Posted on 05/30/2007 9:47:17 AM PDT by Tolerance Sucks Rocks
Today's Financial Times headline ("Spitzer to Streamline Rules for Wall Street") is an example of government allowing good old Yankee free enterprise to become more competitive with other international challengers.
The Financial Times also contains additional evidence of increasing inflationary pressures and of interest rates around the world, particularly in the European Union (E.U).
Meanwhile, in face of growing inflationary evidence and increasing interest rates among our key competitors, our Fed has kept our rates on hold.
While it warns of inflation as its main concern, our Fed appears "frightened" to compete either against inflation or with the rising interest rates of other competing currencies, most notably the Euro, against which it has depreciated by 12.24% in under a year and by about a third in the past two years.
There is a legislative reason why our Fed understandably feels "frightened" and seemingly unwilling to do more that utter warnings of inflation.
In the old days, our country was the undisputed master of the world's economy and our mighty dollar was keenly held, often in preference to gold, as the crucial reserve of other competing nations.
From this dominant position, our past Congress was tempted to give our Fed not just the single mandate, of its competing international central banks, of controlling inflation, but a second (often competing contra) mandate of encouraging economic growth.
This government action made our Fed and thereby our currency, inherently uncompetitive, over the long term. The problem was not evident when our economy remained not just highly competitive but overridingly dominant around the world.
America was so dominant then that it is now hard to relate to in today's world.
When I worked as an investment banker at Morgan Stanley & Co (in the late 1960"s), the market capitalization of just one major U.S. company (IBM) was greater then the total capitalization of all the European Stock exchanges (excluding London) added together!
Today, after a series of Democrat Presidents and the luxurious, almost hedonistic, spread of liberalism in the U.S., the situation is very, very different.
The end of World War II allowed the countries of Europe to compete with the U.S.
The end of the Cold War opened free competition to some 3 billion hard working, tough and hungry people around the world.
Meanwhile, our Congress felt it could carry on in the same hedonistic, high-spending, liberal manner.
The countries of Europe got together, sacrificing much of their individual cultures and sovereignty to compete, on equal terms, in the form of the European Union.
The E.U. is an increasingly competitive threat to the U.S. Today, its stock and government bond markets are larger that those of America, and its currency, the euro, has more units in circulation than the U.S. dollars.
This past January, Germany alone (facing high interest rates and a greatly appreciated currency) knocked us into second place as the world's largest exporter. A month later, China pushed us into third place.
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Yesterday's New York Times ran an article asserting that the E.U. had recently displaced the U.S. as the "economic engine" of the world economy.
Worse still, the Euro has increasingly displaced the U.S. dollar as the "reserve currency" of the world's central banks.
The fact that our dollar was the world's "reserve currency" was of great strategic and economic advantage to our country. Worldwide demand for U.S. dollars allowed the U.S. to have relatively lower interest rates than our main economic competitors. This helped our economic growth, to a crucial degree.
In the "oil shock" of 1973, our Secretary of State Henry Kissinger was able to pull off a major strategic coup by persuading OPEC to take U.S. dollars as the exclusive payment for their oil. This allowed America to inflate with impunity without doing serious damage to our dollar in the foreign exchange markets.
Despite this vastly changed world, our Congress continues to "interfere" and even to threaten far greater "controls" over our free enterprise system.
Worst of all, in the face of a plunging dollar (threatening its credibility as a currency, not just as a reserve currency) and the growing evidence of inflation (despite the "cooked" CPI figures), our Congress continues to leave our Fed in a fettered and highly uncooperative position.
Last week we witnessed the galling experience of delegations of our government facing two of our biggest strategic competitors (China and Iran). The saddest thing of all was to see our negotiators with no "Royal" cards in their hands.
As we said last week, we believe our government must quit bleating and start competing, by freeing up good some old Yankee free enterprise competition (Sarbanes-Oxley, etc).
One place it could start and have immediate effect upon our entire economy would be to free our Fed from its second debilitating mandate to encourage economic growth.
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Free of its government imposed second mandate, our Fed would be put on a level playing field with its competing central banks.
Our dollar would be allowed to compete and so allow American business to compete, not just on price (the downward slope to long term failure) but on the essential long-term success determents of the "Product Marketing Mix", just as Germany and Switzerland have done so successfully for years.
Of course, it will be tough, particularly as interest rates will rise, and our government will have to face their financial realty of the liberal profligate policies by actually paying a market rate for their debt and their social security promises.
We believe that, in order to become truly competitive, our government must face international realty by freeing our Fed. Thus allowing us, the people, to compete.
Regardless of Congressional inaction, we note that at long last, the long bond market is beginning to signal increased interest rates as the yield curve steepens slowly to become more normal and in our view more realistic!
In light of this, we continue to urge our readers to remain averse to accepting the great risks we see as inherent in the price of long bonds.
And who are the shareholders of Chase and the other money center banks?
Show me the audit.
Follow my link. Two links there will show you the audits.
Who owns the Federal Reserve?
The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.
As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."
The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Wow! 6%!
The Board, unlike the Reserve Banks, was established as a federal government agency and is supported by Washington staff numbering approximately 1,800, as it carries out its responsibilities in conjunction with other components of the Federal Reserve System.
What'd you think about my uncovering of those top secret profit numbers? Pretty cool, huh?
Wow, 6% dividend! You'd think that controlling the Fed would get you a higher rate of return.
Nice cut and paste. Wikipedia.
If you followed my link, you’d know it wasn’t Wikipedia.
FAIRTAX!!!
Dividends are payments made by a company to its shareholders. When a company earns a profit, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders of the company as a dividend. Many companies retain a portion of their earnings and pay the remainder to their shareholders.
And anyone who has ever been self-employed knows that the biggest friend to you when it comes time for taxes, is business "COSTS" wink wink, nudge nudge. Now where are those receipts.
Now that’s funny!
Do you actually believe that??
Strike “so bad at math”
Insert “dumb”
Perfect!
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