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If “Everything Is Awesome”, Why The Alarms Over A Slight Rate Hike?

recovery

For those who have paid attention, the question asked, “If “Everything Is Awesome”, Why The Alarms Over A Slight Rate Hike?” is self-explanatory. Everything is NOT awesome. The economy is not fixed. It is deteriorating daily. The unemployment numbers are lies, the average family has no spare money to help boost the economy, and the Banks are not loaning to Main Street. Instead, they are investing on Wall Street, or in derivatives.  It is a “fake” recovery, benefiting only the rich. – Shorty Dawkins, Associate Editor

This editorial comes from the Wall Street Journal via zerohedge.com

by Omid Malekan

Imagine you have a serious illness and have been taking medication that was supposed to cure you long ago. After being on the maximum dosage for years you start to feel better, so you ask your doctor if you could roll back the dosage, ever so slightly, to alleviate some of the side effects. He says that would be fine—but then a pharmaceutical rep tells you that doing so would be dangerous. Whose advice would you follow?

This resembles the situation today as the Federal Reserve signals its intent to start raising interest rates, ever so slightly, after six years of near-zero rates. This extraordinarily loose monetary policy was introduced in late 2008 when the global economy was in free fall. U.S. gross domestic product was plunging, the unemployment rate was rising and would soon climb above 10%, and in March 2009 the Dow Jones Industrial Average would fall below 7000.

Although at the time few could argue with the need for such extraordinary Fed action, the U.S. economy today has been growing for several quarters. Unemployment is below 6%, and the Dow recently reached an all-time high above 18000. An outside observer might think that taking some modest steps back toward a normal monetary policy is a no-brainer. Not so. Within and outside the Fed there is a great debate as to when, and sometimes whether, the Fed should start raising rates, even by a trivial amount.

Charles Evans, president of the Chicago Fed and a voting member of the board that determines rate policy, said last month that raising rates too soon would be a “catastrophe.” Former CEO of General Electric Jack Welch , during a Feb. 4 interview on CNBC, called a possible spring rate hike “ludicrous.” Billionaire investor Warren Buffett told Fox Business Network on the same day that he didn’t think a rate increase this year would be “feasible.” Catastrophe. Ludicrous. Not feasible. Really?

It might help to put this into historical perspective. According to the Fed’s own monthly data, for the five decades (1954-2007) leading to the current rate-cut cycle, the benchmark, overnight federal-funds rate averaged 5.7%. In the 1980s the rate went as high as 19% and in the early 2000s, after the dot-com crash, it went as low as 1%. But the 5.7% average is the number that withstood the Vietnam War, the Cold War, the stagflation of the 1970s and the boom of the 1990s. Since December 2008 the fed-funds rate has been kept close to zero.

Read more here.

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Shorty Dawkins

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6 comments

  1. If you pay attention to the debt clock, we have less then 50% of the population in the work force currently, this includes part time workers. this equates to a large mass of the population being one large leech on those that do work.

    this also means we are now long past the point of no return.

    1. Please do not lump all who have trouble getting work in the same “basket”.

      There are many who grow what they can so that their families can eat, trade almost anything, including labor to get what they need, and those who save and share seeds (heritage – which is why they are trying to make heritage seeds illegal so that more Americans will starve.

      Others also plant food on bike trails, parks, creek banks, river banks, etc so that people can eat. Not all are leaches on the economy, and I would bet that most who are immigrated here and have little understanding of our government – they are just words they needed to learn. Which is why I try to tell all that if you speak the language they use, and many do NOT use English after living here 20 + years – teach them about our government, how they can live, that the people who serve are NOT the ones LAWFULLY in charge, but are employees put into place to carry out specific duties.

      Or they are illegals who are going to receive (listed below); and I personally rather that an American family whose job was DELIBERATELY destroyed by those traitors within our governments, the treasonous corporations, and the illegal and unlawful banking receive them. They do give back to our economy, unlike the illegals. They did work here, unlike the illegals. This IS their country, etc

      Now add this to the equation; those traitors serving within our governments are issuing work permits to illegals and giving them each $25,000 in U.S. taxpayer money, plus all that already listed? Yes, every person involved in any capacity who is assisting, aiding and abetting this are TRAITORS to the USA and the American people. Obama’s “amnesty” also gives illegals Social Security cards PLUS three years of “back” payments via the Earned Income Tax Credit, even though none of them paid any taxes in the first place. Then Obama is continuing to issue illegals Social Security cards and years of “back” welfare payments added to all that when his specific contract requires him to enforce our laws.

      1. I agree whole heartedly Cal, and maybe would add that the corporations are also bleeding this country dry, using their bail-outs, and tax amnesties to fill their coffers, then fire as many employee’s as possible to drive up their stock prices so the CEO’s can continue to fill their pockets off the sacrifice of jobs for working Americans.

        greed to a point is a good thing, it drives ambition and provides motivation, but the bottomless endless greed of these people is a poison, they place themselves as noblemen and kings, and view the rest of us as expendable serfs, and they want to keep good serfs where they are, and remove their ability to create competition so as to continue their corporate empire’s Reign.

        Do I know the answer to this problem? no I do not, we could email call and yell at our elected officials until we are bleu in the face, but because we cannot contribute to their private financial accounts the way these corporations can, they will give us deaf ears. I fear the abolishment of this government and the two party system is the only answer, but good luck achieving it.

  2. The debt clock currently says more then 50% of America is not working. if this is true we are past the point of no return, and our country is in such dire need of help it is beyond receiving enough of it.

  3. What ever happened to the American Dream, where We can be Our own boss? I’ll tell why, license, permission and registration in the USA corporation. Competition is Sin! To work is to eat in the US of A that makes it a Natural Right! What ever happen to suing if you do not like what you get? We have a Natural Right to eat and have a place to rest Our heads. Each of Us must have individual control of Our own trade coins or otherwise it is a monopoly. I thought we had free trade?

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