“The recovery has been very strong,” Donald Trump said last week. Then the Commerce Department reported the U.S. economy contracted between April and June at the fastest pace in nearly three-quarters of a century, which is as long as economists have been keeping track. The drop wiped out five years of economic growth. Continue reading
Now it is time for various House Committees to publicly question Chairman Powell about the costs of the Fed's callous indifference to the real economy and struggling Americans.
The Federal Reserve Board—our unaccountable Central Bank—needs more citizen and congressional supervision. Fees from financial institutions fund its operations, not congressional appropriations. It is as secret as it wants to be and that’s plenty. (See Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider). Plus, the Fed can print money at will. In the past several years, it has “produced” trillions of dollars that juiced the stock market’s speculation. Continue reading
This great shift in bargaining power from workers to corporate shareholders has created an increasingly angry working class vulnerable to demagogues peddling authoritarianism, racism, and xenophobia.
Why do big corporations continue to win while workers get shafted? It all comes down to power: who has it, and who doesn’t. Continue reading
Their relentless rush to hit the pay jackpot is fueling the calamities that confront us.
America’s dirtiest three-letter word may now be “CEO,” and our ongoing economic meltdown is only making that tag even dirtier. Chief executives the nation over have spent this past spring scheming to keep their pockets stuffed while their workers suffer wage cuts, layoffs, and even death by COVID-19. Continue reading
Donald Trump said last Thursday’s jobs report, which showed an uptick in June, proves the economy is “roaring back”. Continue reading
To most people, if they are familiar with it at all, BlackRock is an asset manager that helps pension funds and retirees manage their savings through “passive” investments that track the stock market. But working behind the scenes, it is much more than that. BlackRock has been called “the most powerful institution in the financial system,” “the most powerful company in the world” and the “secret power.” It is the world’s largest asset manager and “shadow bank,” larger than the world’s largest bank (which is in China), with over $7 trillion in assets under direct management and another $20 trillion managed through its Aladdin risk-monitoring software. BlackRock has also been called “the fourth branch of government” and “almost a shadow government”, but no part of it actually belongs to the government. Despite its size and global power, BlackRock is not even regulated as a “Systemically Important Financial Institution” under the Dodd-Frank Act, thanks to pressure from its CEO, Larry Fink, who has long had “cozy” relationships with government officials. Continue reading
Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.
When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the act actually said was that the next time the banks failed, they would be subject to “bail ins”—the funds of their creditors, including their large depositors, would be tapped to cover their bad loans. Continue reading
So far, it can be said that central banks and governments in most advanced economies have acted correctly to prevent the economic lockdown of large segments of the economy from turning into a total economic disaster. They have, at least, saved the day. Continue reading
Congress seems to be at war with the states. Only $150 billion of its nearly $3 trillion coronavirus relief package—a mere 5%—has been allocated to the 50 states; and they are not allowed to use it where they need it most, to plug the holes in their budgets caused by the mandatory shutdown. On April 22, Senate Majority Leader Mitch McConnell said he was opposed to additional federal aid to the states, and that his preference was to allow states to go bankrupt. Continue reading
A central bank-financed UBI can fill the debt gap, providing a vital safety net while preventing cyclical recessions.
According to an April 6 article on CNBC.com, Spain is slated to become the first country in Europe to introduce a universal basic income (UBI) on a long-term basis. Spain’s minister for economic affairs has announced plans to roll out a UBI “as soon as possible,” with the goal of providing a nationwide basic wage that supports citizens “forever.” Guy Standing, a research professor at the University of London, told CNBC that there was no prospect of a global economic revival without a universal basic income. “It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later ….” Continue reading
Did Congress just nationalize the Fed? No. But the door has been cracked open for that possibility.
Mainstream politicians have long insisted that Medicare for All, a universal basic income, student debt relief and a slew of other much-needed public programs are off the table because the federal government cannot afford them. But that was before Wall Street and the stock market were driven onto life-support by a virus. Congress has now suddenly discovered the magic money tree. It took only a few days for Congress to unanimously pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which will be doling out $2.2 trillion in crisis relief, most of it going to Corporate America with few strings attached. Beyond that, the Federal Reserve is making over $4 trillion available to banks, hedge funds and other financial entities of all stripes; it has dropped the fed funds rate (the rate at which banks borrow from each other) effectively to zero; and it has made $1.5 trillion available to the repo market. Continue reading
The US airline companies have bankrupted themselves by buying back their stock in an enrichment scheme for CEOs and board members. With the impact of the virus on their revenues, Congress is handing them a $50 billion bailout. Instead of being bailed out they should be nationalized. Continue reading
Here we go again: Another financial bubble burst and another financial crisis threatening to disrupt the real economy! This time the trigger is the health pandemic of the coronavirus crisis, the most serious in a generation, which is paralyzing the real economy and triggering crashes in the financial sector. Continue reading
In what is being called the worst financial crisis since 1929, the US stock market has lost a third of its value in the space of a month, wiping out all of its gains of the last three years. When the Federal Reserve tried to ride to the rescue, it only succeeded in making matters worse. The government then pulled out all the stops. To our staunchly capitalist leaders, socialism is suddenly looking good. Continue reading
No real explanations by the Fed; it just dictates. It is a government of its own inside our government—the epitome of corporate socialism.
If you are a saver in a money market account or in a bank, you’ve already noticed your dwindling interest income as interest rates have been at their lowest in modern American history. Well, brace yourself. Your saving account has just become little more than a lock box, thanks to the supreme dictatorship of the Federal Reserve. Continue reading
Coronavirus and globalism will teach us vital lessons. The question is whether we can learn vital lessons that do not serve the ruling interest groups and ideologies. Continue reading
When the World Health Organization announced on February 24 that it was time to prepare for a global pandemic, the stock market plummeted. Over the following week, the Dow Jones Industrial Average dropped by more than 3,500 points or over 10%. In an attempt to contain the damage, on March 3 the Federal Reserve slashed the fed funds rate from 1.5% to 1.0%, in their first emergency rate move and biggest one-time cut since the 2008 financial crisis. But rather than reassuring investors, the move fueled another panic sell-off. Continue reading
While U.S. advocates and local politicians struggle to get their first public banks chartered, Mexico’s new president has begun construction on 2,700 branches of a government-owned bank to be completed in 2021, when it will be the largest bank in the country. At a press conference on Jan. 6, he said the neoliberal model had failed; private banks were not serving the poor and people outside the cities, so the government had to step in. Continue reading
Although the repo market is little known to most people, it is a $1-trillion-a-day credit machine, in which not just banks but hedge funds and other “shadow banks” borrow to finance their trades. Under the Federal Reserve Act, the central bank’s lending window is open only to licensed depository banks; but the Fed is now pouring billions of dollars into the repo (repurchase agreements) market, in effect making risk-free loans to speculators at less than 2%. Continue reading
According to official US government economic data, the US economy has been growing for 10.5 years since June of 2009. The reason that the US government can produce this false conclusion is that costs that are subtrahends from GDP are not included in the measure. Instead, many costs are counted not as subtractions from growth but as additions to growth. For example, the penalty interest on a person’s credit card balance that results when a person falls behind his payments is counted as an increase in “financial services” and as an increase in Gross Domestic Product. The economic world is stood on its head. Continue reading
Former Federal Reserve Chairman Alan Greenspan called Paul Volcker “the most effective chairman in the history of the Federal Reserve.” But while Volcker, who passed away Dec. 8 at age 92, probably did have the greatest historical impact of any Fed chairman, his legacy is, at best, controversial. Continue reading