Almighty Dollar

Now Or Never

3 notes

The Perniciousness of ZIRP

by Gonzalo Lira

WEDNESDAY, FEBRUARY 1, 2012

This is the problem Ben Bernanke and the Federal Reserve currently have—and it’s their own stupid fault: They have promised to maintain interest rates at effectively 0% until at least the end of 2014—they have in fact announced this zero interest-rate policy (ZIRP) as the hallmark of their strategy to reignite the economy—

—but then they’re surprised when businesses aren’t borrowing more. They’re surprised when lending is in fact contracting. They’re surprised when the American economy doesn’t start borrowing—and thus growing—like crazy. 

So the American economy obviously doesn’t benefit from ZIRP. In fact, it stagnates because of ZIRP. 

Leaving aside the deplorable notion that debt-fueled consumption is “growth”, businesses are not going to borrow to expand during the announced period of ZIRP, because business owners will say, “I’m really not sure if my market is growing—and since I can get a low-interest loan for at least the next three years, I think I’m going to hold off on any expansion of my business, hold off on hiring new workers, and instead wait and see if the economy really does pick up. If it doesn’t pick up, I won’t have more debt to service. And if it does pick up, I can always borrow and expand later.”

I can always borrow and expand later”: That’s what every sensible business owner is saying today. Why eat free chocolate now—when I can eat it for free later? Why borrow for free now—when I can borrow for free later? 

And of course, later becomes never

[…]

So then, if businesses—and the wider economy—do not benefit from ZIRP, who does?

Why, the banks and the Federal government! (Yeah, I know:How am I not surprised … ?

See, the banks get their 0% loan from the Federal Reserve—and promptly go out and buy U.S. Treasury bonds, yielding 2% or so. Sure, a 2% yield is nothing—but it’s a whole lot of something when it is risk-free, and adds massively to the banks’ bottom line. And ultimately to the banksters’ bonuses. After all, the Federal government isn’t borrowing twenty bucks for gas: It’s borrowing $1.6 trillion a year—every year

Thus the Federal government, that glutton for debt, also benefits from ZIRP. 

Worse still, ZIRP is a disincentive to reduce the deficit and the overall debt. Since Bernanke and the Federal Reserve are putting out 0% money over the next three years, the Federal government will be under zero-pressure to reduce the deficit and pay down the debt. In fact, ZIRP encourages fiscal irresponsibility. After all, it is the rising coupon payment which eventually leads to rising debt levels being choked off. 

ZIRP doesn’t eliminate the Minsky Moment—that is, the Day of Debt Reckoning. Rather, ZIRP merely postpones it—while making it a whole lot bigger. 

Thus the Federal Reserve’s zero interest-rate policy does not help businesses expand and thus hire more workers to restart the economy; it does not encourage banks to lend to economically productive sectors; and it does not get the Federal government to begin reducing the deficit, let alone the debt. 

In fact, ZIRP makes all these problems worse

Read more »

Filed under economy economics politics editorial Federal Reserve Bernanke zero interest-rate policy Federal government national debt banks U.S. treasury bonds banksters’ bonuses

17 notes

Hurt ‘em where it hurts - - - their wallets. That’s all they really understand.

anonymissexpress:

Anonymous - Operation Black March

Thursday, March 1st 2012 to Saturday 31st March 2012

With the continuing campaigns for Internet-censoring litigation such as SOPA and PIPA, and the closure of sites such as Megaupload under allegations of ‘piracy’ and ‘conspiracy’ the time has come to take a stand against music, film and media companies’ lobbyists.

The only way is to hit them where it truly hurts.

Their profit margins.

March 2012 is the end of the 1st quarter in economic reports worldwide.

Do not buy a single record. Do not download a single song, legally or illegally. Do not go to see a single film in cinemas, or download a copy, Do not buy a DVD in the stores. Do not buy a videogame. Do not buy a single book or magazine.

Wait the 4 weeks to buy them in April: see the film later, etc. Holding out for just 4 weeks, maximum, will leave a gaping hole in media and entertainment companies’ profits for the 1st quarter, an economic hit which will in turn be observed by governments worldwide as stocks and shares will blip from a large enough loss of incomes.

This action can give a statement of intent:

“We will not tolerate the Media Industries’ lobbying for legistation which will censor the internet.” Regarding Black March: If you want to do something that makes a statement, consider shifting your money not only away from corporate media but to independent media. Buy comics published by someone other than DC and Marvel. Buy books from small and independent presses. Support independent production companies who fight to stay independent and fan-focused. Better yet, buy things directly from creators and artisans. Support independent retailers. Don’t just blanket punish media producers and distributors—refocus those resources into supporting the ones who espouse and depend on free exchange of information and ideas. Because those are the people preserving intellectual freedom. Those are the people creating work of substance. And those are the people struggling to make a living, because they aren’t bankrolled by the Corporate Elite lobbying for SOPA and PIPA.

(by Anonym0usNews)

(via polyslime)

6 notes

Belgium Strikes On Day Of EU Summit

by THE ASSOCIATED PRESS

BRUSSELS January 30, 2012

BRUSSELS (AP) — Belgian trade unions organizing a nationwide strike Monday called on leaders attending the European Union summit in Brussels to move away from austerity measures and start boosting growth and employment.

The 27 EU leaders converging on Brussels for their informal summit were largely unaffected by a train and public transport strike, even though some had to come through a small military airport instead of the main one in Brussels.

"We used our military plane — very small — but it functions. It is quite cold, but nevertheless we came," said Finland Prime Minister Jyrki Katainen.

Belgium’s three main unions have called for efforts to reinvigorate the European economy by centering on taxing multinationals and boosting public investment instead of slashing public services and imposing a pension reform that forces people to work longer and cuts payments in some cases.

One of the country’s airports was closed and Brussels’ international airport suffered cancellations, delays and diversions. Traffic delays were limited since many people either worked from home or took a day off.

Trade union leaders converged at the summit building for a small demonstration, demanding a better deal for the workers.

"What we need is growth. Growth creates jobs. And you don’t get growth when you suck the oxygen out of the economy by austerity, austerity, and then some," said Christian Democrat union leader Marc Leemans.

Overall, 23 million people are jobless across the EU, 10 percent of the active population.

Read more »

Filed under politics economy Belgium Brussels Belgian strike EU EU summit austerity measures eurozone crisis

0 notes

Newspapers, Paywalls, and Core Users

by Clay Shirky

posted on Wednesday, January 4th, 2012 

This may be the year where newspapers finally drop the idea of treating all news as a product, and all readers as customers.

[…]

There has never been a mass market for good journalism in this country. What there used to be was a mass market for print ads, coupled with a mass market for a physical bundle of entertainment, opinion, and information; these were tied to an institutional agreement to subsidize a modicum of real journalism. In that mass market, the opinions of the politically engaged readers didn’t matter much, outnumbered as they were by people checking their horoscopes. This suited advertisers fine; they have always preferred a centrist and distanced political outlook, the better not to alienate potential customers. When the politically engaged readers are also the only paying readers, however, their opinion will come to matter more, and in ways that will sometimes contradict the advertisers’ desires for anodyne coverage.

Read more »

Filed under economics newspapers Web Internet newspaper paywalls advertisers core readers

13 notes

occupyonline:

Bernard Lietaer has been studying the implementation of monetary systems for over thirty years. Trained as a civil engineer and economist, he has worked as a central banker, fund manager, university professor and consultant to governments, corporations and communities. He travels the globe researching and speaking about currency systems and is the author of numerous books and articles. 


In his 2011 PopTech presentation, he argues against a monoculture of currency – fiat currency, that is, such as the dollar, euro, or yuan – in favor of a high diversity of currencies such as the WIR, Dora, and other local currencies, which he believes, are shown to provide high resilience to communities and nations. 

He posits that it’s been scientifically proven that we need more than one currency, noting that patriarchal cultures have always had monopolies of a central currency, and matrifocal societies have always had a multiplicity of currencies. He believes we can rebalance our current monetary system woes through a rebalancing of the masculine and feminine in the money domain and that “political democracy without monetary democracy just doesn’t work”. 

Submitted by: shiracoffee

(Source: occupyonline)

Filed under economy economics monetary systems Bernard Lietaer fiat currency