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2024-04-15 Economy

[American Thinker] "Balance and control government activity, which always tends to want more power. Force our government to live within the bounds of our Constitution. For the Constitution explicitly limits the power and scope of only the government. It does so to protect the inalienable rights and freedom of the individual citizen."

Monetary Policy implementation is bipolar. The Federal Reserve tightens through interest rate increases and concurrently stimulates with excess money supply (liquidity). These two activities are diametrically opposed. Yet they happen by the hand of one federal agency, the Federal Reserve’s Federal Open Market Committee (FOMC).

The net effect: Inflation, due to excess money supply, is decimating the buying power of the dollar. Simultaneously, interest rates are bludgeoning business expansion through higher costs of debt. Financial institution margins compress due to the squeeze in spread between long and short rates.

Long interest rates (market-driven) have not gone up nearly as much as the Fed raised short rates (Fed Fund Rate). The yield curve remains inverted, further suggesting a recession.

All recessions are a monetary phenomenon, according to Milton Friedman and through economic observation. Why the Fed decided to put us into a recession is curious. Recessions hurt the private economy and citizen. Recessions don’t hurt bureaucrats or government workers. If the bureaucrat can’t get paid through raising taxes, they print money.

The excessive supply of money was created by placing our nation into massive debt (sale of Treasury Bonds). That debt will be paid back by every working citizen through taxes, further depressing the individual’s ability to stand on his own. That debt was incurred because our government decided to create massive spending programs for entitlements, welfare, student loan forgiveness, COVID relief, and green energy subsidies like E.V.s.

If one believes that the government is the solution for every problem (collectivists, socialists, communists, fascists, democracy, the left), then why not crush the antithesis of the government — namely, private enterprise and free citizens working in the private economy by causing a recession brought on by federal monetary policy. This is not a bias along party lines. Many Republicans exhibit these tendencies, as do most Democrats.

Posted by Besoeker 2024-04-15 06:34|| || Front Page|| [11138 views ] Top

#1 interest rates are bludgeoning business expansion through higher costs of debt

Strange how banks are paying 'savers' 0.04% interest. Couldn't be because the banks no longer see it as a source to fund their business since the Treasury and Fed give them all they ask for.

Posted by Procopius2k 2024-04-15 06:42|| 2024-04-15 06:42|| Front Page Top

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