The Fed

[Fife]

Money Printing Can't Replace Saving and Production as the Real Engine of Economic Growth

By the popular way of thinking, the lowering of the interest rate is likely to strengthen the overall demand for goods and services and this in turn is going to strengthen the production of goods and services (i.e., going to strengthen economic growth). Note that a decline in economic activity, according to this way of thinking, is a result of a weakening in the overall demand. Once demand is given the necessary boost, the economic growth should follow suit.

What's in the news today, in the midst of our Best Economy Ever?

Trump Calls on Fed to Do a 'Big' Rate Cut

U.S. President Donald Trump sent yet another shot across the Federal Reserve’s bow on Wednesday, calling on it for a "BIG CUT" in interest rates just two days ahead of a hotly-anticipated appearance by Chairman Jerome Powell at the Fed's Economic Symposium in Jackson Hole.

“The only problem we have is Jay Powell and the Fed,” he said. “Big U.S. growth if he does the right thing: BIG CUT, but don’t count on him!”

Trump accused the Fed of getting its policy wrong, complaining that "have a far lower interest rate, and we should be lower than them."

Pay attention and you'll see the UBI future, Keynesian friends. We already don't produce jack shit anymore. Lots of grown-ass men sitting on their asses smoking weed and playing the vidya games all day is really gonna really juice the economy, eh?

[Fife]

Thanks for all the zombies, Fed.

The Zombie (Company) Apocalypse Is Here

One of the most significant economic developments since the Great Recession has been the zombification of the economy.

A zombie company is a term introduced to the lexicon by an influential paper, Zombie Lending and Depressed Restructuring in Japan, by economists Ricardo J. Caballero, Takeo Hoshi, and Anil K. Kashyap. The official definition of a zombie company according to the Bank for International Settlements (BIS) “is a publicly traded firm that’s 10 years or older with a ratio of earnings before interest and taxes (EBIT) to interest expenses of below one.” More simply put, zombie companies are companies that are unprofitable — so unprofitable they are unable to pay even the interest on their debt out of their profits. They are effectively bankrupt but kept alive by banks continuing to lend them money to pay their existing loans.

. . .

According to the BIS, the share of zombie companies in the US doubled between 2007 and 2015, rising to around 10 perceent of all public companies. And counterintuitively, as interest rates have fallen lower and lower the number of zombie companies has increased.

. . .

Zombie companies are kept alive only with low interest rates and/or lax banking regulation. But as bankers assembled last month in Stockholm for the annual meeting of the International Capital Markets Association pointed out: “The question is, with the debt level where it is, can central banks ever afford to let interest rates go back up because it will lead to a major bankruptcy wave.” Zombie companies pose a significant challenge for central banks, because in a very real sense their hands are tied — they cannot raise interest rates significantly without causing a huge number of companies to go bankrupt.

The world now has the impossible choice of permanently reduced productivity and slower economic growth — or the mass bankruptcy of a significant percentage of the economy.

[SuburbanFarmer]

Almost as though central banks are a terrible idea.

[Speaker to Animals]

Almost as though central banks are a terrible idea.

Almost as though central banks are a terrible idea.

[SuburbanFarmer]

Almost as though central banks are a terrible idea.

Almost as though central banks are a terrible idea.

Disagree. But government-sponsored cabals given total control over monetary policy are an issue.

[Fife]

Why the Fed's Mythology Endures, with Murray Sabrin

Professor Murray Sabrin, author of the new book Why the Federal Reserve Sucks, joins HAPod to explain why ordinary people should care about — and oppose — the Fed. This is a comprehensive look at central bank mythmaking: how money creation benefits wealthy elites at our expense; what Keynesians, monetarists, and supply-siders get wrong; and, why we should understand the sordid history of money manipulation and tyranny.

[Speaker to Animals]

Almost as though central banks are a terrible idea.

Almost as though central banks are a terrible idea.

Disagree. But government-sponsored cabals given total control over monetary policy are an issue.

They only exist because we keep bailing them out, dude. "Heads I win; tails you lose". Fuck that.

[Fife]

Taleb nails the danger of asymmetry of risk again.

Limited liability through governmental corporate charters is so baked in the cake that 99.9% of otherwise educated people can't escape their blue-pilling on the source of corporate abuses and fuckery. It's the existence of government charters, ipso facto.

Rather than limited liability through government charter and bribery, consider for a moment the natural concept of *unlimited* liability. Every entrepreneur should assess risk in an IRL way and avoid the risk, insure against the risk, and/or mitigate it.

[Speaker to Animals]

A bank as we know it cannot exist without the state. One could certainly start such a creature without the state, but it would eventually collapse because bankers fuck up the risks. Nobody would keep their money in a bank if it were not for bailouts and FDIC insurance because banks would last maybe a five to ten years on average and then go bust, with all the people losing their money (and the bankers walking away with a lot of money).

I suppose you could go with a Knights Templar model, whereby the banker's money is not made by usury based on the money other people store in the bank, but by flat usage fees. It would be very hard for that to go bust other than via robbery, but if we are talking about the Knights Templar model, good luck, because they are going to be elite shooters running the operation.

I mean.. it might be cool if special forces veterans became Templar bankers, but that's speculative fiction. I don't see any good solution to our current problems until we reestablish the prohibition against usury. Nukedog has a bit of an argument if it is limited to usury. That shit is poison.

Not a huge fan of everything Matt Taibi, but his characterization of Goldman Sachs was spot on:

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.

https://www.rollingstone.com/politics/p ... ne-195229/

That's what happens when you get a class of people who worship money and give them power.

[Smitty-48]

I bet the Templar Banksters would be more SIGINT spooks than SOF jocks.

I mean, they're the Templar Banksters right now.