AuthorTopic: Da Fed: Central Banking According to RE  (Read 28538 times)

Offline RE

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🏦 Inside the Fed's balance sheet in four charts
« Reply #225 on: March 21, 2019, 12:47:56 AM »
https://www.reuters.com/article/us-usa-fed-balancesheet-graphic/inside-the-feds-balance-sheet-in-four-charts-idUSKCN1R130J

Business News
March 20, 2019 / 4:04 PM / Updated 6 hours ago
Inside the Fed's balance sheet in four charts
Dan Burns

4 Min Read

WASHINGTON (Reuters) - The Federal Reserve will remain the top holder of U.S. Treasuries for the foreseeable future after the central bank said it would stop shrinking its $4 trillion balance sheet by the end of September.

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell holds a news conference following the two-day Federal Open Market Committee (FOMC) policy meeting in Washington, U.S., March 20, 2019. REUTERS/Jonathan Ernst

So just what is inside this vast holding of assets?

Before the financial crisis struck in late 2007, the Fed’s balance sheet was less than a quarter of its current size and consisted almost entirely of Treasury securities.

Then, to help foster an economic recovery, the Fed went on a buying binge that ran from the end of 2008 to late 2014 in three phases, a program known as quantitative easing (QE). It bought a mix of Treasuries and mortgage-backed securities (MBS) and over those six years its balance sheet mushroomed nearly five-fold.

Today, Treasuries account for just 55 percent of the assets on the Fed’s balance sheet. The other big chunk is MBS at about 40 percent. The remainder is a hodge-podge of other assets, including gold.

The Fed would like to get back to a balance sheet consisting mostly of Treasuries.

(GRAPHIC: The Federal Reserve's balance sheet - tmsnrt.rs/2ULcay0)

But not all Treasuries are the same. These securities range in maturity from 1-month bills to 30-year bonds, and the Fed has held a different mix of these over time.

Ahead of the crisis, its preference was for short-term securities such as T-bills, which mature in a year or less, and shorter-dated notes, typically maturing in no more than five years.

The needs of the QE program changed that, and the program’s priorities also shifted over time. The result was that the composition of the Treasuries portfolio is markedly different today than it was a decade ago.

(GRAPHIC: How the Fed's Treasury portfolio has changed - tmsnrt.rs/2HzaYdX)

Before the crisis, for instance, notes maturing between five and 10 years accounted for just 7 percent of the Fed’s Treasury holdings, and the longest-term securities, maturing in 10 years or more, were around 10 percent of that portfolio.

The five-to-10 year sector shot up to as much as 52 percent of the portfolio by early 2013 when the Fed was making a concerted effort to lengthen its maturity profile to pressure long-term bond yields lower and boost the housing market. The longest-dated bonds grew to account for 25 percent, and its holding of T-bills dropped to effectively zero.

Today, the Fed’s stash of five-to-10 year paper is again its smallest bucket, just over 11 percent. Interestingly it has kept its holdings of long-dated bonds steady, and as the balance sheet has shrunk the share has risen to nearly 30 percent.

(GRAPHIC: The Fed's Treasury holdings by maturity - tmsnrt.rs/2Hv6Iwd)

In his press conference detailing the Fed’s plans for its balance sheet over the long term, Fed Chairman Jerome Powell said he would like to see the overall balance sheet continue to shrink a bit more relative to the U.S. economy.
FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

At its peak, the balance sheet was the equivalent of roughly 25 percent of annual U.S. economic output compared with around 6 percent before the crisis.

As a percentage of nominal gross domestic output, the balance sheet today is just 20 percent of the nearly $21 trillion U.S. economy.

Powell and his colleagues at the Fed would like to see it get down to about 17 percent, at which time they would likely begin growing the portfolio again at a pace to maintain that balance sheet-to-GDP ratio over the long term.

(GRAPHIC: The Fed's balance sheet was a quarter of GDP - tmsnrt.rs/2HvdrGt)
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Offline K-Dog

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Re: Da Fed: Central Banking According to RE
« Reply #226 on: March 21, 2019, 09:14:31 AM »
Forever FED financial talk has been about 'ratios' and the need to get them right.  I think the only ratio that is really being tuned here is the ratio of smoke to air they want to blow up our ass.
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Offline RE

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📉 Stocks Indexes Drop As Bond Market Flashes Recession Warning
« Reply #227 on: March 23, 2019, 12:06:03 AM »
https://www.npr.org/2019/03/22/706073410/stocks-indexes-drop-as-bond-market-flashes-recession-warning

Business
Stocks Indexes Drop As Bond Market Flashes Recession Warning

March 22, 20199:48 PM ET
Scott Horsley 2010


Major U.S. stock indexes fell Friday as short-term Treasury yields exceeded those on long-term bonds, in what some analysts consider a sign that a recession may be coming.
Spencer Platt/Getty Images

The stock market tumbled Friday as investors digested an ominous warning sign: Interest rates on long-term government debt fell below the rate on short-term bills. That's often a signal that a recession is on the horizon.

The Dow Jones Industrial Average fell more than 460 points Friday, or about 1.8 percent. The broader S&P 500 index fell 1.9 percent.

Ordinarily, the yield on long-term debt is higher, just as 10-year certificates of deposit tend to pay higher interest rates than 3-month CDs.
Are We Ready For A Recession?
Planet Money
Are We Ready For A Recession?

Bond watchers get nervous when that typical pattern is turned on its head.

"We don't see that occur that often, but when it does, it's almost always bad news," said Campbell Harvey, a professor of finance at Duke University.

That's why warning lights started flashing Friday morning when the yield on the 10-year Treasury note slipped below that of the three-month bill. The last time that happened was just before the Great Recession.

Harvey's been keeping a close eye on these rare, "inverted" yield curves for more than 30 years, and treats them as a kind of early warning signal.

"My indicator has successfully predicted four of the last four recessions," he said, "including a pretty important call before the global financial crisis."

Harvey won't actually forecast a recession unless the yield curve stays inverted for at least three months. But even a flat curve — in which long-term yields are just slightly above short-term yields — could be an indicator the economy is losing steam.
Fed Signals Rate Hikes May Be Over For 2019
Economy
Fed Signals Rate Hikes May Be Over For 2019

"It might be that we dodge a recession, but the economic growth will be lower — much lower," Harvey said.

On Wednesday, the Federal Reserve lowered its own forecast of economic growth, to just over 2 percent for the year and signaled that it was unlikely to raise interest rates in 2019.

Fed Chairman Jerome Powell said slowing growth in China and Europe present "headwinds" for the U.S. economy. And ongoing trade disputes are not helping. "There's a fair amount of uncertainty," Powell said.

The unemployment rate is at a low 3.8 percent, but the economy added only 20,000 jobs in February. That was far less than projected by economists and the smallest gain since September 2017.
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Offline Eddie

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Re: 📉 Stocks Indexes Drop As Bond Market Flashes Recession Warning
« Reply #228 on: March 23, 2019, 09:54:24 AM »
https://www.npr.org/2019/03/22/706073410/stocks-indexes-drop-as-bond-market-flashes-recession-warning

Business
Stocks Indexes Drop As Bond Market Flashes Recession Warning

March 22, 20199:48 PM ET
Scott Horsley 2010


Major U.S. stock indexes fell Friday as short-term Treasury yields exceeded those on long-term bonds, in what some analysts consider a sign that a recession may be coming.
Spencer Platt/Getty Images

The stock market tumbled Friday as investors digested an ominous warning sign: Interest rates on long-term government debt fell below the rate on short-term bills. That's often a signal that a recession is on the horizon.

The Dow Jones Industrial Average fell more than 460 points Friday, or about 1.8 percent. The broader S&P 500 index fell 1.9 percent.

Ordinarily, the yield on long-term debt is higher, just as 10-year certificates of deposit tend to pay higher interest rates than 3-month CDs.
Are We Ready For A Recession?
Planet Money
Are We Ready For A Recession?

Bond watchers get nervous when that typical pattern is turned on its head.

"We don't see that occur that often, but when it does, it's almost always bad news," said Campbell Harvey, a professor of finance at Duke University.

That's why warning lights started flashing Friday morning when the yield on the 10-year Treasury note slipped below that of the three-month bill. The last time that happened was just before the Great Recession.

Harvey's been keeping a close eye on these rare, "inverted" yield curves for more than 30 years, and treats them as a kind of early warning signal.

"My indicator has successfully predicted four of the last four recessions," he said, "including a pretty important call before the global financial crisis."

Harvey won't actually forecast a recession unless the yield curve stays inverted for at least three months. But even a flat curve — in which long-term yields are just slightly above short-term yields — could be an indicator the economy is losing steam.
Fed Signals Rate Hikes May Be Over For 2019
Economy
Fed Signals Rate Hikes May Be Over For 2019

"It might be that we dodge a recession, but the economic growth will be lower — much lower," Harvey said.

On Wednesday, the Federal Reserve lowered its own forecast of economic growth, to just over 2 percent for the year and signaled that it was unlikely to raise interest rates in 2019.

Fed Chairman Jerome Powell said slowing growth in China and Europe present "headwinds" for the U.S. economy. And ongoing trade disputes are not helping. "There's a fair amount of uncertainty," Powell said.

The unemployment rate is at a low 3.8 percent, but the economy added only 20,000 jobs in February. That was far less than projected by economists and the smallest gain since September 2017.

Pretty much right on time for my prediction of the last five years...that 2020-2021 would be a bottom, maybe the next crash.

The thing that is different now was pointed out by Marty Armstrong some months ago....there is nowhere for big money to hide now, so a lot of it stays in stocks, more than we used to see.

Crypstos will change that.
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Offline RE

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💰 Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
« Reply #229 on: April 21, 2019, 03:53:50 AM »
https://www.counterpunch.org/2019/04/19/stephen-moore-gets-something-right-its-capitalism-vs-democracy/

April 19, 2019
Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
by Paul Street


Photo by Nathaniel St. Clair

Capitalism is a lot more important than democracy. I’m not even a big believer in democracy.

– Stephen Moore, a potential future member of the Federal Reserve Board

The dominant American ideology has long claimed that capitalism is about democracy. It isn’t – and one need not be an anti-capitalist “radical” to know better. My old copy of Webster’s New Twentieth Century Dictionary defines capitalism as “the economic system in which all or most of the means of production and distribution … are privately owned and operated for profit, originally under fully competitive conditions: it has been generally characterized by a tendency toward concentration of wealth and, [in] its latter phase, by the growth of great corporations, increased government controls, etc.”

There’s nothing—nada, zero, zip—about popular self-rule (democracy) in that definition. And there shouldn’t be. “Democracy and capitalism have very different beliefs about the proper distribution of power,” liberal economist Lester Thurow noted in the mid-1990s: “One [democracy] believes in a completely equal distribution of political power, ‘one man, one vote,’ while the other [capitalism] believes that it is the duty of the economically fit to drive the unfit out of business and into extinction. … To put it in its starkest form, capitalism is perfectly compatible with slavery. Democracy is not.”

Thurow might have added that capitalism is perfectly compatible with fascism, racism, nativism, sexism, militarism, and imperialism among other authoritarian and anti-democratic forces and formations. More than being merely compatible with slavery, moreover, U.S.-American capitalism arose largely on the basis of the Black cotton slave system in the nation’s pre-Civil War South. This is demonstrated at length in historian Edward Baptist’s prize-winning study The Half Has Never Been Told: Slavery and the Making of American Capitalism.

“We must make our choice,” onetime Supreme Court Justice Louis Brandeis is reputed to have said or written: “We may have democracy in this country, or we may have wealth concentrated in the hands of a few, but we cannot have both.” This statement (whoever made it) was perhaps unintentionally anti-capitalist. Consistent with Webster’s(above), the historically astute French economist Thomas Piketty has shown that capitalism has always been inexorably pulled toward the concentration of wealth into ever fewer hands.

Anyone who thinks capitalism is about democracy ought to take a working-class job and report back on how much they and their fellow workers’ opinions matter in the design and execution of their work, the compensation they receive, and the overall management and conduct of their employers’ firms. As Alexandria Ocasio-Cortez has remarked, people living under the “irredeemable” (her word) system of capitalism “check [their] rights at the door when they cross the threshold into the workplace.”  Karl Marx wrote brilliantly about the “hidden abode” and veiled “despotism” of the capitalist workplace, where employees perform typically narrow and alienating, life-shortening tasks conceived and devised with no higher purpose in mind than the upward transfer of wealth to the investor class. There’s no democracy on an Iowa Beef Processors killing floor or a Wal-Mart check-out line.

The tyranny continues beyond the workplace. Workers who do or say anything their employers don’t like off as well as on the job put their employment and the benefits associated with their hire – commonly including their health insurance and that of their families (no small matter) – at risk.

Public opinion on numerous key issues is largely irrelevant under American capitalism.  Most U.S.-Americans have long wanted the progressive and social-democratic agenda advanced by Bernie Sanders and Alexandria Ocasio-Cortez: guaranteed free and quality health care for all; a drastically increased minimum wage; a significant reduction of the nation’s extreme economic inequalities; free college tuition; the removal of private money from public elections; large-scale green jobs programs to provide decent employment and help avert environmental catastrophe; massive investment in public schools and housing, and more.  Most U.S.-Americans would go beyond Sanders and agree to drastic reductions in the U.S. Pentagon budget to help (along with increased taxes on the preposterously wealthy and under-taxed Few) pay for these and other good things. Most U.S.-Americans think public opinion ought to influence policy every day, not just on those occasional and brief, savagely time-staggered moments when “we the people” supposedly get meaningful egalitarian “input” by marking ballots filled with the names of major party candidates who have generally been pre-approved by the nation’s unelected dictatorship of money.

But so what? Who cares? The commoners don’t call the shots under capitalism.  They never have and they never will. Universal suffrage was granted in the West only with the understanding that commoners’ participation in “democratic” politics would not challenge the underlying persistence of bourgeois class rule. That rule is guaranteed through elite corporate and financial sector control and manipulation of various power levers (please see Chapter 5, titled “How They Rule: The Many Modes of Moneyed Class Power” in my 2014 book They Rule: The 1% v. Democracy) including but hardly limited to campaign contributions, lobbying, media ownership, and the investment and “job creation” function.

How curious it is, then, to behold corporate cable news talking heads seem stunned to report that the openly authoritarian real estate mogul and creeping fascist U.S. president Donald Trump has nominated someone for the Federal Reserve Board who believes that “capitalism is more important than democracy.” The nominee, Stephen Moore, was recently featured as follows in a disapproving CNN report:

“Moore, who President Donald Trump announced last month as his nominee for the Federal Reserve Board of Governors, has a history of advocating self-described ‘radical’ views on the economy and government….In speeches and radio interviews reviewed by CNN’s KFile, Moore advocated for eliminating the corporate and federal income taxes entirely, calling the 16th Amendment that created the income tax the ‘most evil’ law passed in the 20th century.”

“Moore’s economic worldview envisions a slimmed down government and a rolled back social safety net. He has called for eliminating the Departments of Labor, Energy and Commerce, along with the IRS and the Consumer Finance Protection Bureau. He has questioned the need for both the Department of Housing and Urban Development and the Department of Education. He has said there’s no need for a federal minimum wage, called for privatizing the ‘Ponzi scheme’ of Social Security and said those on government assistance lost their dignity and meaning.”

“…Moore has repeatedly said he believes capitalism is more important than democracy. In an interview for Michael Moore’s 2009 film Capitalism: A Love Story, Moore said hewasn’t a big believer in democracy. ‘Capitalism is a lot more important than democracy,’ Moore said. ‘I’m not even a big believer in democracy. I always say that democracy can be two wolves and a sheep deciding on what to have for dinner. Look, I’m in favor of people having the right to vote and things like that…Speaking on the Thom Hartmann Show in 2010…Moore … [said] …Saudi Arabia wouldn’t be better off as a democracy.

“‘I think [that without] capitalism, without free market capitalism, countries don’t get rich,’ Moore said, when asked if capitalism was more important than democracy. ‘And so I would rather have a country that’s based on, you know, a free enterprise system of property rights and free exchange of free trade of low tax rates’…Moore told CNN’s KFile, ‘I believe in free market capitalism and representative government. It is what has made America the greatest nation…on earth’” (emphasis added).

Many U.S.-Americans would feel painful cognitive dissonance after reading this news item. “What,” these indoctrinated citizens could exclaim: “he says he prefers capitalism to democracy?  What’s that’s about? Capitalismisdemocracy.”

No, it is not. Not at all. And, to repeat, you don’t have to be a radical critic of capitalism (like the present writer) to acknowledge this.  You can get it and be a prominent liberal academic like the late Lester Thurow (who wasn’t too critical of wealth-concentrating capitalism to charge $30,000 per speaking engagementin his heyday) or a right-wing political hacklike Stephen Moore.

(Many American capitalist “elites” and propagandists who routinely conflate the profits system with democracy probably know it’s a false equation but have learned to pretend otherwise. Some have likely learned so well that they’ve have crossed over into actually believing in the bogus conflation.)

Whether out of clumsiness or out of heartfelt candor, the clownish Moore publicly drops the doctrinal pretense that capitalism and democracy are the same thing. (Note that he supports “people having the right to vote” even as he states his preference for capitalism over democracy.  That is an acknowledgement that universal suffrage and periodic elections don’t necessarily translate into any real popular threat to his beloved regime of class rule.  This goes back to the birth of so-called bourgeois democracy: widespread voting is fine as long as the electoral partaking of the common people doesn’t threaten real capitalist authority.)

Moore drops the ball, however, when he identifies the profits system with the “free market.” Capitalism has never been about the “free market.”  It has always involved the owners and managers of capital exercising control over the state, using it to make themselves richer and to thereby (since wealthis power, as Louis Brandeis or someone pretending to be him knew) deepen their grip on politics and policy. The profits system is so dependent on and enmeshed with governmental protection, subsidy, and giveaways that one might half-reasonably question the accuracy of calling it capitalism: it is state-capitalismat the very least. Big Business today relies on a sweeping array of oligarchic government protectionsthat are ubiquitous across governments: patent, trademark and copyright laws that monopolize profitable knowledge; multiple and many-sided direct and indirect subsidies; ubiquitous regressive tax breaks, credit shelters and loopholes; regressive austerity measures; multiple and often complex debt mechanisms; economic, environmental and social deregulation, and ubiquitous privatization; control of central government banks.

One key part of the U.S.-American capitalist state is the Federal Reserve, on whose board Moore may soon sit. As the left economist Michael Hudson has explained, the Fed influences interest rates by “creating bank reserves at low give-away charges” and thereby “enables banks to make easy gains simply by borrowing from it and leaving the money on deposit to earn interest (which has been paid since the 2008 crisis to help subsidize the banks, mainly the largest ones). The effect is to fund the asset markets – bonds, stocks and real estate – not the economy at large”

Stephen “free market” Moore isn’t against government per se. He’s against any and all parts of government that serve the working-class majority, the poor, and the common good over the holy profits of the wealthy Few.  He’s all for those parts of government that expand those profits.

As anyone with political knowledge and common sense knows, moreover, Moore’s mission on the Fed board – the reason that Trump has nominated him – would be to advance  Trump’s political re-election agenda by pushing the president’s absurd claim that the Fed is pursuing a “tight money” (high interest rate) policy. The Fed is doing no such thing, but Trump says it is in what The Washington Post’s editorial board has rightly called “an anticipatory blame game for any economic slowdown that may develop.”

Still, give Stephen Moore some credit: he doesn’t mind going public with an elementary if sadly scandalous fact of social and political life past and present: capitalism and democracy work at cross purposes with each other.  Imagine that!
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Offline Eddie

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Re: 💰 Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
« Reply #230 on: April 21, 2019, 07:18:09 AM »
https://www.counterpunch.org/2019/04/19/stephen-moore-gets-something-right-its-capitalism-vs-democracy/

April 19, 2019
Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
by Paul Street


Photo by Nathaniel St. Clair

Capitalism is a lot more important than democracy. I’m not even a big believer in democracy.

– Stephen Moore, a potential future member of the Federal Reserve Board

The dominant American ideology has long claimed that capitalism is about democracy. It isn’t – and one need not be an anti-capitalist “radical” to know better. My old copy of Webster’s New Twentieth Century Dictionary defines capitalism as “the economic system in which all or most of the means of production and distribution … are privately owned and operated for profit, originally under fully competitive conditions: it has been generally characterized by a tendency toward concentration of wealth and, [in] its latter phase, by the growth of great corporations, increased government controls, etc.”

There’s nothing—nada, zero, zip—about popular self-rule (democracy) in that definition. And there shouldn’t be. “Democracy and capitalism have very different beliefs about the proper distribution of power,” liberal economist Lester Thurow noted in the mid-1990s: “One [democracy] believes in a completely equal distribution of political power, ‘one man, one vote,’ while the other [capitalism] believes that it is the duty of the economically fit to drive the unfit out of business and into extinction. … To put it in its starkest form, capitalism is perfectly compatible with slavery. Democracy is not.”

Thurow might have added that capitalism is perfectly compatible with fascism, racism, nativism, sexism, militarism, and imperialism among other authoritarian and anti-democratic forces and formations. More than being merely compatible with slavery, moreover, U.S.-American capitalism arose largely on the basis of the Black cotton slave system in the nation’s pre-Civil War South. This is demonstrated at length in historian Edward Baptist’s prize-winning study The Half Has Never Been Told: Slavery and the Making of American Capitalism.

“We must make our choice,” onetime Supreme Court Justice Louis Brandeis is reputed to have said or written: “We may have democracy in this country, or we may have wealth concentrated in the hands of a few, but we cannot have both.” This statement (whoever made it) was perhaps unintentionally anti-capitalist. Consistent with Webster’s(above), the historically astute French economist Thomas Piketty has shown that capitalism has always been inexorably pulled toward the concentration of wealth into ever fewer hands.

Anyone who thinks capitalism is about democracy ought to take a working-class job and report back on how much they and their fellow workers’ opinions matter in the design and execution of their work, the compensation they receive, and the overall management and conduct of their employers’ firms. As Alexandria Ocasio-Cortez has remarked, people living under the “irredeemable” (her word) system of capitalism “check [their] rights at the door when they cross the threshold into the workplace.”  Karl Marx wrote brilliantly about the “hidden abode” and veiled “despotism” of the capitalist workplace, where employees perform typically narrow and alienating, life-shortening tasks conceived and devised with no higher purpose in mind than the upward transfer of wealth to the investor class. There’s no democracy on an Iowa Beef Processors killing floor or a Wal-Mart check-out line.

The tyranny continues beyond the workplace. Workers who do or say anything their employers don’t like off as well as on the job put their employment and the benefits associated with their hire – commonly including their health insurance and that of their families (no small matter) – at risk.

Public opinion on numerous key issues is largely irrelevant under American capitalism.  Most U.S.-Americans have long wanted the progressive and social-democratic agenda advanced by Bernie Sanders and Alexandria Ocasio-Cortez: guaranteed free and quality health care for all; a drastically increased minimum wage; a significant reduction of the nation’s extreme economic inequalities; free college tuition; the removal of private money from public elections; large-scale green jobs programs to provide decent employment and help avert environmental catastrophe; massive investment in public schools and housing, and more.  Most U.S.-Americans would go beyond Sanders and agree to drastic reductions in the U.S. Pentagon budget to help (along with increased taxes on the preposterously wealthy and under-taxed Few) pay for these and other good things. Most U.S.-Americans think public opinion ought to influence policy every day, not just on those occasional and brief, savagely time-staggered moments when “we the people” supposedly get meaningful egalitarian “input” by marking ballots filled with the names of major party candidates who have generally been pre-approved by the nation’s unelected dictatorship of money.

But so what? Who cares? The commoners don’t call the shots under capitalism.  They never have and they never will. Universal suffrage was granted in the West only with the understanding that commoners’ participation in “democratic” politics would not challenge the underlying persistence of bourgeois class rule. That rule is guaranteed through elite corporate and financial sector control and manipulation of various power levers (please see Chapter 5, titled “How They Rule: The Many Modes of Moneyed Class Power” in my 2014 book They Rule: The 1% v. Democracy) including but hardly limited to campaign contributions, lobbying, media ownership, and the investment and “job creation” function.

How curious it is, then, to behold corporate cable news talking heads seem stunned to report that the openly authoritarian real estate mogul and creeping fascist U.S. president Donald Trump has nominated someone for the Federal Reserve Board who believes that “capitalism is more important than democracy.” The nominee, Stephen Moore, was recently featured as follows in a disapproving CNN report:

“Moore, who President Donald Trump announced last month as his nominee for the Federal Reserve Board of Governors, has a history of advocating self-described ‘radical’ views on the economy and government….In speeches and radio interviews reviewed by CNN’s KFile, Moore advocated for eliminating the corporate and federal income taxes entirely, calling the 16th Amendment that created the income tax the ‘most evil’ law passed in the 20th century.”

“Moore’s economic worldview envisions a slimmed down government and a rolled back social safety net. He has called for eliminating the Departments of Labor, Energy and Commerce, along with the IRS and the Consumer Finance Protection Bureau. He has questioned the need for both the Department of Housing and Urban Development and the Department of Education. He has said there’s no need for a federal minimum wage, called for privatizing the ‘Ponzi scheme’ of Social Security and said those on government assistance lost their dignity and meaning.”

“…Moore has repeatedly said he believes capitalism is more important than democracy. In an interview for Michael Moore’s 2009 film Capitalism: A Love Story, Moore said hewasn’t a big believer in democracy. ‘Capitalism is a lot more important than democracy,’ Moore said. ‘I’m not even a big believer in democracy. I always say that democracy can be two wolves and a sheep deciding on what to have for dinner. Look, I’m in favor of people having the right to vote and things like that…Speaking on the Thom Hartmann Show in 2010…Moore … [said] …Saudi Arabia wouldn’t be better off as a democracy.

“‘I think [that without] capitalism, without free market capitalism, countries don’t get rich,’ Moore said, when asked if capitalism was more important than democracy. ‘And so I would rather have a country that’s based on, you know, a free enterprise system of property rights and free exchange of free trade of low tax rates’…Moore told CNN’s KFile, ‘I believe in free market capitalism and representative government. It is what has made America the greatest nation…on earth’” (emphasis added).

Many U.S.-Americans would feel painful cognitive dissonance after reading this news item. “What,” these indoctrinated citizens could exclaim: “he says he prefers capitalism to democracy?  What’s that’s about? Capitalismisdemocracy.”

No, it is not. Not at all. And, to repeat, you don’t have to be a radical critic of capitalism (like the present writer) to acknowledge this.  You can get it and be a prominent liberal academic like the late Lester Thurow (who wasn’t too critical of wealth-concentrating capitalism to charge $30,000 per speaking engagementin his heyday) or a right-wing political hacklike Stephen Moore.

(Many American capitalist “elites” and propagandists who routinely conflate the profits system with democracy probably know it’s a false equation but have learned to pretend otherwise. Some have likely learned so well that they’ve have crossed over into actually believing in the bogus conflation.)

Whether out of clumsiness or out of heartfelt candor, the clownish Moore publicly drops the doctrinal pretense that capitalism and democracy are the same thing. (Note that he supports “people having the right to vote” even as he states his preference for capitalism over democracy.  That is an acknowledgement that universal suffrage and periodic elections don’t necessarily translate into any real popular threat to his beloved regime of class rule.  This goes back to the birth of so-called bourgeois democracy: widespread voting is fine as long as the electoral partaking of the common people doesn’t threaten real capitalist authority.)

Moore drops the ball, however, when he identifies the profits system with the “free market.” Capitalism has never been about the “free market.”  It has always involved the owners and managers of capital exercising control over the state, using it to make themselves richer and to thereby (since wealthis power, as Louis Brandeis or someone pretending to be him knew) deepen their grip on politics and policy. The profits system is so dependent on and enmeshed with governmental protection, subsidy, and giveaways that one might half-reasonably question the accuracy of calling it capitalism: it is state-capitalismat the very least. Big Business today relies on a sweeping array of oligarchic government protectionsthat are ubiquitous across governments: patent, trademark and copyright laws that monopolize profitable knowledge; multiple and many-sided direct and indirect subsidies; ubiquitous regressive tax breaks, credit shelters and loopholes; regressive austerity measures; multiple and often complex debt mechanisms; economic, environmental and social deregulation, and ubiquitous privatization; control of central government banks.

One key part of the U.S.-American capitalist state is the Federal Reserve, on whose board Moore may soon sit. As the left economist Michael Hudson has explained, the Fed influences interest rates by “creating bank reserves at low give-away charges” and thereby “enables banks to make easy gains simply by borrowing from it and leaving the money on deposit to earn interest (which has been paid since the 2008 crisis to help subsidize the banks, mainly the largest ones). The effect is to fund the asset markets – bonds, stocks and real estate – not the economy at large”

Stephen “free market” Moore isn’t against government per se. He’s against any and all parts of government that serve the working-class majority, the poor, and the common good over the holy profits of the wealthy Few.  He’s all for those parts of government that expand those profits.

As anyone with political knowledge and common sense knows, moreover, Moore’s mission on the Fed board – the reason that Trump has nominated him – would be to advance  Trump’s political re-election agenda by pushing the president’s absurd claim that the Fed is pursuing a “tight money” (high interest rate) policy. The Fed is doing no such thing, but Trump says it is in what The Washington Post’s editorial board has rightly called “an anticipatory blame game for any economic slowdown that may develop.”

Still, give Stephen Moore some credit: he doesn’t mind going public with an elementary if sadly scandalous fact of social and political life past and present: capitalism and democracy work at cross purposes with each other.  Imagine that!

Universal suffrage was granted in the West only with the understanding that commoners’ participation in “democratic” politics would not challenge the underlying persistence of bourgeois class rule.

We don't have bourgeois class rule. We have rule by the corporate elites and the USMIC. You old commies need to lose the Marx rhetoric. It does not apply.
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Re: 💰 Stephen Moore Gets Something Right: It’s Capitalism vs. Democracy
« Reply #231 on: April 21, 2019, 07:35:38 AM »
We don't have bourgeois class rule. We have rule by the corporate elites and the USMIC. You old commies need to lose the Marx rhetoric. It does not apply.

I didn't write that article.  I have no control over his choice of terminology.  Personally, you won't find that stuff in my writing, because I am not a "Marxist", although as I like to say I am further "left" than Che Fucking Guevara. lol.  However, the spirit of what he writes is basically correct.

Insofar as rule by the Corporate Elites versus "petty bourgeois" is concerned,  I'm not going to go down that road because I know where it leads with you.  Suffice it to say, the petty bourgeois are enablers of the rule by the corporate elite and they profit from that position.

RE
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Re: Da Fed: Central Banking According to RE
« Reply #232 on: April 21, 2019, 07:42:22 AM »
The bourgeosisie are the ones keeping this Titanic afloat. Yeah, they're mostly elite wannabes, but being bourgeois is not in itself a crime, and what we have is far from rule by the bourgeoisie.

These commies just can't turn loose of their Marx. Stupid if you ask me.
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Re: Da Fed: Central Banking According to RE
« Reply #233 on: April 21, 2019, 09:12:07 AM »
These commies just can't turn loose of their Marx. Stupid if you ask me.

I'm not asking you.  Maybe somebody else will though.

Capitalist Pigs don't turn loose of Adam Smith, Gold Bugs don't turn loose of Von Mises, Buddhists don't turn loose of Alan Watts, anti-SJWs don't turn loose of Jordan Peterson, Fundies don't turn loose of Jesus etc.  Most people have some acknowledged "expert" they rely on to explain their beliefs.  I'm not one of those people.  I do my own explaining.

RE
« Last Edit: April 21, 2019, 09:17:21 AM by RE »
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I wonder how DBank's shares will do after they release Trumpovetsky's records?   ???   :icon_scratch:

RE

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https://www.globalresearch.ca/us-1st-quarter-gdp-analysis-facts/5676033

The Apparent Surge in America’s Rate of Economic Growth (GDP): The Facts Behind the Hype
By Dr. Jack Rasmus
Global Research, April 30, 2019
Region: USA
Theme: Global Economy


Last week’s US GDP for the 1st quarter 2019 preliminary report (2 more revisions coming) registered a surprising 3.2% annual growth rate. It was forecast by all the major US bank research departments and independent macroeconomic forecasters to come in well below 2%. Some banks forecast as low as 1.1%. So why the big difference?

One reason may be the problems with government data collection in the first quarter with the government shutdown that threw data collection into a turmoil. First preliminary issue of GDP stats are typically adjusted significantly in the second revision, coming in future weeks. (The third revision, months later, often is little changed).

There are many problems with GDP accuracy reflecting the real trends and real GDP that many economists have discussed at length elsewhere. My major critique is the redefinition in 2013 that added at least 0.3% (and $500b a year) to GDP totals by simply redefining what constituted investment. Another chronic problem is how the price index, the GDP Deflator as it’s called, grossly underestimates inflation and thus the price adjustment to get the 3.2% ‘real’ GDP figure reported. In this latest report, the Deflator estimated inflation of only 1.9%. If actual inflation were higher, which it is, the 3.2% would be much lower, which it should. There are many other problems with GDP, such as the government including in their calculation totals the ‘rent’ that 50 million homeowners with mortgages reputedly ‘pay to themselves’.

Apart from these definitional issues and data collection problems in the first quarter, underlying the 3.2% are some red flags revealing that the 3.2% is the consequence of temporary factors, like Trump’s trade war, which is about to come to an end next month with the conclusion of the US-China trade negotiations. How does the trade war boost GDP temporarily?


Real GDP: Percent change from preceding quarter
Source: US Bureau of Economic Analysis

Two ways at least. First, it pushes corporations to build up inventories artificially to get the cost of materials and semi-finished goods before the tariffs begin to hit. Second, trade disputes initially result in lower imports while negotiations are underway. In the latest US GDP analysis reported last week, lower imports resulted in what’s called higher ‘net exports’ (i.e. the difference between imports and exports). Net exports contribute to GDP. The US economy could be slowing in terms of output and exports, but if imports decline faster it appears that ‘net exports’ are rising and therefore so too is GDP from trade.
Trump at the UN: Lies, Damn Lies, & Statistics

Looking behind the 1st quarter numbers it is clear that the 3.2% is largely due to excessive rising business inventories and rising net exports contributions to GDP.

Net exports contributed 1.03% to the 3.2% and inventories another 0.65% to the 3.2%. That is, over half.  Even the Wall St. Journal reported that without these temporary contributions (both will abate in future months sharply), US GDP in the quarter would have been only 1.3%. (And less if adjusted more accurately for inflation and if the 2013 phony redefinitions were also ‘backed out’).

US GDP in reality probably grew around the 1.1% forecasted by the research departments of the big US banks.

This analysis is supported by the fact that around 75% of the US economy and GDP is due to business investment and household consumption typically. And both consumption and investment are by far the primary sources of GDP. (The rest is from government spending and ‘net exports).

Consumer spending (68% of GDP) rose only by 1.2% last quarter and thereby contributed only 0.82% of the 3.2%. That’s only one fourth of the 3.2%, when consumption, given its size in the economy, should contribute 68%!

Durable manufactured goods collapsed by -5.3% and autos sales are in freefall. And all this during tax refund season which otherwise boosts spending. (Thus confirming middle class refunds due to Trump tax cuts have been sharply reduced due to Trump’s 2018 tax act).

Similarly private business investment contributed only a tepid 0.27% of the 3.2%, well below its average for GDP share.

Business investment is composed of building structures (including housing), private equipment, software and the nebulously defined ‘intellectual property’, and of course the business inventories previously mentioned. The structures and equipment categories are by far the largest categories of business investment. However, in the first quarter 2019, structures declined by -0.8%, housing by -2.8% and equipment investment rose only a statistically insignificant 0.2%.

This poor contribution of business investment contributing only 2.7% to GDP, when the long term historical average is about 8-10% normally, is all the more interesting given that Trump projected a 30% boost to GDP is his business-investor-multinational corporate heavy 2018 tax cuts were passed. 2.7% is a long way off 30%! The tax cuts for business didn’t flow into real investment, in other words. (They went instead into stock buybacks, dividend payments, and mergers and acquisitions of competitors). And they compressed household consumer spending to boot.

Since Trump’s tax cuts, there’s been virtually no increase in the rate of Gross private domestic investment in the US. It’s held steady at around 5% of GDP on average since mid-2017. Within that 5%, housing and business equipment contributions have been falling, while IP (hard to estimate) and inventories have been rising.

In short, both Consumer spending and core business investment contributions to US GDP have been slowing, and that’s true within the recent 1st quarter US 3.2% GDP.

In other words, 1st quarter GDP rose  due to the short term, and temporary contributions to inventories and net exports–both driven artificially by Trump’s trade wars.

The only other major contribution to first quarter GDP is, of course, Trump war spending which rose by 4.1% in 1st quarter GDP. (Conversely, nondefense spending was reduced -5.9% in the first quarter GDP).

Going forward in 2019, no doubt war spending will continue to increase, but business inventories and household consumption will continue to weaken. Meanwhile, business investment on structures, housing, and equipment and household consumption will continue to remain weak at best.

Trump is betting on his 2020 re-election and preventing the next recession now knocking at the US and global economy door. He will keep defense spending growing by hundreds of billions of dollars. He’ll hope that concluding his trade wars will give the economy a temporary boost. And he’ll up the pressure on the Federal Reserve to cut interest rates before year end.

Summing up, beneath the surface of the US economy the major categories of US GDP–business structures, housing, business equipment, and household consumer spending (especially on durables and autos)–will continue to weaken. Whether war spending, the Fed, and trade deals can offset these more fundamental weakening forces remains to be seen.

Bottom line, therefore, the 3.2% GDP is no harbinger of a growing economy. Quite the contrary. It is artificial and due to temporary forces that are likely about to change. It all depends on further war spending, browbeating the Fed into further submission to lower rates, and what happens with the trade negotiations.
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https://finance.yahoo.com/news/federal-reserve-chair-jerome-powell-may-have-just-killed-the-stock-market-meltup-164314401.html

Federal Reserve Chair Jerome Powell may have just killed the stock market melt-up
Brian Sozzi
Editor-at-Large
Yahoo Finance May 2, 2019

<a href="http://www.youtube.com/v/Vo3yVdp7xK4" target="_blank" class="new_win">http://www.youtube.com/v/Vo3yVdp7xK4</a>

Federal Reserve Chair Jerome Powell — forever a market mover — may have just put a dagger right through the heart of the bulls that are blindly buying stocks right now at dangerously higher valuations.

Powell’s comments on Fed day may have set a short-term top in markets, explained Miller Tabak equity strategist Matt Maley on Yahoo Finance’s The First Trade.

“The market could see a breather here,” Maley added.

While the Fed lived up to expectations on Wednesday by leaving interest rates unchanged, it was Powell’s somewhat hawkish comments on inflation that could upset the bull thesis that has enveloped the market in recent weeks.

“We suspect transitory factors may be at work,” Powell told reporters after the Fed’s rate decision. The word “transitory” was viewed by traders as a sign that the Fed would not deliver the interest rate cut later this year that had been priced into stock valuations.

The Dow Jones Industrial Average fell 162 points on Wednesday following Powell’s remarks. Selling pressure persisted into Thursday, with the Dow reversing early gains to drop by 150 points by midday trading.

Investors rotated into more defensive names such as McDonald’s, Procter & Gamble, Verizon Communications and Merck.

That rotation is counter to the action for most of April, where riskier areas of the market were bid up. It was just a few days ago that Microsoft and Apple touched trillion dollar market caps again, a combination of good first quarter results and the specter of low interest rates well into 2020.

Obviously, the reduced prospect of a rate cut theoretically should dent the case to buy stocks at much higher valuations than earlier this year.

Watch that VIX Index, people.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi
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While it is common knowledge that the US budget deficit is soaring even though the US economy is allegedly growing at a brisk, mid-2% pace, resulting in recurring bond trader nightmares about funding the growing twin US deficits (Budget and Current Account), what few people know is the increasingly ominous composition of this budget deficit.

As we first pointed out one month ago, when looking at the US 'income statement', most concerning by far is that for the first four months of fiscal year 2019, interest payments on the U.S. national debt hit $221 billion, 9% more than in the same five-month period last year, with the rate of increase breathtaking (see chart below). As a reminder, according to the Treasury's conservative budget estimates, interest on the U.S. public debt is on track to reach a record $591 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to almost 3% of estimated GDP, the highest percentage since 2011.

https://www.zerohedge.com/news/2019-05-01/minsky-moment-starting-2024-all-us-debt-issuance-will-be-used-pay-interest-debt
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💩 Deutsche Bank to set up 50 billion euro bad bank: FT
« Reply #238 on: Today at 12:13:24 AM »
D-Bank scrambling for survival.  But tell me, WTF is going to buy any of the DOGSHIT 💩they are loading into the "Bad Bank"?  ???   :icon_scratch:

RE

https://www.reuters.com/article/us-deutsche-bank-restructuring-usa/deutsche-bank-to-set-up-50-billion-euro-bad-bank-ft-idUSKCN1TH0S7

June 16, 2019 / 12:15 PM / Updated 7 hours ago
Deutsche Bank to set up 50 billion euro bad bank: FT


(Reuters) - Deutsche Bank is planning to overhaul its trading operations by creating a “bad bank” to hold tens of billions of euros of assets and shrinking or shutting its U.S. equity and trading businesses, the Financial Times reported on Sunday.

The bad bank would house or sell assets valued at up to 50 billion euros ($56.06 billion)- after adjusting for risk - and comprise mainly long-dated derivatives, the FT reported, citing four people briefed on the plan.

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With the creation of the bad bank, Chief Executive Officer Christian Sewing is shifting the German lender away from investment banking and focusing on transaction banking and private wealth management, the newspaper said.

As part of the restructuring, the lender’s equity and rates trading units outside continental Europe will be shrunk or closed entirely, the report said.

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The bank is planning cuts at its U.S. equities business, including prime brokerage and equity derivatives, to win over shareholders unhappy about its performance, four sources familiar with the matter told Reuters in May.

“As we said at the AGM on May 23, Deutsche Bank is working on measures to accelerate its transformation so as to improve its sustainable profitability. We will update all stakeholders if and when required,” Deutsche Bank said in an emailed statement on Sunday in response to the FT report.

Sewing could announces announce the changes along with Deutsche Bank’s half-year results in late July, the FT reported.

Reporting by Ishita Chigilli Palli and Kanishka Singh in Bengaluru; Editing by Sonya Hepinstall and Peter Cooney
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