Thursday, March 27, 2014

Lock the door and also hammer those nails in a little further

New unemployment claims were only 311,000 last week which is the lowest they've been before the Republicans shut down of the United States Government. Claims are not as low as they should be, but with the economy still stumbling along in the middle of the Bush Great Depression they are at least in the positive range if only indicating a lukewarm job market.

The only stimulus to the economy is coming from the Federal Reserve continuing to buy bonds and German companies using the US as a low cost manufacturing floor. Good American job 'creators' continue to move as many jobs out of the country as they can. The Fed stimulus has been tapered from $85b a month down to $55b comprised of buying $30b in Treasury bonds from the after market (not from the Treasury) and $25b in mortgage backed securities.

The main purpose of the QE3 money printing scheme is to produce a real inflation rate of 2% with the idea that companies and banks will be inclined to do something with the trillions in cash that they have sitting on rather than watch it evaporate. The super rich are hoarding cash like they do during any Depression. With inflation near zero and the economy sluggish they hope to take advantage of deflation. Should asset prices start to fall they would likely drop by the typical 90%, and allow some billionaires to become trillionaires in today's dollars.

You might point out that the fortunes of the rich would also decline by 90%, but it's not the actual dollar amount that matters to the rich, but the amount of 'real wealth' that they hold. Running the value of money up and down to capture wealth from the middle class is a long standing practice. It happened many times in the US up until the New Deal. This was also what the temple money changers would do to the common people in Biblical times, and that was what prompted a certain socialist to drive them out. Conservatives don't seem to care how much wealth is stolen from the common people, and in fact applaud the practice as righteous. Apparently they've got a lock on the temple door, and their only 'socialist' remains firmly nailed to the cross.

Twitter @Bruce Enberg - where we do what we can to drive out the money changers.