Federal Reserve raises interest rates for the third time in 2017

JUST IN: Federal Reserve raises interest rates for the third time in 2017 https://t.co/IJFyl1iUkp pic.twitter.com/HUgJhGdmDL

— The Hill (@thehill) December 13, 2017

6-in-10 millennials anxious about Federal Reserve’s interest rate hike

6-in-10 millennials anxious about Federal Reserve’s interest rate hike https://t.co/K1PmDrjQfN via @anthonyhennen pic.twitter.com/QyPZXHNMtO

— Red Alert Politics (@RedAlert) December 18, 2015

“[Fed Chairman] Ben Bernanke has pulled off a neat trick that could well give us the worst of all worlds: a brief commodity deflation, future inflation and a stagnant economy”

◼ Steve Forbes: Fed Policy Continues to Plague Asset Markets, Economy - MoneyNews

“It will earn him a prominent place in the central bank’s Hall of Infamy.”

The weak economy has helped push inflation down, leading to gold’s recent drop, he says. “Leveraged speculators are waking up to the fact that we won’t be getting a 1970s-style inflation in the near future and are bailing out — for now,” Forbes writes.

“Gold rose sharply in anticipation that all that quantitative easing would flood the economy with excess money just as happened in the 1970s.”

But that water has now been bottled up. “Or a better metaphor, it lies in a vast reservoir. However, in this case, the water is held in place by a very weak dam,” he notes.

“The Fed is still doing enormous damage to the economy by distorting the credit markets both in the pricing of credit and in creating uncertainty about the future value of the dollar.”

The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse.

◼ Sundown in America: The Corruption of Capitalism in America - David Stockman/NYT

...even Mr. Obama’s hopelessly glib policies could not match the audacity of the Fed, which dropped interest rates to zero and then digitally printed new money at the astounding rate of $600 million per hour. Fast-money speculators have been “purchasing” giant piles of Treasury debt and mortgage-backed securities, almost entirely by using short-term overnight money borrowed at essentially zero cost, thanks to the Fed. Uncle Ben has lined their pockets.

While the Fed fiddles, Congress burns. Self-titled fiscal hawks like Paul D. Ryan, the chairman of the House Budget Committee, are terrified of telling the truth: that the 10-year deficit is actually $15 trillion to $20 trillion, far larger than the Congressional Budget Office’s estimate of $7 trillion. Its latest forecast, which imagines 16.4 million new jobs in the next decade, compared with only 2.5 million in the last 10 years, is only one of the more extreme examples of Washington’s delusions...

These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.

All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-election have become conterminous. Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-election; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll. It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.

Two Awful Anniversaries: Income Tax and Federal Reserve

◼ This year marks the 100th anniversary of the federal income tax (February) and the Federal Reserve System (December), both of which today are doing immeasurable harm. And, thankfully, both will be undergoing enormous changes. - Steve Forbes/FORBES

...Research by Art Laffer and other economists has demonstrated that over time states that have no income tax perform better than states with high income taxes. New Jersey, for instance, traditionally outperformed the national economy. Then it not only enacted a state income tax but also subsequently raised it to nosebleed levels. Today New Jersey’s economy is a shadow of its former self and lags the nation. The same thing has happened in Connecticut.

Before the enactment of the 16th Amendment, which permitted Washington to impose an income tax, states were in the vanguard of putting taxes on income. Today they are doing just the opposite. Governor Sam Brownback of Kansas has been unrelenting in pushing for lower income tax levies. When certain members of his own party balked, he supported their challengers in the primaries. Brownback triumphed and is now putting Kansas on the path to eliminating this exaction altogether. Governor Dave Heineman of Nebraska wants to do the same thing, as does Governor Bobby Jindal of Louisiana. Other governors are pushing to reduce rates sharply, including Governors Pat McCrory of North Carolina, Mary Fallin of Oklahoma and John Kasich of Ohio.

And look at what’s happening in Massachusetts: Governor Deval Patrick, taking cues from his close friend Barack Obama, proposed raising Massachusetts’ 5.25% income tax to 6.25%, as well as boosting other levies. Despite virtually no Republican representation in the state legislature–Democrats have 36 of 40 seats in the Senate and 129 of 160 in the House–Patrick’s scheme looks to be crashing and burning. White House fantasies to the contrary, most people are in no mood to pay more to Big Government....

The big news is that the Fed is now doubling the amount of money it is printing.

◼ No Way Out - Peter Schiff/europac.net; cross-posted with ◼ Doug Ross

By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve's Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford. At his press conference this week, Fed Chairman Bernanke explained how the easiest policy stance in Fed history has just gotten that much easier. First it gave us zero interest rates, then QEs I and II, Operation Twist, and finally "unlimited" QE3.

Now that those moves have failed to deliver economic health, the Fed has doubled the size of its open-ended money printing and has announced a program of data flexibility that virtually insures that they will never bump into limitations, until it's too late....

To cloak these shockingly accommodative moves in the garb of moderation, the Fed announced that future policy decisions will be put on automatic pilot by pegging liquidity withdrawal to two sets of economic data. By committing to tightening policy if either unemployment falls below 6.5% or if inflation goes higher than 2.5%, Bernanke is likely looking to silence fears that the Fed will stay too loose for too long. While these statistical benchmarks would be too accommodative even if they were rigidly enforced, the goalposts have been specifically designed to be completely movable, and hence essentially meaningless....

But perhaps the most absurd statement in Bernanke's press conference was his contention that the Fed is not engaged in debt monetization because it intends to sell the debt once the economy improves. This is like a thief claiming that he is not stealing your car, because he intends to return it when he no longer needs it. To make the analogy more accurate, there could not be any other cars on the road for him to steal....

In order to generate phony economic growth and to "pay" our country's debts in the most dishonest manner possible, the Federal Reserve is 100% committed to the destruction of the dollar. Anyone with wealth in the U.S. dollar should be concerned that economic leadership is firmly in the hands of irresponsible bureaucrats who are committed to an ivory tower version of reality that bears no resemblance to the world as it really is.