Can the Fed rescue the economy by making money even cheaper than it already is? A debate is being played out in the Fed about whether it should return to so-called "quantitative easing" -- buying more mortgage-backed securities, Treasury bills, and other bonds -- in order to lower the cost of capital still further.
The sad reality is that cheaper money won't work. Individuals aren't borrowing because they're still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they're not in a position to borrow. Small businesses aren't borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.
That leaves large corporations. They'll be happy to borrow more at even lower rates than now -- even though they're already sitting on mountains of money.
But this big-business borrowing won't create new jobs. To the contrary, large corporations have been investing their cash to pare back their payrolls. They've been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.
If Bernanke and company make it even cheaper to borrow, they'll be unleashing a third corporate strategy for creating more profits but fewer jobs -- mergers and acquisitions.
The M&A wave has already started. Continental and United Airlines just got approval to merge. Biotech giant Genzyme is on the auction block after Sanofi-Aventis announced a $18.5 billion bid. On Friday, 3Par, a data storage company, accepted a $1.8 billion takeover offer from Dell -- one day after Hewlett-Packard raised its offer. Campbell's Soup is eying parts of United Biscuits, BHP Billiton has put in a takeover bid for Potash, Oracle or H-P are likely to pay up to $1.5 billion for security software maker ArcSight. Bain Capital is expected to acquire Air Medical Group for almost $1 billion. The insurance industry is headed for the biggest merger boom in recent history.
Who wins from all this? If history is a guide, shareholders of acquired companies do better than shareholders of companies doing the acquiring. Top executives who end up running bigger corporations get fatter pay packages. And Wall Street and big-name corporate law firms who engineer the M&As reap a bundle.
Who loses? Large numbers of ordinary workers will lose their jobs. After all, the purpose M&As is to create greater economies of scale and more "synergies." Translated: More pink slips.
Last week in Jackson Hole, Ben Bernanke insisted the Fed will do what's necessary to increase consumer and business spending in order to keep the economy growing. But cheaper money won't necessarily create the kind of spending that generates more jobs. In fact, right now it's having the opposite effect. When consumers and small businesses can't and won't borrow more, big businesses use cheap money to bid up the prices of corporate assets and cut payrolls.
What we need now is more jobs, not bigger corporations.
This post originally appeared at RobertReich.org
so, yea, what's the big deal?
This is not a simple matter of temporary inconvenience. If you agree to pay interest on a loan from them you are enslaving yourself. It is very simple, and they don't want you to know that.
The loan money you agree to pay back did not exist until you signed the dotted line. In fact, it will never 'exist'. When you purchase a home or a car you agree to make payments until the loan is completely paid off, paying an 'agreed' interest rate, a premium, for the convenience of taking control of the home or car without paying in full. But no money is ever exchanged. The loan document is essentially an agreement that if you stop making payments the bank will have to take over, potentially at a loss. Either way the third party, such as the original owner of the home, or Toyota, in the case of a car, is paid in full by the bank - the third party is no longer involved. They have received full payment. But you, my dear consumer, are now a slave.
Why use such a term as slave? Because you are working for someone that never worked for the money in the first place. They 'printed' it. They increased the number of zeros on their ledger because you have agreed to make payments on that money, but it never existed in the first place. That is, the Federal Reserve has the ability to increase the money supply and then pass it on to their 'member' banks: Wells Fargo, Citi, Bank of America, etc. These banks will only take a loss if you stop making payments - and they threaten you with a lower FICO score, which is always fluctuating and at risk of identity fraud anyway, if you decide not to play anymore. So how is this slavery? You are paying interest on money they did not work for. But you had to sweat to get the money to pay that interest. Your sweat goes to these bankers without them doing a thing. If enough of your fellow consumers stop making payments the house of cards falls and the big bank gets a bailout. The small banks just get their assets gobbled up by the big banks; no bailout.
If you, my dear consumer, attempt to create money out of thin air you are put in jail. You are a cheat. But not them. They can create all the money they need, raising this so-called debt ceiling, creating programs like TARP, and other 'bailouts' for risk-taking banksters. That's right. They get your sweat in the form of interest payments, you slave, and they get to take risks because Glass-Steagall has been repealed, and if they fail, you, the taxpaying consumer, get to become the primary investor in their failure: the bailout. They threaten collapse, chaos, and even war if the don't get their bailout from the taxpayer. And then they turn around and lend you, the consumer, money at 10, 20, 30%.
So what is pragmatic? How about a system that cannot be manipulated? How about a system in which losers actually lose and are not allowed to play anymore instead of given huge bonuses?
That system, is a gold-backed system. Keynes is popular in the current time because he speaks the language of bankers and politicians - not the People. There should be no such thing as inflation. Inflation is at best a hidden tax (increase the money supply to fund inefficient programs, sweetheart deals, and risky investments waiting for a bailout) because the value of the money under your mattress is devalued - you can't buy as much anymore. Why should anyone ever! be content to have less money the next day. You can buy X for $10 today, after inflation it will be $11. Why would you ever want that? How is that ever good? This is no mere inconvenience - it really is theft. So these financial scientists (bankers) and politician friends have devised a near perfect system of control. And because you can't inflate gold (it can't be copied, duplicated, or printed) it's 'value' stays constant. A gold coin will always have a specific weight and purity according to the standards of the mint it came from. That's what's in the Constitution - not an extra-governmental (private) instiution that can create as much money as it needs to maintain control!
Banking should be boring. They should accept deposits and charge money for keeping it safe in their vaults. But don't they pay depositors interest, you ask? Why would they pay you to keep your money safe when you can come in and get it back anytime you like? You can't run a business like that! The point of paying interest on a deposit is because the depositor agrees to allow the banker to loan the money to someone else. But that's not how it works, you say? Exactly. Because everybody knows that if enough depositors come to get their money the house of cards collapses and the FDIC has to step in. This should never happen. There should be no such thing, generally speaking, as a bankrun. A bank will fail if they make too many risky loans. That is, if a banker fails to properly evaluate the 'creditworthiness' of the individuals applying for loans. If too many loans go sour the banker fails and all of his assets are purchased by those making loans that are less risky. No need to ask Keynes what he thinks. Banking should not involve economics, which is really about the effects of human choice. Banking is math. If you deposit money, and you want to be able to get it the next day, you must pay the banker a fee for safekeeping. If you agree that your money can be lent to another, trusting the judgment of your banker, then you should receive part of the profit - and you cannot get it the next day, because it has already been lent! How can you possibly retrieve something that is not there? You banker would think you are an idiot to request money you agreed to lend! But that's what an honest system would work. Instead, we have an 'unlimited' system. It stops working properly if you apply gravity. Ron Paul's 26 year attempt to audit the Federal Reserve is almost more of an inside joke. He already knows that the Federal Reserve is evil - but he has a hard enough time deflecting attempts from the media to portray him as a lunatic as it is - he wants the public to perceive what a mudfight will ensue if they actually knew how the system works.
So growth would be slower. But it is inherently stable. Individuals are likely to take less risk, and they are less likely to get a loan that they probably won't be able to pay back. People sharpen their pencils. People look for other ways to finance their plans by seeking out friends, family, neighbors, etc instead of bankers. The free market is the market in which there is no restriction. But we do not have a free market. We have banksters hiding behind green curtains telling us what is best. The more stable the system the less money the banksters make. They make more money gaming the system: booms and busts - and we start to hear these pompous, paid economists (bankster apologists) tell us they couldn't see this was going to happen, and we all nod our heads, "Nobody saw this coming." So because the banksters never work for any of this money it is in their best interest that you, the simple-minded, ever-trusting consumer is in a perpetual state of paying interest. They are less interested in being paid in full than they are having you pay with your sweat.
Bankers control. Consumers always pay. Maybe you already explained all this to your girlie, my fellow FR-hater, and there is much more, but ask her what has always happened when enough people become apathetic to evil. The reason the founding fathers didn't get around to explaining the free market in the Constitution is because it is the lack of restriction. Real liberty. Let coined precious metals be the pinnacle of our economic system - everything else can be bartered. It keeps the bankers at bay.
I leave you with two quotes, from men of opposite character, that say the same thing using different words:
Weekly Search & Social <b>News</b>: 09/28/2010 | Search Engine Journal
Hey there gang, it's time for another '7 Days of Search and Social' . Did ya miss me? Sure ye did. I was ill last week so for the first time, in a long time,
SwitchEasy intros CapsuleRebel for iPhone 4 | iLounge <b>News</b>
iLounge news discussing the SwitchEasy intros CapsuleRebel for iPhone 4. Find more iPhone Accessories news from leading independent iPod, iPhone, and iPad site.
Brad Friedman and Desi Doyen: Green <b>News</b> Report: September 28 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Halliburton Makes the Dow Jones Sustainability Index (and pigs fly); More than 100 Arrested at White House Demanding End to Mountaintop Removal; Australian climate activists close down world's ...
halloween costumesWeekly Search & Social <b>News</b>: 09/28/2010 | Search Engine Journal
Hey there gang, it's time for another '7 Days of Search and Social' . Did ya miss me? Sure ye did. I was ill last week so for the first time, in a long time,
SwitchEasy intros CapsuleRebel for iPhone 4 | iLounge <b>News</b>
iLounge news discussing the SwitchEasy intros CapsuleRebel for iPhone 4. Find more iPhone Accessories news from leading independent iPod, iPhone, and iPad site.
Brad Friedman and Desi Doyen: Green <b>News</b> Report: September 28 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Halliburton Makes the Dow Jones Sustainability Index (and pigs fly); More than 100 Arrested at White House Demanding End to Mountaintop Removal; Australian climate activists close down world's ...
Can the Fed rescue the economy by making money even cheaper than it already is? A debate is being played out in the Fed about whether it should return to so-called "quantitative easing" -- buying more mortgage-backed securities, Treasury bills, and other bonds -- in order to lower the cost of capital still further.
The sad reality is that cheaper money won't work. Individuals aren't borrowing because they're still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they're not in a position to borrow. Small businesses aren't borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.
That leaves large corporations. They'll be happy to borrow more at even lower rates than now -- even though they're already sitting on mountains of money.
But this big-business borrowing won't create new jobs. To the contrary, large corporations have been investing their cash to pare back their payrolls. They've been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.
If Bernanke and company make it even cheaper to borrow, they'll be unleashing a third corporate strategy for creating more profits but fewer jobs -- mergers and acquisitions.
The M&A wave has already started. Continental and United Airlines just got approval to merge. Biotech giant Genzyme is on the auction block after Sanofi-Aventis announced a $18.5 billion bid. On Friday, 3Par, a data storage company, accepted a $1.8 billion takeover offer from Dell -- one day after Hewlett-Packard raised its offer. Campbell's Soup is eying parts of United Biscuits, BHP Billiton has put in a takeover bid for Potash, Oracle or H-P are likely to pay up to $1.5 billion for security software maker ArcSight. Bain Capital is expected to acquire Air Medical Group for almost $1 billion. The insurance industry is headed for the biggest merger boom in recent history.
Who wins from all this? If history is a guide, shareholders of acquired companies do better than shareholders of companies doing the acquiring. Top executives who end up running bigger corporations get fatter pay packages. And Wall Street and big-name corporate law firms who engineer the M&As reap a bundle.
Who loses? Large numbers of ordinary workers will lose their jobs. After all, the purpose M&As is to create greater economies of scale and more "synergies." Translated: More pink slips.
Last week in Jackson Hole, Ben Bernanke insisted the Fed will do what's necessary to increase consumer and business spending in order to keep the economy growing. But cheaper money won't necessarily create the kind of spending that generates more jobs. In fact, right now it's having the opposite effect. When consumers and small businesses can't and won't borrow more, big businesses use cheap money to bid up the prices of corporate assets and cut payrolls.
What we need now is more jobs, not bigger corporations.
This post originally appeared at RobertReich.org
so, yea, what's the big deal?
This is not a simple matter of temporary inconvenience. If you agree to pay interest on a loan from them you are enslaving yourself. It is very simple, and they don't want you to know that.
The loan money you agree to pay back did not exist until you signed the dotted line. In fact, it will never 'exist'. When you purchase a home or a car you agree to make payments until the loan is completely paid off, paying an 'agreed' interest rate, a premium, for the convenience of taking control of the home or car without paying in full. But no money is ever exchanged. The loan document is essentially an agreement that if you stop making payments the bank will have to take over, potentially at a loss. Either way the third party, such as the original owner of the home, or Toyota, in the case of a car, is paid in full by the bank - the third party is no longer involved. They have received full payment. But you, my dear consumer, are now a slave.
Why use such a term as slave? Because you are working for someone that never worked for the money in the first place. They 'printed' it. They increased the number of zeros on their ledger because you have agreed to make payments on that money, but it never existed in the first place. That is, the Federal Reserve has the ability to increase the money supply and then pass it on to their 'member' banks: Wells Fargo, Citi, Bank of America, etc. These banks will only take a loss if you stop making payments - and they threaten you with a lower FICO score, which is always fluctuating and at risk of identity fraud anyway, if you decide not to play anymore. So how is this slavery? You are paying interest on money they did not work for. But you had to sweat to get the money to pay that interest. Your sweat goes to these bankers without them doing a thing. If enough of your fellow consumers stop making payments the house of cards falls and the big bank gets a bailout. The small banks just get their assets gobbled up by the big banks; no bailout.
If you, my dear consumer, attempt to create money out of thin air you are put in jail. You are a cheat. But not them. They can create all the money they need, raising this so-called debt ceiling, creating programs like TARP, and other 'bailouts' for risk-taking banksters. That's right. They get your sweat in the form of interest payments, you slave, and they get to take risks because Glass-Steagall has been repealed, and if they fail, you, the taxpaying consumer, get to become the primary investor in their failure: the bailout. They threaten collapse, chaos, and even war if the don't get their bailout from the taxpayer. And then they turn around and lend you, the consumer, money at 10, 20, 30%.
So what is pragmatic? How about a system that cannot be manipulated? How about a system in which losers actually lose and are not allowed to play anymore instead of given huge bonuses?
That system, is a gold-backed system. Keynes is popular in the current time because he speaks the language of bankers and politicians - not the People. There should be no such thing as inflation. Inflation is at best a hidden tax (increase the money supply to fund inefficient programs, sweetheart deals, and risky investments waiting for a bailout) because the value of the money under your mattress is devalued - you can't buy as much anymore. Why should anyone ever! be content to have less money the next day. You can buy X for $10 today, after inflation it will be $11. Why would you ever want that? How is that ever good? This is no mere inconvenience - it really is theft. So these financial scientists (bankers) and politician friends have devised a near perfect system of control. And because you can't inflate gold (it can't be copied, duplicated, or printed) it's 'value' stays constant. A gold coin will always have a specific weight and purity according to the standards of the mint it came from. That's what's in the Constitution - not an extra-governmental (private) instiution that can create as much money as it needs to maintain control!
Banking should be boring. They should accept deposits and charge money for keeping it safe in their vaults. But don't they pay depositors interest, you ask? Why would they pay you to keep your money safe when you can come in and get it back anytime you like? You can't run a business like that! The point of paying interest on a deposit is because the depositor agrees to allow the banker to loan the money to someone else. But that's not how it works, you say? Exactly. Because everybody knows that if enough depositors come to get their money the house of cards collapses and the FDIC has to step in. This should never happen. There should be no such thing, generally speaking, as a bankrun. A bank will fail if they make too many risky loans. That is, if a banker fails to properly evaluate the 'creditworthiness' of the individuals applying for loans. If too many loans go sour the banker fails and all of his assets are purchased by those making loans that are less risky. No need to ask Keynes what he thinks. Banking should not involve economics, which is really about the effects of human choice. Banking is math. If you deposit money, and you want to be able to get it the next day, you must pay the banker a fee for safekeeping. If you agree that your money can be lent to another, trusting the judgment of your banker, then you should receive part of the profit - and you cannot get it the next day, because it has already been lent! How can you possibly retrieve something that is not there? You banker would think you are an idiot to request money you agreed to lend! But that's what an honest system would work. Instead, we have an 'unlimited' system. It stops working properly if you apply gravity. Ron Paul's 26 year attempt to audit the Federal Reserve is almost more of an inside joke. He already knows that the Federal Reserve is evil - but he has a hard enough time deflecting attempts from the media to portray him as a lunatic as it is - he wants the public to perceive what a mudfight will ensue if they actually knew how the system works.
So growth would be slower. But it is inherently stable. Individuals are likely to take less risk, and they are less likely to get a loan that they probably won't be able to pay back. People sharpen their pencils. People look for other ways to finance their plans by seeking out friends, family, neighbors, etc instead of bankers. The free market is the market in which there is no restriction. But we do not have a free market. We have banksters hiding behind green curtains telling us what is best. The more stable the system the less money the banksters make. They make more money gaming the system: booms and busts - and we start to hear these pompous, paid economists (bankster apologists) tell us they couldn't see this was going to happen, and we all nod our heads, "Nobody saw this coming." So because the banksters never work for any of this money it is in their best interest that you, the simple-minded, ever-trusting consumer is in a perpetual state of paying interest. They are less interested in being paid in full than they are having you pay with your sweat.
Bankers control. Consumers always pay. Maybe you already explained all this to your girlie, my fellow FR-hater, and there is much more, but ask her what has always happened when enough people become apathetic to evil. The reason the founding fathers didn't get around to explaining the free market in the Constitution is because it is the lack of restriction. Real liberty. Let coined precious metals be the pinnacle of our economic system - everything else can be bartered. It keeps the bankers at bay.
I leave you with two quotes, from men of opposite character, that say the same thing using different words:
corporate reputation management
Weekly Search & Social <b>News</b>: 09/28/2010 | Search Engine Journal
Hey there gang, it's time for another '7 Days of Search and Social' . Did ya miss me? Sure ye did. I was ill last week so for the first time, in a long time,
SwitchEasy intros CapsuleRebel for iPhone 4 | iLounge <b>News</b>
iLounge news discussing the SwitchEasy intros CapsuleRebel for iPhone 4. Find more iPhone Accessories news from leading independent iPod, iPhone, and iPad site.
Brad Friedman and Desi Doyen: Green <b>News</b> Report: September 28 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Halliburton Makes the Dow Jones Sustainability Index (and pigs fly); More than 100 Arrested at White House Demanding End to Mountaintop Removal; Australian climate activists close down world's ...
Dr. eric seigerWeekly Search & Social <b>News</b>: 09/28/2010 | Search Engine Journal
Hey there gang, it's time for another '7 Days of Search and Social' . Did ya miss me? Sure ye did. I was ill last week so for the first time, in a long time,
SwitchEasy intros CapsuleRebel for iPhone 4 | iLounge <b>News</b>
iLounge news discussing the SwitchEasy intros CapsuleRebel for iPhone 4. Find more iPhone Accessories news from leading independent iPod, iPhone, and iPad site.
Brad Friedman and Desi Doyen: Green <b>News</b> Report: September 28 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Halliburton Makes the Dow Jones Sustainability Index (and pigs fly); More than 100 Arrested at White House Demanding End to Mountaintop Removal; Australian climate activists close down world's ...
http://www.businessweek.com/magazine/content/07_18/b4032066.htm
http://www.businessweek.com/magazine/content/07_18/b4032066.htm
http://www.businessweek.com/magazine/content/07_18/b4032066.htm
http://money.cnn.com/magazines/fortune/fortune_archive/1999/10/25/267811/index.htm
http://money.cnn.com/magazines/fortune/fortune_archive/1999/10/25/267811/index.htm
http://money.cnn.com/magazines/fortune/fortune_archive/1999/10/25/267811/index.htm
http://www.businessweek.com/magazine/content/07_18/b4032066.htm
No comments:
Post a Comment