Posted on 11/09/2010 4:45:07 AM PST by rabscuttle385
Central bankers urge tax, regulatory reforms, pro-trade policy.
WASHINGTON (MarketWatch) — Top Federal Reserve officials on Monday said the central bank has done everything it can to help a weak U.S. economy. The rest is up to Congress and the White House.
In separate speeches, three senior Fed executives said Washington needs to fashion better tax and regulatory policies that encourage businesses to invest in the U.S. and create jobs. They said there is little else the Fed can do to boost domestic growth.
"It is absolutely imperative that the Congress and the president attack the long-run budget problems the nation faces," St. Louis Federal Reserve President James Bullard said in a speech to Wall Street financial analysts in New York.
(Excerpt) Read more at marketwatch.com ...
Bosh. The Fed could go negative on interest rates and PAY us to hold their dollars.
What the hell? This is the pimp telling his crack ho that she really needs to cut back on smoking crack.
If they are printing more money,
isn’t that what they are forcing us to do?
They are right. The government forgot all about investment, technology, and organic economic growth when W took office in 2001.
Citizens to the FED: Get your act together and stop screwing us to prop up the idiots in Washington. They won’t back up from the trough until you take the feed away.
They simply have to face the truth. Socialists have run out of other people’s money to spend. You have killed the economy. There is no more to take without killing Nation as well.
“They are right. The government forgot all about investment, technology, and organic economic growth when W took office in 2001.”
Just so, the real estate driven boom engineered by the Bush Administration was a serious policy mistake and the current Administration has only made matters worse. The Fed has done everything it can to use liquidity as a tourniquet to staunch the bleeding but clearly this is not sufficient. Conservatives need to stop the silly Fed attacks and recognize the nature of the problems we face. Our economic competitiveness has suffered greatly over the last 10 years and we need to start the hard work of recovering it. That will require streamlining (easing)regulations, simplifying the tax code, broadening the tax base, bringing government spending to heal and encouraging free trade, capital flows and household saving. The Fed is right to seek to weaken the dollar 10% to 20% versus the yuan and Euro. But it must be wary of sending the buck into a tail spin. The Fed is walking on a thin tight rope now and conservatives will do well to support it rather than slagging it off.
.....the real estate driven boom engineered by the Bush Administration.....
The Real estate boom was driven by the congress, specifically Barnie Frank and Chris Dodd with Eliot Spitzer as an AIG transforming facilitator. The Bush Administration opposed by could not kill the legislation that is destructing the economy.
” The Fed is right to seek to weaken the dollar 10% to 20% versus the yuan and Euro. But it must be wary of sending the buck into a tail spin. “
So, it’s perfectly acceptable to blow up the dam, as long as the water stays in the reservoir....
Look, the fact that the dollar is the world reserve currency is both a blessing and a curse. It's a blessing in so much as it allows us to import far more goods and services than we export and run fiscal deficits that we can never repay. It is a curse because it artificially holds up the exchange value of the currency, thereby reducing the competitiveness of our goods and services in export markets.
The over-valuation of the dollar helped the world economy last year by allowing U.S. interest rates to stay low and the rest of the world to recover by way of exporting to the U.S. But we can't as a nation afford to finance the global recovery through massive accumulation of debt forever. We need to export more, import less, become more efficient and to encourage import substitution. One can't do that with an over-valued currency. Full stop.
As for Fannie and Freddie being the cause of the housing boom/bust, we conservatives need to get off that canard. FNM and FRD were late to the sub-prime party. They joined in only after the private sector securitization machine had utterly undermined whatever was left of mortgage loan underwriting in the U.S. They started buying sub-prime paper largely because they had lost much of their marketshare to the go-go mortgage banks like Countrywide that were able to offer advantageous terms to borrowers that the GSE couldn't match because the rating agencies and RMBS investors didn't care how poorly the loans were underwritten. Granted, congress shouldn't have allowed the GSE to blow up their balance sheets, but this wasn't the cause of the disease, only a symptom. The whole mess was made possible because the Chinese recycled their excess dollar reserves back into the U.S. economy through government, agency and MBS bond purchases. They accumulated the excess dollar reserves because the Bush Administration permitted the PRC to grossly undervalue the yuan. The result, a sugar high import consumption and construction driven boom that was doomed to fail. And when it failed, it failed spectacularly, undermining the safety and soundness of the world's banking system. We need to follow the policy lead provided by the far more conservative Brits and Germans now: fiscal austerity, reasonable exchange rates and increased productivity. In other words, we need real economic growth not illusory prosperity brought by way of an over-valued greenback and cheap Chinese flat screens and laptops.
” It’s a blessing in so much as it allows us to import far more goods and services than we export and run fiscal deficits that we can never repay. It is a curse because it artificially holds up the exchange value of the currency, thereby reducing the competitiveness of our goods and services in export markets. “
And therein lies the trap - brush away the rhetoric, and our ‘trading partners’/adversaries are perfectly happy with the situation-as-has-been — and they will resist vigorously any unilateral attempt (such as unilaterally devaluing our currency the 20-30% you mentioned) to alter it. (Of course, there could be a worldwide epidemic of altruism, or, more unlikely, foresight, on the part of politicians and entrenched business...)
When the goose stops laying golden eggs, why take the time and expense to cure it, when it’s so much more convenient to kill it and have it for Sunday Dinner....
” So Uncle Ike, what do you suggest we do? “
I don’t think there is a ‘solution’, at this juncture — we’re dealing with trends that were set in motion by choices made decades ago, and, to the best of my ability to divine, will play themselves out to their logical conclusion regardless of any actions we - or anybody else (barring, of course, Divine Intervention) may take...
There are some mitigating measures we could take, ie dismantling in an orderly fashion the overtaxed, over-regulated, over-extended, welfare-state, regime, instead of waiting for it to collapse under its own weight - but the best we can hope for at this late date is to cushion, somewhat, the impact when the whole mess hits bottom....
We, as individuals, with a bit of foresight and preparedness, can survive - and even thrive in - the coming ‘troubles’ - but the outlook for our Nation - perhaps, the World - is pretty bleak....
(Sorry it took so long to respond - I had to go out and feed my chickens... ;))
Well... here’s a few ideas. I know I’m no Uncle Ike... but here goes...
Take all State and Federal pensions and transition to be replaced completely by SSI. Yup Draconian. Those pulling down 6 figure incomes from us will be replaced by SSI. Transition them to allow selling assets to prepare for the austerity.
Allow nationwide corporate insurance companies. Open up all competition for health care. Repeal Ocare, and medicare... yup... I said it. Have the individual responsible for selecting their level of care on the open market and give individuals on medicare currently a credit to buy the minimal coverage. While giving the individual choice about the programs he/she may want to join for the extra care, paid for by either retirement/ssi etc.
Taxes... while easy to say... are hard to implement. But we can do better. No more progressive taxation, institute a flat tax that is equal for all Americans.
Because we will have a flat system remove taxation of corporate entities. (Corporate dividends for individuals would be taxed as normal, as would the taxation of selling stocks/bonds)
Remove Welfare. Instead institute a program that provides room and board for a full days work. Those who are seniors, handicap, special needs etc have no exemption, find something for them.
Institute a pay for children tax credit that helps rewards people who have children. Only for people who receive no public welfare, or government assistance. We are going to need lots of children in 30 years to help drive the economic machine and we need to start thinking about this now. These micro families we are having will be a real issue for us. Healthy homes and strong footing help raise children in many cases. This isn’t a slam dunk, but it’s a start. If one parent would be removed from the work force for raising the child it would be nice to reward that decision since so much revolves around the family unit.
Institute Gold as the backing for the reserve again. Get back to something that is tangible and credible.
Open up Offshore drilling, ANWR, remove the red tape for Nuclear reactor building, offer companies a subsidized zero interest loan for reactors. (Cap the profit on electricity by allowing those companies (who take the loan) 10% profit) This is easy to say hard to institute since government contracts normally are horribly written and allow run-away costs. We don’t want cost+, we want fixed price+.
Create the same program for Hydroelectric dams. Encourage them, and support them.
Remove all subsidy in Solar and Wind. Wait until the commercial market researches improved battery and storage mechanisms, and incentivize them to do so.
There are far too many to list but wholesale remove about 60% of federal departments. Consolidate the intelligence community. Build and invest in military hardware. Expand 10x special operator units and decrease the standing military. Most fights are going to be small conflicts which need highly trained operators. Invest more into the Navy and Air Force, and shut down many standing army bases around the world.
Return a large portion of Federal property. Sell it to Families, and individuals first. Then allow larger portions in certain areas to be sold for development etc. Give American’s back what they had in the beginning, a place to build their dreams and a chance to own property if they are lawful tax paying citizens. (Perhaps a heavy discount if served in the military)
I think I could go on and on... I’m really more interested in what others would contribute. I’m sure some of my above will strike a chord.
Of course saying the above would never get a person elected...
“Sorry it took so long to respond - I had to go out and feed my chickens... ;))”
In the Mad Max world of the not too distant future a man’s wealth will be measured by the number of chickens he owns and his supply of feed. I, alas, will have nothing.
” I know I’m no Uncle Ike... “
Most of the time, *I’m* no Uncle Ike.... ;)
“Of course saying the above would never get a person elected...”
Most of your suggestions are sound. But even if the political will existed to bring them about an extended period of transition would be required to effectuate them. I still contend that an appropriate readjustment of our relative currency exhange rate would be appropriate under the conditions. THis would force us to consume less, export more and improve our energy efficiency / output. Then we can begin the process of rebuilding our “real” economy and trimming back Leviathon and all its imperial trappings.
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