fed doesn't even matter.  


http://www.businessinsider.com/debate-over-dual-mandate-2010-11

Humphrey-Hawkins Full Unemployment Act of 1977 (Full Employment and Balanced Growth Act)

During the 1970s unemployment and inflation levels began to rise, creating fears of an economic recession. In the past, the country's economic policy had been defined by the Employment Act of 1946, which encouraged the federal government to pursue "maximum employment, production, and purchasing power" through cooperation with the private sector. Some Congressmen, dissatisfied with the unclear wording of this act, sought to create an amendment that would strengthen and clarify the country's economic policy…

The Act's sponsors embraced conventional Keynesian economic theory (our country’s favorite theory of economics), which advocates forceful government spending to increase economic demand by impacting GDP. In particular, Keynesian theory asserts that the government can minimize the distress of business fluctuations by compensatory spending, intended to sustain or inflate investment levels by government spending and promote long term growth with the economy.

Consistent with Keynesian theory, the Act provides four measures to create temporary government jobs to reduce unemployment, as was attempted during the Great Depression.

1.     Full employment

2.     Growth in production

3.     Price stability

4.     Balance of trade and budget.

Somewhat contradictorily, the Act also encouraged the government to develop a sound monetary policy, to minimize inflation, and to push toward full employment by managing the amount and liquidity of currency in circulation.  Overall, the Act sought to formalize (and to expand Congress's role in) the economic policy process, as governed by the Federal Reserve and the President.

- Unfortunately inflation and deflation of the money supply and manipulation of interest rates are the Federal Reserves only options to try to meet these strict requirements.  I’m not sure but these options don't sound like there meeting the long term goals of promoting consistent growth for the economy...

Free Lunch theory explained

After talking with a friend and looking over a highly debated question asked in his Economics class I thought it would be good to repost a popular video explained by Milton Friedman on the topic "Free Lunch" explaining there is no such thing as a free lunch.