Archive for November, 2012

Some Scholars Reject Dark Portrait of Jefferson–NYTimes

November 27, 2012

I do not place Jefferson on a pedestal, nor wish to suppress the responsible truth, but the darker portraits of Jefferson that have emerged over the past couple of decades have implicitly served to undermine his ideals for the American republic. That is a loss we cannot endure, considering how these ideals have come under serious attack of recent, particularly from the Patriot Act.

Financial Suicide – Privatizing Social Security

November 20, 2012

The clatter is starting up again over the privatization of Social Security. With this plan, the individual gets to decide how to invest their Social Security funds, something akin to a public 401k program. The bulk of this new-found investing activity, however, will go towards Wall Street and the stock exchanges.

The idea of being able to select one’s own investments sounds all well and good, but Americans may want to start asking themselves just what is at stake. In fact, if you’re investing in stocks, stock-driven mutual funds or a 401k, you stand no better chance in redeeming these investments at retirement from a privatized Social Security plan as you do from an increasingly at-risk public Social Security plan. (more…)

Post-Consumer Society? Monetary Discipline Needed.

November 16, 2012

This morning, Bloomberg News reported the strengthening of the U.S. dollar. Citigroup sees this as the foreign-currency exchanges anticipating the end of the Federal Reserve’s monetary stimulus. Bloomberg News’ slant was this: Since the U.S. economy is strengthening, the Federal Reserve will pull back on its quantitative easing efforts.

I’m taking a contrarian view: The gain in the dollar isn’t based on some new-found confidence in the U.S. economy, but rather currency investors are simply seeking a safe haven in the coming deluge of economic weakness, taking advantage of the U.S. dollar’s global reserve currency status. Consider the recent headlines:

  • New York region’s manufacturing shrank for the fourth month
  • Jobless claims jumped in November of 2012
  • Euro area slumps into a recession for second time in four years
  • Consumer prices rose at a slower pace in October of 2012
  • U.S. industrial production drops 0.4%
  • Economist anticipate the United kingdom’s GDP shrinking in 4Q 2012
  • A recession looms in Japan

The upshot of all this is that as the dollar strengthens in a counter-intuitive cycle – after all, the Fed’s quantitative easing efforts should be weakening, not strengthening the dollar – this only encourages the modern monetary theorist’s thinking that the U.S. dollar has found some new reality, and monetary and fiscal stimulus can continue unabated.

This reminds me of the economists who, in the late ’90s, proclaimed the U.S. economy had become recession proof. (more…)

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