Fed
by
charleshughsmith
Executive Summary
- Understanding the Fed's ability to impact (or not) health & education, pensions, and inflation
- What you can do to insulate yourself from the impacts of the Fed's financial interference
- Mindset
- Major expenses
- Debt
- Resilience
- Income
If you have not yet read Part I: The Fed Matters Much Less Than You Think, available free to all readers, please click here to read it first.
In Part I, we found that the supposedly omniscient Federal Reserve is irrelevant to the engine of real wealth creation (innovation) and actively inhibits the allocation of capital and labor to innovation by incentivizing speculation and malinvestment.
In Part II, we’ll look at what else matters that the Fed either negatively influences or does not control, as well as specific actions we can take as individuals to insulate ourselves from the collateral damage caused by misguided central bank policies.
Health and Education
We all know health and education are vital to individuals and the economy, and like everything else that matters, the Fed’s influence is limited to financial repression of interest rates that enables the Federal government to avoid the sort of healthy fiscal discipline that higher rates would demand. In other words, the Fed has widened the moat around government spending, protecting it from the hard choices that would accompany massive deficits and bond issuance in a free-market economy.
Public and Private Pensions
By at least one measure, the Fed’s repression of interest rates (designed to recapitalize the banks at no direct cost to the Fed or government) has cost savers $10.8 trillion in lost income. Since the majority of savings in the U.S. are in public and private pension plans, 401Ks, and IRAs (individual retirement accounts), the Fed’s repression of interest rates has pushed these income-security savings into risky speculative asset bubbles in stocks, bonds, and real estate, and critically undermined the financial health of pensions by radically reducing their low-risk, safe returns.
How You Can Limit Your Exposure to the Fed’s Financial Interference
PREVIEW by charleshughsmithExecutive Summary
- Understanding the Fed's ability to impact (or not) health & education, pensions, and inflation
- What you can do to insulate yourself from the impacts of the Fed's financial interference
- Mindset
- Major expenses
- Debt
- Resilience
- Income
If you have not yet read Part I: The Fed Matters Much Less Than You Think, available free to all readers, please click here to read it first.
In Part I, we found that the supposedly omniscient Federal Reserve is irrelevant to the engine of real wealth creation (innovation) and actively inhibits the allocation of capital and labor to innovation by incentivizing speculation and malinvestment.
In Part II, we’ll look at what else matters that the Fed either negatively influences or does not control, as well as specific actions we can take as individuals to insulate ourselves from the collateral damage caused by misguided central bank policies.
Health and Education
We all know health and education are vital to individuals and the economy, and like everything else that matters, the Fed’s influence is limited to financial repression of interest rates that enables the Federal government to avoid the sort of healthy fiscal discipline that higher rates would demand. In other words, the Fed has widened the moat around government spending, protecting it from the hard choices that would accompany massive deficits and bond issuance in a free-market economy.
Public and Private Pensions
By at least one measure, the Fed’s repression of interest rates (designed to recapitalize the banks at no direct cost to the Fed or government) has cost savers $10.8 trillion in lost income. Since the majority of savings in the U.S. are in public and private pension plans, 401Ks, and IRAs (individual retirement accounts), the Fed’s repression of interest rates has pushed these income-security savings into risky speculative asset bubbles in stocks, bonds, and real estate, and critically undermined the financial health of pensions by radically reducing their low-risk, safe returns.
by
Gregor Macdonald
Global Slowdown
The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham – the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility?
The Dead Weight of Sluggish Global Growth
by Gregor MacdonaldGlobal Slowdown
The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham – the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility?
Total 293 items
by sand_puppy 
