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Posts Tagged ‘Monetary Policy’

RADIO SHOW RECORDING

Alternative Visions – The US Fiscal-Monetary Crisis Intensifies – 10/02/13

Oct 2nd, 2013 by progressiveradionetwork

Dr. Jack Rasmus provides his analysis on the current government shutdown and the repeat of the debt ceiling crisis coming by mid-October and their possible negative impacts on the economy. Rasmus then considers the ‘other policy crisis’–i.e. the US Federal Reserve’s QE and zero interest rate monetary policies. He explains why US monetary policy has also entered a crisis stage in recent months–i.e. proving increasingly ineffective at stimulating the real economy while simultaneously generating financial bubbles. QE and austerity policies elsewhere in the world are discussed, with similar counterproductive effects on the real economy. Rasmus concludes the US and global economy is now entering a period of growing ineffectiveness of traditional fiscal-monetary policies generating a sustained economic recovery, at a time during which the US and global economies continue to slow or stagnate long term.

LISTEN TO THE FULL 56MIN. SHOW ON THE ‘ALTERNATIVE VISIONS’ WEBSITE AT:

http://prn.fm/category/archives/alternative-visions/

OR ALSO AT:

http://alternativevisions.podbean.com/

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The following is an excerpt from a longer feature article–“Larry Summers–Next Fed Chair?”, which can be accessed this weekend on my website, http://www.kyklosproductions/articles.html.

“The Fed soon plans to ‘taper’ its existing policy of QE after its next September 18 meeting. A Summers at the Fed helm will represent no major change from this. The Fed without doubt will taper later this year, but very very slowly. Instead of $85 billion a month in ‘free money’ for banksters, speculators, stock and bond traders, and the very high net worth individuals—i.e. those folks that drive the financial markets globally—the Fed may reduce that to $75 or $65 billion. Big deal. Or the Fed may try to indirectly cut back on the free money spigot by a policy of ‘reverse repos’ (don’t worry, no need to understand that financial legerdemain). But none of that will stop the banksters and company from using the remaining mountain of virtually free cash to speculate in stocks, junk bonds, foreign exchange, and derivatives to keep the ‘global money parade’ going.

The ‘wildcard’ in this monetary policy poker deck, of course, is what’s happening with the emerging markets right now. Just the talk of the Fed tapering has driven bond rates up by nearly 100% in the last few months. The 10 year T-Bond was 1.6% this past spring; it’s now 2.9% and will almost certainly go higher.

That rapid rate shift is now resulting in the trillions of dollars of Fed money injection of the past five years flowing into emerging markets, especially Indonesia, India, Brazil, Turkey and So Africa (now referred to as the ‘BITTS’). Now that mountain of liquidity (money) is flooding back to the US and Europe. That reversed flow—precipitated by the Fed’s upcoming QE policy shift—is resulting in currency collapse in these emerging markets, massive capital flight back to the west, worsening trade deficits, commodities price deflation, coming oil price inflation, and in turn what will prove a significant slowing of these countries’ real economies that will in turn further exacerbate all the above.

In other words, the locus of the global economic crisis is now quickly shifting—from Europe in particular to Asia, emerging markets, especially the BIITS (Brazil,India, Indonesia, Turkey, So. Africa).

This growing instability may result in the Fed moving toward a ‘tapering’ of QE even more carefully and slowly. But it doesn’t matter who’s leading the Fed. Whether Bernanke or Summers, or even someone else, the Fed policy will not change significantly. Again, forget any ‘Summers Effect’. Summers will do as he always has done for the banksters: ensured their interests are protected—whether offshore or in the US.

In conclusion, whomever assumes the role of Fed Chair—Summers, current Fed Vice-Chair, Janet Yellen, or some compromise candidate like Fed governor, Kohl—will have to address a new ‘tail risk’ domestically, as well as globally (e.g. emerging markets crisis).

The domestic tail risk may prove to be a US economy and economic recovery that is highly sensitive to interest rate hikes, already having risen more than 1% since June for mortgages and other loans. US monetary policy makers have experienced nearly five years during which lowering interest rates to record levels has produced very little recovery in the real economy—i.e. housing, jobs, or real investment in the US—even as those record low rates produced a boom and bubble in financial securities investments, in stocks, bonds, derivatives, etc.

It may soon be revealed that the US economy is extremely sensitive to increases in interest rates, just as it has been largely insensitive to reductions in interest rates the past five years. The markets having become addicted to free money and super-low rates for five years may act like junkies without their fix if the Fed goes ‘cold turkey’ on them. If so, and interest rates in the US rise even moderately, then the US economy’s latest tepid rebound will quickly result in yet another ‘relapse’.

Jack Rasmus, copyright, September 2013

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AS A MEMBER OF THE JUST FORMED ‘U.S. GREEN SHADOW CABINET’, THE FOLLOWING IS A BRIEF INTRODUCTION BY THE ORGANIZATION, ON APRIL 22, 2013 AS A PRESS RELEASE. THE PURPOSE OF THE GREEN SHADOW CABINET IS TO PRODUCE, PUBLICIZE, AND PROMOTE ALTERNATIVE POLICIES TO THE FAILED REPUBLICAN-DEMOCRATIC SOLUTIONS OF RECENT YEARS. FOR MORE ON WHO COMPRISES THE GREEN SHADOW CABINET, AND STATEMENTS BY ITS MORE THAN 80 MEMBERS, ON THE SIDEBAR, SCROLL DOWN AND CLICK ON  ‘Jack Rasmus Website’ ACCESSING MY WEBPAGE.

AS THE ‘SHADOW’ CHAIRMAN OF THE U.S. FEDERAL RESERVE BANK, YOU CAN READ MY INTRODUCTORY OPED STATEMENT ON THIS BLOG (TO FOLLOW ABOVE) ALSO AVAILABLE ON MY WEBSITE, ENTITLED “THE FAILURE OF FISCAL & MONETARY POLICIES, 2008-2013”. MORE OF MY ANALYSES WILL FOLLOW AS TO WHAT NEEDS TO CHANGE CONCERNING THE US CENTRAL BANK, THE FEDERAL RESERVE, AND MONETARY POLICY. Dr. Jack Rasmus

INITIAL PUBLIC PRESS RELEASE BY THE U.S. GREEN SHADOW CABINET:

“This Earth Week, another government is possible . . .
Meet the new Green Shadow Cabinet

Dr. Jill Stein and Cheri Honkala, the 2012 Green Party presidential and vice-presidential nominees, have marked the beginning of Earth Week by announcing a new Green Shadow Cabinet that will serve as an independent voice in U.S. politics, putting the needs of people and protection of the planet ahead of profits for big corporations. The Cabinet will operate in the tradition of shadow cabinets in other countries, such as the United Kingdom and Mexico, responding to actions of the government in office, and demonstrating that another government is possible.

The Green Shadow Cabinet, which is viewable at http://www.GreenShadowCabinet.US, includes nearly 100 prominent scientists, community and labor leaders, physicians, cultural workers, veterans, and more, and will provide an ongoing opposition and alternative voice to the dysfunctional government in Washington D.C..

The Cabinet is organized into six federal branches: Democracy, Economy, Ecology, Foreign Affairs, General Welfare, and Justice. Topics include the economy, environment and climate change, health and general welfare, democratization, rights of workers, wages and labor, community power, closing military bases, ending wars for resources and restoring the rule of law. Among the top priorities will be advocating for full employment through a Green New Deal and confronting climate change and the ecological crisis through a program of creating a carbon-free and nuclear free energy economy.

Public statements from Cabinet members . . .

In honor of the launch of the Green Shadow Cabinet, twenty members of the Cabinet have issued public statements for Earth Week. These are available for republication at http://greenshadowcabinet.us/statements

The Green Shadow Cabinet includes not only scientists and leaders of social change organizations, but also artists and writers. The talented comedian Lee Camp offers this video “statement” on the need for the Cabinet: http://youtu.be/m3zNyEIR-Ww

What you can do . . .

Tell everyone you know about the Green Shadow Cabinet, and get them to sign up for news at http://greenshadowcabinet.us/subscribe-our-newsletter

Make a donation toward getting this Cabinet moving – send a donation made out to Green Shadow Cabinet, Attention: Ben Manski, PO Box 260217, Madison, WI 53726-0217
Urge blogs, newspapers, and others in the media to contact the Green Shadow Cabinet to schedule interviews and to publish articles.

There will be more in the weeks and months to come. Thank you.”

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