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After QE, Whence the Economy?

November 12, 2014 in Economics

By Joseph Salerno

Charles Plosser

Charles Plosser

Jeff Peshut of RealForecasts.com  gives an insightful analysis of the likely effect of the termination of the Fed’s QE programs on TMS, the money supply aggregate formulated by Murray Rothbard and myself and regularly calculated by Michael Pollaro.

Peshut shows that the three rounds of QE succeeded  in dramatically increasing the growth rate of the money supply.   TMS stood at about $5.6 trillion at the beginning of the QE1 in November 2008, growing to $10.5 trillion by the end of September of this year.  The average annual increase of TMS was thus over $800 billion during the period of quantitative easing.  The year-over-year growth rate of the money supply reached a high of over 16% during QE1, around 15% during QE2, and leveled off at 8% during the “tapering off” period of QE3.

Peshut also has a valuable discussion of the differential  impact of QE on base money, composed of currency plus “covered money substitutes” (equal to bank reserves), which is directly controlled by the Fed, and “uncovered money substitutes,” which are the deposits directly created by bank lending.

Peshut foresees the TMS growth rate accelerating in the short term and than decelerating toward zero through 2016, assuming the Fed maintains its current policy stance.  I have a slight quibble with this forecast.  As of now the Fed is continuing its ultra-easy monetary policy of targeting a zero interest rate, and most Fed officials do not foresee a change in this policy at least until mid-2015.  Charles Plosser, the soon to retire President of the Philadelphia Fed recently expressed strong reservations about this policy as the economy continues to pick up steam.  According to Plosser:

That [sic] are many indicators that tell us rates are too low.  We have been at zero for nearly six years and there is no precedent in history, even when inflation is too low, to have rates at zero when unemployment rates are as low as they are.  We are really behaving in a way that is outside historical norms and that should make us nervous.

And I am very nervous.  Trying to artificially suppress interest rates at extremely low levels as businesses increase borrowing and asset prices boom–a la the Greenspan Fed–is a recipe for a continued  massive expansion of the money supply that raises the prospect of another runaway bubble followed by a financial disaster.

…read more

Source: MISES INSTITUTE

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Arrested for Having a Miscarriage? 7 Appalling Instances Where Pregnant Women Were Criminalized

November 12, 2014 in Blogs

By Janet Allon, AlterNet

Anti-abortion laws hurt all women, including those who are anti-abortion.


It does not really matter whether a woman is pro- or anti-abortion. In states like Tennessee, with its freshly passed anti-abortion amendment, you can be arrested for having a miscarriage.

An alarming number of women are being arrested, prosecuted and jailed just for losing their pregnancy. In addition to anti-abortion measures, you can thank the advance of “personhood” fights for embryos, fetuses and even fertilized eggs for that.

In a recent op-ed for the New York Times, Lynn M. Paltrow and Jeanne Flavin of the National Advocates for Pregnant Women offer up some of the most egregious cases of the criminalization of pregnant women. “Since 2005, we have identified an additional 380 cases, with more arrests occurring every week,” they write. “This significant increase coincides with what the Guttmacher Institute describes as a “seismic shift” in the number of states with laws hostile to abortion rights.”

Here are their six most horrifying examples, with lots more to come.

1. A critically ill, 27-year-old, Washington D.C. woman was 26 weeks pregnant when a judge ordered her to have a cesarean section. He did so with the understanding that the procedure would very likely kill her. It did. The baby died as well.

2. A pregnant woman in Iowa fell down a flight of stairs and went to the hospital. The hospital reported her to the police who arrested her for “attempted fetal homicide.”

3. A Utah woman gave birth to twins, one of which was stillborn. Her doctors blamed the death on her decision to delay a cesarean. She was arrested for fetal homicide.

4. A Louisiana woman checked in to a hospital due to vaginal bleeding. She was locked up for a year on charges of “second-degree murder before medical records revealed she had suffered a miscarriage at 11 to 15 weeks of pregnancy.”

5. A Florida woman “was held prisoner at a hospital to prevent her from going home while she appeared to be experiencing a miscarriage. She was forced to undergo a cesarean.” She still lost the baby, and her two small …read more

Source: ALTERNET

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The Big Climate Deal: What It Is and What It Isn't

November 12, 2014 in Blogs

By Bill McKibben, Huffington Post

In effect President Obama is writing an IOU to be cashed by future presidents and Congresses.


1) It is historic. John Kerry was right to use the phrase in his New York Times opedannouncing the deal: for the first time a developing nation has agreed to eventually limit its emissions, which has become a necessity for advancing international climate negotiations.

2) It isn't binding in any way. In effect President Obama is writing an IOU to be cashed by future presidents and Congresses (and Xi is doing the same for future Politburos). If they take the actions to meet the targets, then it's meaningful, but for now it's a paper promise. And since physics is uninterested in spin, all the hard work lies ahead.

3) It is proof, if any more was needed, that renewable energy is ready to go. The Chinese say they'll be using clean sources to get 20 percent of their energy by 2030 — which is not just possible, it should be easy. Which they know because they've revolutionized the production of solar energy, driving down the cost of panels by 90 percent or more in the last decade.

4) It is not remotely enough to keep us out of climate trouble. We've increased the temperature less than a degree and that's been enough to melt enormous quantities of ice, not to mention set the weather on berserk. So this plan to let the increase more than double is folly — though it is good to see that the two sides have at least agreed not to undermine that two degrees target, the one tiny achievement of the Copenhagen conference fiasco.

5) It is a good way to put pressure on other nations. I've just come back from India, which has worked hard to avoid any targets of any sort. But the lesson from this pact is, actual world leaders at least need to demonstrate they're talking about climate; it makes the lead-up to the global negotiations in Paris next year more interesting.

6) It isn't a way for Obama to get off the hook on things like the Keystone pipeline. If he's serious about meeting …read more

Source: ALTERNET

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8-Year-Old Watches Officer Brutally Beat His Mom After Reports of ‘Yelling’

November 12, 2014 in Blogs

By David Edwards, Raw Story

The cop hit Lana Sinclair with a baton and smashed her face against a table.


A Winnipeg woman said this week that she had filed a complaint after an officer beat her in her own home as her 8-year-old son watched.

Lana Sinclair told CBC that Winnipeg police officers showed up on Halloween night to investigate reports of “yelling.” One officer spoke to her son, while another officer talked to her.

“He came up to me and poked me,” Sinclair recalled. “I was sitting on a chair in the kitchen and I jumped up and said you don’t need to touch me.”

The officer pulled out a baton, and beat her with it, she explained to CTV. She said he then smashed her face into a work table, and into the floor.

“He had my arm behind me and he smashed my face right here,” Sinclair said, pointing to her sewing table.

She said the officer handcuffed her, stood her up, and then kicked her feet out from under her. Sinclair hit the floor face first.

To make matters worse, she said her 8-year-old son watched then entire incident.

“We [my son and I] were both traumatized,” Sinclair noted. “I just hug him and kiss him and tell him it’s okay.”

“All I was thinking of was his safety, and how he was going to be traumatized and how he is going to see the police now.”

To stop the same thing from happening to someone else, Sinclair has filed a report with Canada’s Law Enforcement Review Agency (LERA).

But LERA Commissioner Max Churley told CTV that only six of the hundreds of cases filed last year qualified for a hearing. Many of the cases were found to lack sufficient evidence or they were referred for criminal prosecution.

Winnipeg police chose not to comment on the allegations against the officer.

Watch the video below from CTV, broadcast Nov. 10, 2014.

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The Costa Mesa Mises Circle

November 12, 2014 in Economics

By Ryan McMaken

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Here is a sampling of photos from our great Mises Circle event this past weekend in Southern California. The topic: Society without the State. Ron Paul and Judge Andrew Napolitano were our special guests. Over 300 people attended, plus 50 more in an overflow room and hundreds more watching online. Video of individual speeches will be available soon! Audio recordings are available now.

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…read more

Source: MISES INSTITUTE

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The Case for Optimism

November 12, 2014 in Economics

By Ryan McMaken

Make it possible

Mises Daily Wednesday by Jeff Deist

The state seems more powerful than ever, but the state is both economically and intellectually unsustainable. We’re already witnessing a breakdown in the state’s legitimacy and power, and we should be optimistic about seeing more of this in the future.

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Source: MISES INSTITUTE

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Are We Headed towards Another Housing Crisis?

November 12, 2014 in Economics

By Adam Smith, Bruce Yandle

Adam Smith and Bruce Yandle

Get ready for another housing boom and bust roller coaster ride. Fannie Mae and Ginnie Mae, two of the nation’s largest housing finance agencies, have announced plans to reduce the down payments for home purchases from the current 5% to 3%. Fannie Mae CEO Timothy Mayopoulos broke the news on Oct. 22 to a large Las Vegas mortgage banker’s conference. It was the perfect place to roll out yet another housing roulette wheel for house hungry, though credit weary, Americans.

Homebuilding is just now getting back on its legs and there is still a huge stockpile of bad subprime mortgage loans left over from the previous crisis that continue to plague banks and other lenders. So why are the regulators putting us back on the economic roller coaster? 

To answer the question, we have to review the lessons taught by the Bootlegger/Baptist theory of economic regulation.

Why are the regulators putting us back on the economic roller coaster?”

The theory goes like this: Both bootleggers and Baptists like Sunday closing laws that shutter corner liquor stores. By taking the moral high ground on the matter, the good Baptists pride themselves in getting demon rum off the streets (at least one day a week). And the bootleggers? They eliminate competition, also for one day a week. Both win—as do the politicians who have pleased two important interest groups.

The Bootlegger/Baptist theory tells us that durable regulation emerges when two very different lobby groups push for the same outcome. But they cannot be just any two different groups. One must call for doing the right thing, which helps the politicians justify their actions. And the other must be in it for the money so as to focus and possibly bankroll the endeavor. The “Bootleggers” can celebrate all the way to the bank when the “Baptists” deliver the goods.

It’s obvious that people who currently lack the wherewithal to purchase a desired home will celebrate when told that a shortage of cash will no longer stop them on the way to living the American dream. Advocates for lower income people will celebrate with them, while explaining that helping lower income people is the right thing to do.

For example, Paul Leonard, California director of the Center for Responsible Lending, described the situation lower income families faced after the 2008 crash this way: “Those folks took it on the chin the hardest and …read more

Source: OP-EDS

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After Being Taken To Wrong Hospital While Unconscious, Woman Faces Bankruptcy From Medical Bills

November 12, 2014 in Blogs

By Zaid Jilani, AlterNet

If she'd been taken to another hospital three blocks away, her insurance would have covered the costs.


American health care is unique among the industrialized nations in how many people it drives to bankruptcy. Medical bills were linked to two-thirds of bankruptcies in the 2007, despite the fact that most of those going bankrupt had insurance.

There is no more striking case of this than what happened to Megan Rothbauer in Madison, Wisconsin. Rothbauer had a cardiac arrest last September and was left in a coma. Emergency rescuers did not have time to check her insurance to see which hospital to take her to, so they drove her to the emergency room at St. Mary's Hospital instead of Meriter Hospital, which is located three blocks farther away. Those three blocks cost Rothbauer over $50,000, because St. Mary's is not covered by her insurance's network, and Meriter is.

“I was in a coma. I couldn't very well wake up and say, 'Hey, take me to the next hospital.' It was the closest hospital to where I had my event, so naturally the ambulance took me there. No fault to them. It's unfortunate that Meriter is in network and was only three blocks away from St. Mary's,” Rothbauer told local news station Channel 3000. Watch Meriter explain her ordeal

37 percent of patients have reportedly skipped a doctor visit altogether due to costs. In the United Kingdom, that number is four percent.

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Source: ALTERNET

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How Climate Change Could Increase Pollen Levels by 200 Percent

November 12, 2014 in Blogs

By Tim Radford, Climate News Network

Global warming will cause a huge increase in hay fever and pollen allergies.


A team of researchers from the University of Massachusetts at Amherst, U.S., report in the Public Library of Science journal PLOS One that as manmade carbon dioxide and low-level ozone levels rise, so will grass pollen production and allergen exposure, by up to 200 percent.

Many predictions of the problems of global warming are, in effect, simulations: researchers take a climate model, add a few parameters, identify a trend or isolate a possibility, and run it forward to see what happens. Using such techniques, researchers have predicted that heat extremes themselves will present health hazards, and have confirmed that cutting CO2 emissions will certainly save lives.

Notorious Irritant

But Jennifer Albertine and her colleagues at Amherst tried the other approach: they grew plants in laboratory conditions, using different atmospheric concentrations of carbon dioxide and of ozone—the O3 version of oxygen (O2) that plays an important protective role in the stratosphere, but is a notorious irritant and health hazard in traffic-choked cities.

For the experiment they selected the grass Phleum pratense, widely known as Timothy grass and common in lawns, pasture and meadows everywhere. Then, at the appropriate moment, they bagged the flowers, captured and measured the pollen production, and used enzymes to get at an allergen protein called Phl p 5.

The news is not good for those who dread the start of hay fever season in spring. As atmospheric CO2 doubled to 800 parts per million, there was a 53 percent increase in pollen production per grass flower.

But that was only part of the effect. A greater number of plants flowered as a result of the stimulus of the extra carbon dioxide, which has an effect on plant fertility. And that brought the increase in pollen levels to a startling 200 percent.

Allergen Levels

The increases in low-level ozone—already widely predicted as …read more

Source: ALTERNET

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America: Time to Talk with North Korea

November 12, 2014 in Economics

By Doug Bandow

Doug Bandow

Power is like quicksilver. It often slips through the fingers of those attempting to grasp it. Who is in power in North Korea? Maybe thirty-one-year-old Kim Jong-un. Maybe someone else.

The Democratic People’s Republic of Korea (DPRK) continues its policy of mixing threats and entreaties. A high-level delegation visited Seoul to propose further talks and promote warmer relations. Days later, the North’s troops were exchanging gunfire with the Republic of Korea’s military, only to be followed by an inconclusive military meeting—and most recently, the apparent collapse of bilateral negotiations.

Kim disappeared from public view for forty days. His reported health problems—gout or ankle or foot surgery—should not have prevented him from attending important meetings and being filmed while sitting. And his return was not entirely convincing: Pyongyang only released undated still photos of a smiling Kim leaning on a cane while talking with other officials.

There’ve been no untoward troop movements or party conclaves in the North, though there was disputed talk of a “lock-down” restricting movement in and out Pyongyang. When visiting Seoul, the DPRK’s number two, Vice Marshal Hwang Pyong-so, seemed to enjoy some of the trappings of power previously limited to the supreme leader. The conflicting signs reawakened questions about the execution of Kim’s uncle, Jang Song-taek, a year ago. Was it Kim’s decision, or one forced on him by the military, which apparently had clashed with Jang over control of economic enterprises? There is no stability in the regime’s upper reaches: In his nearly three years at the top, Kim has replaced upwards of half of the party’s and military’s top officials, changing some positions multiple times.

It’s time for Washington to try something different.”

Whoever reigns, there is little reason to hope for nuclear disarmament. To the contrary, the North appears to be increasing production of fissile material, moving ahead on ICBM development and upgrading rocket-launch facilities. Who in Pyongyang has an incentive to abandon a weapon that causes the rest of the world to pay attention to an otherwise small, impoverished and even irrelevant nation? Why trade away an effective tool of financial blackmail that has yielded billions in aid from the ROK?

Finally, even a seemingly secure Kim, the “Great Successor” whose father concocted the North’s “military first” policy, would hesitate challenging the armed services by trading away its most important weapon. And if he is insecure—or merely a figurehead for …read more

Source: OP-EDS