Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the...
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.
Daily Reckoning founder Bill Bonner thinks central banks are waging war on the markets. He also believes they will lose.
I wholeheartedly agree with Bonner's rationale. Let's tune in.
This is a guest post courtesy of Bill Bonner and the Daily Reckoning.
Why the Feds Will Lose Their War on the Markets
The markets continue to dawdle. Not much conviction in either direction.
We've already looked at the War on Poverty, the War on Drugs and the War on Terror.
So let's move on...using our new lens to look at another of the feds' fake wars.
Dirty War
No war was ever officially declared against the markets.
But for four decades the feds conducted covert operations...a dirty war in which they've tried to mislead, obstruct, and suppress market forces.
They used fake money, fake savings, and fake interest rates to confuse investors, businesses, and consumers.
They didn't say so directly, but their purpose was to give out false signals so that people would change their behaviour.
'Demand' was too weak, they said. What to do about it?
They flooded the system with phony savings (credit).
Price signals were distorted. Credit limits seemed to disappear. Debt limits were eased.
Then, in 2008, the war turned hot...with the feds actively and overtly holding down interest rates to push up stock and bond prices.
In response to the crisis they caused - by encouraging too much debt in the housing sector - they claimed that the 'free market' had failed.
They were just responding to the 'emergency', they said.
Soon, everybody got in on the act - expressing an opinion about how high (or low) interest rates should be.
Force and fraud
Believe it or not, an activist group called 'Fed Up' argues that raising rates is...you guessed it...racist!
Institutional Investor magazine reports that a group funded by 32-year-old Facebook cofounder Dustin Moskovitz is lobbying against rate increases on the grounds that higher rates are bad for US workers. From the website:
'The truth about the economy is obvious to most of us: not enough jobs, not enough hours, and not enough pay - particularly in communities of color and among young workers.
'Some members of the Federal Reserve think that the economy has recovered. They want to raise interest rates to slow down job growth and prevent wages from rising faster. That's a terrible idea.
'We stand with millions of workers and their families in calling on the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.'
What? Who are these people? Do they have tails? Horns?
They're right about one thing: When the Fed tries to control the economy, it is politics, not markets, at work.
Markets work by persuasion and voluntary exchange. Politics works on force and fraud. Fed Up is a political organisation trying to influence how the force and fraud is applied.
But let's look at the feds' War on Markets through our now-familiar scope.
Victory is impossible
First, is this a war the feds can win?
No. Of course not.
Markets can be suppressed, delayed, and denied...but never eliminated.
Markets do not stop working just because you try to bend, distort, and even outlaw them. Victory is impossible.
The market for drugs does not stop just because the feds make them illegal. Instead, they reprice illegal drugs, taking into account the increased cost of doing business.
Nor does poverty disappear just because the feds make war on it.
'The poor will always be with you,' said Jesus, wisely.
Wealth and poverty are relative; there will always be some rich and some poor. Passing laws will not change that.
And 'terrorism'?
Those who do not have access to conventional armies always resort to unorthodox attacks.
That's what American colonists did when they launched their war against the British in 1775.
It's what the Jews did when they launched their 'insurgency' against the British in Palestine in 1939.
And it's what the Maquis did during the occupation of France by the Nazis during the Second World War.
Terror won't stop any time soon. Nor will markets cease to function.
Bubbles, bankruptcies, and misery
Second, does the enemy gain strength from the 'war' against it?
Well, yes and no.
Markets work perfectly well whether you make war on them or not. Governments can put any price on anything they want. But only markets can tell you what they are worth.
Just look at what happened in the Soviet Union. Or China, pre-1979. Or Venezuela.
Who bought anything from China when the communists were setting prices?
Who goes to Venezuela to do his shopping today?
We visited Russia soon after the Soviet Union was disbanded. Markets were just opening up. But after 70 years of price fixing, there was almost nothing to buy. Almost everything that was being sold had been pilfered from the army. We bought a pair of boots for $1.00. We still have them. The soles are so stiff they barely bend.
There are really only two types of economies - command economies and market economies. The latter work for everyone - but you never know who the real winners will be. The former work only for the commanders. Then, when they have stolen everything there was to steal, markets reassert themselves.
Economies are price-discovering, information-generating learning systems. On the world market, every economy has access to the same resources, more or less. It's what you do with them that counts.
Dictating prices is like teaching students that Japan won the Second World War...or saying that two plus two equals five...or rounding off Pi to three just to make it easier to remember.
But the more fake information you give out, the more valuable real information becomes.
A war the feds will ultimately lose
Third, did it create a new, corrupt Deep State industry? And fourth, do the combatants on both sides gain as the public loses?
Not exactly.
This is different from other 'wars' announced by the Deep State. This is how the insiders fund their other wars...and how they shift trillions of dollars from the public to themselves.
The War on Markets distorted almost all industries and corrupted the entire economy.
As reported here many times, suppressed interest rates alone probably cost savers as much as $10 trillion since 2008. Goosing up asset prices probably shifted another $10 trillion or so to the people who own them (typically, the elite).
As in all of these fake wars, the casus belli is phony.
Markets do not hurt people; they help them. Price signals, set by markets, are essential. Otherwise, you don't know whether you're adding wealth or subtracting it.
Trying to suppress free markets or abolish them always leads to confusion, bubbles, bankruptcies, and misery. Economies weaken; people grow poorer.
Since 2008, wages have been stagnant or falling for most people...GDP growth has declined and is now probably negative...productivity growth has declined more than any time in the last 40 years...world trade levels are back to 2009 levels...and the bounce-back from the Great Recession was the weakest on record.
For now, the war serves its real purpose: to increase the power and wealth of the Deep State insiders.
But it is a war that the feds will ultimately lose.
Trying to suppress markets is like putting a giant cork in the mouth of a volcano. It doesn't stop the eruption; it just makes it more violent.
Regards,
Bill Bonner,
For The Daily Reckoning, Australia
End Bonner - Mish Start - Fed Up
Let's start with three truths by Bonner.
By Scutify
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JPMorgan's Dimon defends Trump advisory role, deregulation
JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters, saying he...
JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters, saying he would help "any president" in office.
At the bank's annual meeting in Wilmington, Delaware, several attendees demanded answers from Dimon about his role on a White House business council and JPMorgan's involvement with financial deregulation efforts in Washington.
Read the full article here.
Jobs Data Shows Economy Still Not Recovered, Far from Full Employment
Workers Still Face Low Pay, Part-Time Employment in Today’s Economy
Connie Razza, Director of Strategic Research for the Center for Popular Democracy (CPD), released the following...
Workers Still Face Low Pay, Part-Time Employment in Today’s Economy
Connie Razza, Director of Strategic Research for the Center for Popular Democracy (CPD), released the following statement following today’s jobs report:
“Today’s jobs numbers show we are still a long way away from a full recovery, particularly in communities of color. Labor force participation rates are still at their lowest levels in decades and the rate of involuntary part-time work is still far too high. The clearest indicator that there is still significant slack in the labor market is that wages are still not rising. With unemployment rates remaining stuck, the number of jobs added under-performing expectations and last month’s projections revised downward, the new jobs numbers show that the Federal Reserve made the right decision by not raising interest rates.
“In her comments following the Fed’s decision not to raise interest rates in September, Federal Reserve Chair Janet Yellen responded to a question about the Fed Up campaign by speaking about workers who are still suffering from under-employment and don’t have the opportunity to work a full workweek. She is correct: the even this very disappointing headline unemployment rate understates the even greater weaknesses of the economy.
“This reality was illuminated by media reports in the past few days of unfair scheduling practices at Starbucks, which include workweeks that fall far short of 40 hours, and terrible scheduling conditions such as lack of notice and ‘clopening’ shifts. If the economy were healthy and we were at full employment, America’s largest employers wouldn’t be able to treat their employees this way. In a true full employment economy, workers would be able to demand fair schedules and better wages, to make up for years of rising inequality. Today’s jobs numbers continue to show that the economy is far from full employment and we still have a lot of work to do before everyone who wants one can find a stable, predictable, full-time job.”
Anthony Newby, Executive Director of Minnesota Neighborhoods Organizing for Change(MNNOC) released the following statement:
"A 15.9% unemployment rate for black Minnesotans means we have a two-tiered economy, here and across country. Some people have access to steady jobs with good pay, and some don't. At workplaces across the country, like Target Field in Minneapolis, people doing the same job have different standards for scheduling and pay for doing the exact same job. Workers need the same protections everywhere and we need the economy to keep growing to win them."
Sondra Jones, temp worker at Target Field for the past two summers at $8/hour, Minneapolis:
“Me and my co-workers at Target Field are not experiencing the economy or employment in our country getting any better. We are still struggling to get enough hours to live off and to plan our lives around our unpredictable work schedule. Once, I received a text message telling me to come into work later that day. I had planned to baby-sit for my sister, but I needed to go into work. Since my sister didn't have childcare that day, she lost her job. We need enough notice of our schedule to plan our lives, and we need enough hours to pay our bills.”
For additional interview opportunities with Connie Razza, Anthony Newby, Sondra Jones, or low-wage workers from other cities across the country in various industries, please contact Ricardo Ramirez at rramirez@populardemocracy.org, 202-905-1738 or Anita Jain at ajain@populardemocracy.org, 347-636-9761.
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The King who carried on the fight for economic justice
The King who carried on the fight for economic justice
Coretta Scott King opposed violence in all its forms — from the personal violence that took her husband 50 years ago Wednesday, to what she described as the economic violence of unemployment and...
Coretta Scott King opposed violence in all its forms — from the personal violence that took her husband 50 years ago Wednesday, to what she described as the economic violence of unemployment and poverty that continues around us.
Read the full article here.
Climate Jobs for All
Other groups like the Sierra Club, Demos, 350.org, the Center for Popular Democracy, the Labor Network for Sustainability, and the US Climate Action Network have also been discussing the climate...
Other groups like the Sierra Club, Demos, 350.org, the Center for Popular Democracy, the Labor Network for Sustainability, and the US Climate Action Network have also been discussing the climate jobs guarantee (CJG).
Read the full article here.
Chair Yellen’s Troubling Comments on African American Unemployment
In her testimony before the House on Wednesday, Federal Reserve Chair Janet Yellen downplayed what the Fed can do to address the outsized unemployment among African Americans. Responding to a...
In her testimony before the House on Wednesday, Federal Reserve Chair Janet Yellen downplayed what the Fed can do to address the outsized unemployment among African Americans. Responding to a question about racial inequality in the job market, Yellen said “there really isn’t anything directly that the Federal Reserve can do to affect the structure of unemployment across groups . . . there’s nothing we can do about any particular group.” Connie Razza, director of strategic research at the Center for Popular Democracy, issued the following statement on behalf of the Fed Up Coalition:
“Chair Yellen’s response is troubling. With African Americans still mired in our own Great Recession, we should be hearing a positive vision from the Fed on how to foster full employment. While the economy is complex and the Federal Reserve’s tools are limited, there is plenty the Fed can do to improve the labor market for Black workers and to reduce racial inequality in the job market.
“Today, the unemployment rate for African Americans is 9.5 percent – higher than it ever was for whites during the worst months of the Great Recession. Black America is still in the middle of a Great Recession. Chair Yellen must consider the many places in our country where Black unemployment is double pre-recession levels before putting the brakes on recovery.
“When Chair Yellen and other Fed officials talk about raising interest rates in 2015, they are talking about intentionally slowing down the economy and job growth, which would make it harder for most Americans, and particularly Black workers, to find good paying jobs. The direct consequences of the Fed’s projected interest rate hikes would harm millions of workers.
“Instead, the Fed could continue to push toward a tight labor market, in which the number of people looking for work more closely matches the number of jobs available. A full-employment economy, as we saw in the late 1990s, shrinks racial inequity and will bring particular benefits to Black workers, who are disproportionately unemployed, underemployed, underpaid, and endure more difficult scheduling circumstances in the workplace.
“In particular, a tight labor market reduces the practicability of discriminating. High unemployment rates facilitate racial discrimination because there are too many qualified job candidates for every job, so employers can arbitrarily limit their labor pool with unnecessary educational requirements, irrelevant credit or background checks, or straightforward discrimination. A tight labor market makes it much harder for employers to succumb to conscious and unconscious biases and instead hire workers who are qualified. The Federal Reserve must not raise interest rates until a tighter labor market has been achieved.
“Inflation is below the Fed’s already-low two percent target. Unemployment and underemployment are too high, while wages are still too low. There is no reason to raise interest rates in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately harm African Americans.”
To schedule interviews with Connie Razza, send an email to press@populardemocracy.org.
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The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda.
Hundreds To Protest Potential Safety Net Cuts At GOP Retreat
Hundreds To Protest Potential Safety Net Cuts At GOP Retreat
"We’re stronger together. And right now, more than ever, we need our elected officials to be looking at how we expand the safety net, how we provide more opportunities and more stability to...
"We’re stronger together. And right now, more than ever, we need our elected officials to be looking at how we expand the safety net, how we provide more opportunities and more stability to communities across the country, not less,” said Jennifer Epps-Addison, a co-executive director of the Center for Popular Democracy Action, a progressive umbrella group organizing the event with the help of local partners.
Read the full article here.
Let cities better help their retirees
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added...
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added years will be a time of uncertainty and dependency rather than leisure.
Connecticut is the latest state seeking to stave off this looming crisis in elder poverty, passing legislation to provide access to a state-sponsored retirement plan for the 600,000 Connecticut residents who do not have a plan through their employers. The bill will automatically enroll workers in businesses with five or more workers in a retirement plan overseen by a new quasi-public authority. Connecticut joins California, Illinois, and more than a dozen other states pushing for state-sponsored plans to encourage workers to save for retirement.
The accelerated pace of activity follows decades of wage stagnation that have left the average American worker with just half of what workers saved in the 1970s. Half of those nearing retirement have no retirement savings at all and those that do have savings have only enough to provide a median income of around $400 per month.
At the same time, employers have largely abandoned defined benefit pension plans that once guaranteed a minimum level of security based on salary and length of service, opting instead for plans that put the onus on workers to build up their own retirement accounts. Today, more than half of American workers have no private pension coverage at all.
Those who retire without a pension or sufficient savings will depend largely on Social Security for their retirement income, a system that will grow increasingly burdened as baby boomers retire, leaving fewer workers to cover the costs of each retiree.
This daunting reality has spurred states like Connecticut to act.
Innovation at the state level, however, is currently hindered by the federal Employment Retirement Security Act (ERISA), which generally preempts state action on private sector pensions. State legislatures have had to build language into bills making any plan contingent on an exemption from federal ERISA requirements. This burden creates uncertainty for both workers and state administrators, preventing many states from even exploring the possibility of a plan.
In response, the Department of Labor (DOL) is currently developing a safe harbor rule that would clarify how states can bypass ERISA requirements. The rule would let states develop the retirement security model that best suits their residents, while also learning from the successes and missteps of other state plans.
While the proposed DOL rule is a great first step, it does not go far enough in its present form. The rule is limited to states, but cities such as New York are also considering similar plans. They should be afforded the same opportunity to ensure a secure retirement for their residents.
In developing its rule, the DOL should aim to reach the largest possible number of workers, including those whose state legislatures are unable or unwilling to address retirement security. Including cities also allows for more tailored programs when demographics and industries vary widely across a state.
Preventing an elder poverty crisis will require creative solutions at all levels of government. The DOL should ensure that federal regulations foster that creativity, rather than stifle it.
By ANDREW FRIEDMAN
Source
Poll: Voters like Charter Schools but Want More Oversight
The Seattle Times - March 12, 2015, by Leah Todd - Voters want greater oversight for charter schools and more assurance that charters — independently run but publicly funded schools — won’t hurt...
The Seattle Times - March 12, 2015, by Leah Todd - Voters want greater oversight for charter schools and more assurance that charters — independently run but publicly funded schools — won’t hurt other public schools by drawing students away, a new national poll suggests.
Two education policy groups that are generally skeptical of charters — In the Public Interest and the Center for Popular Democracy — conducted the poll, which involved interviews with 1,000 randomly selected registered voters from across the country.
They found that while the public is mostly supportive of charter schools, most voters surveyed said they wanted better financial auditing and oversight. Though nearly one in three respondents said they knew nothing about charter schools, 62 percent said they would prefer to decrease or keep the same number of charters in their area.
A lack of choice about where to send children to school wasn’t a major issue among the voters interviewed — only about 10 percent listed that as a top concern.
The top areas of concern for those surveyed were lack of parental involvement, too much focus on standardized tests and large class sizes.
The voters surveyed overwhelmingly supported audits of charter schools’ finances to detect fraud or waste, and said that before a charter school opens, its impact on nearby public schools should be studied.
The former is already happening in Washington state, where the charter school commission has increased its oversight of the state’s lone charter following financial and organizational problems. The commission has added more financial reporting to its charter application process and has ordered a state audit into the school’s finances.
This year, lawmakers in six states considered bills to limit the number of charter schools in their states, and nine states proposed increasing charter-school transparency and adding oversight, according to Kyle Serrette, director of education at the Center for Popular Democracy.
In Washington, Sen. Jeannie Darnielle, D-Tacoma, proposed a bill that would mandate performance audits for charters and allow no more than three charter schools to open simultaneously in any single school district. The bill died in committee.
You can dig into more of the poll’s results here.
Source
Data on immigrants won't be safe from Trump, unless the data doesn't exist
Data on immigrants won't be safe from Trump, unless the data doesn't exist
When New York City implemented its IDNYC municipal ID system, it was meant to give undocumented immigrants a way to access crucial services that require government identification. But as Donald...
When New York City implemented its IDNYC municipal ID system, it was meant to give undocumented immigrants a way to access crucial services that require government identification. But as Donald Trump’s inauguration looms, a new lawsuit will test the wisdom of keeping sensitive data for the program.
A NEW LAWSUIT WILL TEST THE WISDOM OF HOLDING THE DATA
Two Republican state assembly members have sued to stop the destruction of records on hundreds of thousands of cardholders, and a court has decided that the records must remain, pending a hearing later this month. Soon after, Trump will take office, as advocates worry whether he’ll target the information to identify undocumented immigrants.
There is no guarantee the lawsuit will succeed, or that Trump will be able to use the records — which contain information on many people besides immigrants — for deportation purposes. But what looked like a clever bureaucratic gambit is unexpectedly something very different, and to immigrants, possibly more dangerous.
When it designed the IDNYC program, New York retained information on cardholders, but with a caveat: at the end of this year, the city would have the power to change how it holds the data. In an act of partisan gamesmanship, the clause in the local law amounted to a kill switch — one that was put in place, as one Councilman almost presciently put it, “in case a Tea Party Republican comes into office.”
THE CLEVER GAMBIT SUDDENLY LOOKS VERY DIFFERENT
The suit filed this week rests on New York’s state transparency law, known as the Freedom of Information Law, or FOIL. According to the suit, since there are no provisions in the law that allow for the destruction of government records, the city would be overstepping its bounds by destroying the IDNYC data, especially based on who is in office.
The dispute isn’t without precedent. In New Haven, Connecticut, a similar legal battle unfolded over the city’s municipal ID program. There, an anti-immigration group also sued the city under the state’s freedom of information law, with plans to turn the information over to ICE. In that case, the city beat back the lawsuit, but that won’t ensure the same outcome in New York.
“The city is violating state law,” Nicole Malliotakis, one of the Assembly members involved in the suit, told The Verge. “They are not doing what’s in the best interest of the citizens that they are representing.”
In many ways, the database debate parallels other stories of unintended consequences unfolding as the government prepares to transition from Obama to Trump. How will Trump use the surveillance apparatus created by Obama? What does this mean for the undocumented immigrants brought to the US as children, who are staying through an Obama executive order?
THE DATABASE DEBATE PARALLELS STORIES UNFOLDING ACROSS GOVERNMENT
As the Center for Popular Democracy, which advocates for immigrants’ rights, pointed out in a report last year, there are two generally accepted ways to safeguard sensitive data: explicitly prevent its release in the legislation, or never provide the data in the first place. Cities have already proven that not retaining underlying personal information is viable — San Francisco operates a program without using underlying application documents, for one example.
Win or lose, if there’s any lesson for privacy advocates and local governments to carry from the unexpected battle over its data, it may be that even planned self-destruction is no impenetrable barrier against misuse. The best way to keep sensitive data private may still be to never hold the data at all.
By Colin Lecher
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2 months ago
2 months ago