Free Republic

What is driving the stock market to dizzying heights? Try stock margin accounts and Fed Monetary easing. Here is a chart of NYSE Member Firms Debit Balances in Margin Accounts and the Standard and Poor’s Index. margindebtspx And here is a chart of the SPX against The Fed’s Balance Sheet size. spxfedbal You must admit, there seems to be a pattern here. Particularly since real median household income seems to be shrinking (although house prices are rising). cs20realmedhinc Margin accounts + easy Fed money = bubbles.

Two years ago, a few days after the victory of Cristina Fernandez de Kirchner in Argentina’s presidential election, the government decided to impose a new system of foreign exchange controls that the press called “the cepo.” Initially started as an effort to crack down on tax evasion, it became clear later that the new measures were part of another exchange-market intervention by the central bank. In a system of flexible exchange rates, the central bank limits its activities to controlling the money supply. Therefore, the price of foreign currency acts only as an indicator of the correctness or incorrectness of...

With government intervention now becoming the only viable solution being touted for everything from individual health care and the economy to our personal safety and how we educate our children, it would only make sense that officials in Washington also figure out a way to use their power of confiscation and redistribution to equalize the income playing field. It’s no secret that 48 million Americans require nutritional assistance just to put food on the table, or that over 100 million of us are living in or at the very edge of poverty, or that nearly one in three of us...

Still unnoticed by a large part of the population is that we have been living through a period of relative impoverishment. Money has been squandered in welfare spending, bailing out banks or even — as in Europe — of fellow governments. But many people still do not feel the pain. However, malinvestments have destroyed an immense amount of real wealth. Government spending for welfare programs and military ventures has caused increasing public debts and deficits in the Western world. These debts will never be paid back in real terms. The welfare-warfare state is the biggest malinvestment today. It does not...

Janet Yellen has been approved as Federal Reserve Chair by the US Senate Banking Panel. And the Philadelphia Fed Index plunged to 6.5 in November from 19.8 in October. Economists were expecting a read of 15. Philly Fed Nov More troubling in the Philadelphia Fed report is the decline in average employee workweek. Philly Fed Details Oct Of course, Janet Yellen being approved by the Senate Banking Panel has nothing to do with the Philly Fed Index plunge. Or does it? Yellen has been on the Bernanke QE team and we know that it has not been successful restoring life...

While economists mostly focus on real gross domestic product (GDP) growth, let’s look at nominal GDP growth for a change. If we go back to 1948 and President Harry Truman, you can see the number of times that nominal GDP growth (Year-over-year) exceeded 5%. nomgdpyoy And if we count the number of times nominal GDP equaled or exceeded 5%, we can see a pattern developing. Under President Obama, nominal GDP exceed 5% only once (5.2% for Q1 2012). The last President that experienced 5% or more nominal GDP growth was Ronald Reagan. gdpgt5 But even under the much-maligned President Jimmy...

On 15 November 1923 decisive steps were taken to end the nightmare of hyperinflation in the Weimar Republic: The Reichsbank, the German central bank, stopped monetizing government debt, and a new means of exchange, the Rentenmark, was issued next to the Papermark (in German: Papiermark). These measures succeeded in halting hyperinflation, but the purchasing power of the Papermark was completely ruined. To understand how and why this could happen, one has to take a look at the time shortly before the outbreak of World War I. Since 1871, the mark had been the official money in the Deutsches Reich. With...

Recently, FF Wiley and Ginger Snap at Cynicomics posted an interesting article entitled “M.C. Escher and the Impossibility of the Establishment Economic View.“ In their article, they discuss the latest budget forecast from the Congressional Budget Office (CBO). They point out that the CBO is abnormally bullish on near-term growth, based on its long-standing assumption that the gap between actual and potential output will swiftly close. But the longer-term growth forecast is … bearish. 44521-LTBOSupplementalData2013 escherchart1_thumb1 (1) The CBO also forecasts the REAL 10 year Treasury rate (nominal less inflation). escherchart21 According to the CBO, the real 10 year rate...

In his parting act, Federal Reserve Chairman Ben Bernanke has decided to continue printing some $85 billion per month (6 percent of GDP per year) and spend those dollars on government bonds and, in the process, keep interest rates low, stimulate investment, and reduce unemployment. Trouble is, interest rates have generally been rising, investment remains very low, and unemployment remains very high. Bernanke’s dangerous policy hasn’t worked and should be ended. Since 2007 the Fed has increased the economy's basic supply of money (the monetary base) by a factor of four! That's enough to sustain, over a relatively short period...

Inflation in Venezuela has surged above 50 percent as a plunge in the value of the currency deters investment and makes basic goods harder to find. … President Nicolás Maduro vowed on Wednesday to intensify efforts to stamp out currency speculators and hoarders he accuses of waging “economic war” against the government. …

The real median earnings of both men and women dropped in the third quarter of 2013 and are down 3.2 percent since President Barack Obama took office in the first quarter of 2009, according to data released today by the Bureau of Labor Statistics. In non-inflation-adjusted dollars, Americans who worked full-time for a wage or salary had median usual weekly earnings of $775 in second quarter of 2013 and $777 in the third quarter. In current dollars that was $2-per-week increase. However, when adjusted for inflation, median earnings actually declined from the second to the third quarter, according to BLS....

If you believe that there is high inflation in the United States, you are just imagining things. That is the message that the U.S. government and the Federal Reserve would have us to believe. You might have noticed that the government announced on Wednesday that the cost of living increase for Social Security beneficiaries will only be 1.5 percent next year. This is one of the smallest cost of living increases that we have ever seen. The federal government is able to get away with this because the official numbers say that there is hardly any inflation in the U.S....

Since Ben Bernanke has been in control of the Federal Reserve, inflation has increased 43 percent more under President Barack Obama than George W. Bush, according to data from the Bureau of Labor Statistics. “Inflation can be defined as the overall general upward price improvement of goods and services in an economy,” the Bureau said. By evaluating the Consumer Price Index (CPI) data, increases in inflation can be evaluated. …

WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough. Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment. The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the...

WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough. Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment. The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the...

he U.S. government managed to avoid a government shutdown -- for now --so now Americans can turn their attention from the economic dysfunction in Washington, D.C, to their own financial picture. Unfortunately, a study from investment banking giant Wells Fargo says adults heading into their post-working years face a financial shutdown of their own. Many middle-class Americans seem to be losing hope over any resolution to their retirement problems. A full 37% of middle-income Americans told Wells Fargo researchers that they will "never retire," but will "work until I'm too sick or die." Left unsaid is that there is no...

"The question is not tapering. The question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], a trillion dollars a month," Faber said in a " Squawk Box " interview. The Fed-which is currently buying $85 billion worth of bonds every month-will hold its October meeting next week to deliberate the future of its asset purchases known as quantitative easing . (Read more: Treasury yields will still spike to 5%: Societe Generale ) Faber has been predicting so-called "QE infinity" because "every government program that is introduced under urgency and as a...

Gold's spiking $38 in Asia as the market opens . Looks like Asia realizes the USA just kicked the can down the road and the treasuries they hold are worth less.

Ms. Yellen decided to pursue a doctorate at Yale University after hearing a speech by James Tobin, the economist whom she still regards as her intellectual hero. Mr. Tobin was a staunch defender of the view that government policy could lift an economy from recession. .... “While admirers of capitalism, we also to a certain extent believe it has limitations that require government intervention in markets to make them work,” Ms. Yellen said in a 2012 interview with Berkeley’s business school magazine. .... In a related debate in 1995, Ms. Yellen argued that reducing high unemployment should sometimes be the...

Federal Reserve chair nominee Janet Yellen Wednesday suggested that she will put a renewed emphasis on “jobs” in her role as Chairwoman of the U.S. Federal Reserve Bank. President Obama nominated Yellen, a vice chairwoman of the Board of Governors of the Federal Reserve System and former president and CEO of the Federal Reserve Bank of San Francisco, to run the U.S. central bank Wednesday. If confirmed by the Senate, Yellen will become the first woman to run the Fed in its hundred-year history. Yellen is expected to accelerate the devaluation of the dollar by continuing or even expanding the...