Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Federal Reserve

DOA: Fair Tax Act to Abolish the IRS Has Zero Chance of Passage

This article appeared online at TheNewAmerican.com on Thursday, January 12, 2023:  

Tantalizing though it may sound, Rep. Buddy Carter’s (R-Ga.) bill to replace the IRS and the nation’s present convoluted and complex income-tax system with a simple flat-consumption tax has no chance of seeing the light of day in the new Congress.

It was one concession that now-Speaker of the House Kevin McCarthy was more than happy to give to those blocking his campaign. Efforts in past decades to pass a similar bill have been ignored, with no committee even looking at it and never passing it on for a floor vote.

The concept is elegant: In place of the IRS (and its 87,000 new agents), the Fair Tax Act would eliminate all taxes — federal, state, estate, capital gains, gift, and payroll — and replace them with a nationwide sales tax, a simple 23-percent sales tax on all goods and services purchased for personal consumption.

Carter made his pitch to his colleagues:

Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation.


Armed, unelected bureaucrats should not have more power over your paycheck than you do.

His pitch so far has elicited the support of fewer than a dozen of his colleagues. One of them, Rep. Jeff Duncan (R) from South Carolina, gave his approval:

As a former small business owner, I understand the unnecessary burden our failing income tax system has on Americans.


The Fair Tax Act eliminates the tax code, replaces the income tax with a sales tax, and abolishes the abusive Internal Revenue Service.


If enacted, this will invigorate the American taxpayer and help more Americans achieve the American Dream.

Another Republican supporter, Rep. Bob Good of Virginia, added:

I support the Fair Tax because it simplifies our tax code.


This transforms the U.S. tax code from a mandatory, progressive, and convoluted system to a fully transparent and unbiased system which does away with the IRS as we know it.


It is good for our economy because it encourages work, savings, and investment. Thank you to my colleague Rep. Buddy Carter for leading this effort to simplify the system for American taxpayers.

Just in case Carter’s bill gains some traction, the Biden White House fired a warning shot:

With their first economic legislation of the new Congress, House Republicans are making clear that their top economic priority is to allow the rich and multi-billion-dollar corporations to skip out on their taxes, while making life harder for ordinary, middle-class families that pay the taxes they owe.

The chances that Carter’s bill won’t see the light of day is due to the present system’s ability to be manipulated by Congress to reward certain segments of the economy through tax incentives, credits, or welfare transfer payments from people who earned it to those who didn’t, for political purposes.

The root of the evil is the 16th Amendment: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

This amendment passed muster at the Supreme Court in 1916, three years after its passage. Since then, it has allowed the Federal Reserve, also created in 1913, in conjunction with the U.S. Treasury, to fund both World Wars and create the largest welfare state in history.

Would a national sales tax do anything to reduce that welfare state? To be enforced, would not every transaction need to be monitored by the federal government so that “all goods and services purchased for personal consumption” could be effectively taxed?

Bad as it is, it’s perhaps best to keep the present system in place and let the utopian idea of a flat tax die a natural death in the 118th Congress.

Investors, Wall Street Pummeled in 2022; Worse to Come in 2023

This article appeared online at TheNewAmerican.com on Monday, January 2, 2023:  

Doug Noland, a highly regarded financial analyst, wrote in Seeking Alpha on New Year’s Eve: “It had all been a grand illusion: the Fed [the Federal Reserve System] and free ‘money’ [through government handouts] generat[ed] a permanent plateau of prosperity. The year saw inflationism’s inescapable scourge of wealth destruction and misery begin to be revealed.”

On paper, investors saw their accounts lose more than $30 trillion (that’s trillion, with a T) in 2022. There was no place to hide. Said Noland: “The ‘everything Bubble’ morph[ed] into the everything bust.” The Dow Jones Industrial Average (the “Dow”) dropped by 9 percent; the broader market index, Standard & Poor’s 500, lost 20 percent; and the tech-heavy NASDAQ lost a third of its value. Bond funds lost between 15 and 20 percent, and Bitcoin dropped 64 percent.

Popular names that had led the parade for the past three years gave back most of those gains: Tesla stock collapsed 65 percent, Facebook (META) declined 64 percent, Netflix dropped 51 percent, Amazon 50 percent, Alphabet/Google 39 percent, Microsoft 29 percent, Apple 27 percent, Disney 44 percent, and Nike 30 percent.

Seven hedge funds — those touted by their purveyors as providing an alternative hiding place — went bankrupt, with the one making the most headlines being FTX, the cryptocurrency empire that some are now calling a giant Ponzi scheme and a money-laundering Ukrainian/Democrat slush fund.

FTX’s founder, Sam Bankman-Fried (aka SBF), will start the new year under a court-ordered detention in his parents’ home on a $250 million bond. He faces eight federal counts of wire fraud, money laundering, and conspiracy, carrying a maximum of 115 years in federal prison.

The decline in the value of bonds and stocks turned 2022 into the worst year since 1871.

The cause of all this was, naturally, the combination of federal spending enabled by the unholy alliance between the Federal Reserve System and the U.S. Treasury. Republicans and Democrats alike are guilty of spending without limit, utilizing the new economic principle called MMT, or Modern Monetary Theory.

This “other worldly” fantasy is defined by Investopedia:

Modern monetary theory (MMT) is a heterodox macroeconomic supposition that asserts that monetarily sovereign countries (such as the U.S.) … which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.


Put simply, modern monetary theory decrees that such governments do not rely on taxes or borrowing for spending since they can print as much money as they need and are the monopoly issuers of the currency.


Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt.

Translation: Seized by politicians as the way to print the way to utopia, the resulting inflation is then to be reined in by raising interest rates.

In 2022, the fraud of MMT was in full view. By pumping the money supply (allegedly to keep the economy from cratering during the plandemic), consumers and businesses went on spending sprees, causing supply chain disruptions. The money supply, as measured by the Fed’s M2 indicator, rose 42 percent in the three years that ended in March.

When the Fed then tentatively started tapping the brakes (i.e., raising interest rates) and beginning to reduce its now enormous balance sheet, the game was over. The stock market peaked in November 2021, and has been coming off its “high” ever since.

As Noland noted:

The year [2022] marked the end of a multi-decade cycle of ever-looser monetary policy, declining [interest rates], [and] inflating financial asset prices [i.e., stocks and bonds].

It was, in other words, the year that Reagan economist Herb Stein was proved right: when something cannot continue, it will stop.

What about 2023?

Jeffrey Hirsch has been studying seasonal and historical patterns for decades. In his Stock Trader’s Almanac, he says:

The 2022 bear market will likely bounce along sideways, testing [its] June 2022 lows, reaching a bear market low in late Q3 [July-August-September] or early Q4 [October-November-December] … in typical midterm bottom fashion.


[W]e expect a new bull market to commence … that takes the market to new highs in the Pre-Election Year 2023.

The list of reasons such a sunny outlook may get derailed is long: drought, floods, fires, hurricanes, heat waves, deep freezes, and food supply issues. The number of people still “not in the labor force” is five million higher than at pre-Covid levels, and job openings are still more than three million higher than before the start of the plandemic.

And this list doesn’t include the potential for a European war; the flood of illegals pouring into the country looking for handouts, health care, and education for their children; election fraud; energy supply constraints; and so on.

The real danger is that weak-kneed Republicans now in control of the House, headed up by RINO Kevin McCarthy, will not change anything of substance, but instead allow the federal government to continue to ignore constitutional boundaries. The threat of an imploding economy is overshadowed by the increasing threat of an exploding government that runs everything into ruin.

Dems “Have Thrown In the Towel” on Bidenflation in Latest Poll

This article appeared online at TheNewAmerican.com on Tuesday, June 21, 2022:  

Pollster TIPP (TechnoMetrica Institute of Policy and Politics) reported on Monday that even Democrats have ceased buying the canard that Vladimir Putin, oil companies, or shipping companies are the underlying cause of inflation. Wrote Terry Jones, an editor with Issues & Insights, which partnered with TIPP:

Most surprising … Democrats have thrown in the towel on Biden’s economic leadership, with 53% blaming Biden’s policies for inflation.

A majority of every other group except those calling themselves “liberals” see Biden and the Democrats’ policies as the root cause of the diminishing purchasing power of their paychecks:

Indeed, of all the major demographic groupings followed by the I&I/TIPP Poll, just one was below 50% overall: self-described “liberals.”


All the other groups, including blacks (61%), Hispanics (61%), men (68%), women (61%), along with every income group, every age group, and every education group, all felt Biden’s policies caused the current inflation mess.

TIPP asked the 1,300 people they polled the first week of June a follow up question: “Does excessive government spending … ‘worsen inflation,’, ‘lessen inflation,’ or ‘not sure.’” Nearly 90 percent of Republicans and 70 percent of independents said “excessive government spending” was the root cause, while more than half of Democrats agreed.

This is an astounding result. For years, Keynesian economist Paul Samuelson brainwashed college students into thinking it was a “demand-pull” concoction that was to blame. In his college textbook Economics — the bible taught in introductory economics classes for decades in nearly every major university in the country — Samuelson tried to explain it:

Demand-Pull inflation arises when the aggregate demand increases more than the economy’s potential for productivity which leads to rise in Prices so as to have a new equilibrium with the Aggregate Supply.

Any student who could memorize this for the final exam would pass. Anyone who questioned its falsity — like the little boy declaring that “the emperor is naked!” — would fail.

This writer is a product of that system, and that canard.

Happily, Florida Governor Ron DeSantis, with degrees from both Harvard and Yale, has recovered from the Keynesian myth. On Friday, he gave reporters a lesson in real-world economics:

I think it’s sad to see some of the economic numbers with Bidenflation coming out — 8.6 percent. They tried to say — first, they said it wasn’t going to happen, was transitory and it would basically kind of solve itself.


They said it was gonna moderate two months ago and now it’s accelerating, and you have energy, groceries, all the things that really, really matter are just going through the roof … [these] are the results that we’re seeing with this inflation report.


Unfortunately, as a result of a lot of bad policy … you don’t declare war on American energy and undercut our energy independence and think that that’s gonna lead to more affordable energy for people….


You don’t print trillions and trillions of dollars and think that that’s somehow not gonna be reflected in rising prices and rising inflation.

DeSantis failed to clarify that while Biden has supported big government spending, it is Congress, working with and through the U.S Treasury and the Federal Reserve System, which is also to blame. Instead of Keynesian myths it’s common sense: One cannot increase the amount of currency in circulation without diluting the purchasing power of each unit of that currency.

And it was Republican President Richard Nixon who unleashed the inflation tiger back in 1971 when he unilaterally removed the last tie the dollar had to gold. That tiger will, if the present rate of inflation (eight percent per year, using government figures) continues, reduce the purchasing power of today’s already-weak and weakening dollar to just fifty cents in nine years.

It’s nice to know that Democrats are finally owning up to their part in the destruction of it.

Does Decline in Consumer Sentiment Portend a Recession?

This article appeared online at TheNewAmerican.com on Monday, May 16, 2022:  

According to a report released last week by the University of Michigan,

The University of Michigan consumer sentiment for the US fell to 59.1 in May of 2022, the lowest since August of 2011, from 65.2 in April and below market forecasts of 64, as Americans remained concerned over … inflation.

Behind the headline there was little good news:

The current economic conditions index fell to 63.6, the lowest in 13 years while the expectations gauge sank to 56.2 from 62.5….


To make things even worse, the index of buying conditions for durable goods, such as household appliances, fell to the lowest level since the survey began in 1978….


Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation.

Economic prognosticators make a handsome living explaining the continuing drop in consumer sentiment. Topping the list is rising prices, incorrectly but repeatedly called “inflation.” Rising prices is the result of the inflation of the currency and the Federal Reserve is responsible for that.

Regardless, consumers see the impact every day at the grocery store and the gas pump. Every day they see their paychecks purchasing less and less. And they’re mad at Joe Biden, pushing his job approval rate to ever lower lows.

There are plenty of other “causes,” including the Russian invasion of Ukraine, the invasion of illegals across the nation’s southern border, China’s internal lockdowns disrupting the supply chain, and the Fed’s belated response to the rising prices that its policies have created.

The Fed is playing catch up. Initially Fed Chairman Jerome Powell said last fall that the rise in prices was “transitory.” Now, to quench the fire he started, he is raising interest rates under the assumption that a slower economy will force prices down. There is little talk of the Fed reducing the money supply, which is the only permanent solution.

The Fed’s recent 50 basis point (half of a percentage point) rise in the Fed Funds Rate is not only the largest single increase in 22 years, but Powell has promised a similar half-point rise in interest rates at each of the next two meetings of the Fed’s Board of Governors.

The trick is to avoid raising interest rates too far and too fast, forcing a contraction in economic output. Two quarters of negative growth is the classic definition of a recession.

Some are blaming Wall Street, which has given up about a fifth of its value just since the first of the year. More than $7 trillion has evaporated from the stock market so far this year.

Others are saying that the decline on Wall Street is a predictor of a recession six months out.

Still others point to the recent “yield curve inversion,” that moment in time when short-term interest rates rise above long-term interest rates. The history is unhappy: That “inversion” has preceded every recession since 1955 — and giving only one “false positive” during that time — according to the Federal Reserve Bank of San Francisco.

Another good living is made by those predicting just how far Wall Street will drop in the event of a recession. One firm doing just that is DataTrek, which is saying Wall Street could drop another 25 percent before finding a bottom. That would bring the Dow, currently trading at 32,200, down to 24,000. And the S&P 500 Index, currently at 4,000, would decline to 3,000.

One prognosticator with a remarkable record of calling tops and bottoms is Barry Ritholtz. His asset-management firm, Ritholtz Wealth Management LLC, has over $2.7 billion in assets under management. His blog, The Big Picture, generates half a million page views every month, and he is one of the few who saw the coming housing implosion and derivative mess long before his peers.

Today he is taking the long view. He wrote on Friday that there are many competing explanations for the selloff on Wall Street, including “inflation, war, rising Fed Fund rates, [the] end of cheap capital, [the] fall-off in liquidity, [the] impending recession, and political unrest.”

He thinks there is a simpler answer: a reversion to the mean. Wrote Ritholtz:

Over the past decade, we have enjoyed returns of above 14% per year … the past two years gained 20% and 28%….


Over longer periods of time, equity markets generate average returns of 8-9%….


Perhaps [the decline] is nothing more complex than mean reversion.

For the long haul, Ritholtz remains bullish:

This market could/should have another good 5-7 years in it (assuming random events do not mess it up).


That is how I have been seeing this market for a while: it is one part history, one part secular theory, [and] two parts wishful thinking.

Is Bitcoin Collapse a Setback for Global Cryptocurrency Plans?

This article appeared online at TheNewAmerican.com on Friday, May 13, 2022:  

The collapse in the price of digital currencies, particularly Bitcoin, has not only significantly damaged Americans who invested or traded in the currency but its credibility as a tool for governments to control its citizens.

An estimated one in every six Americans has owned, invested, traded, or used a cryptocurrency at least once, taking advantage of its encrypted property: No outside agency, including government, can track its ownership or use.

The collapse has been staggering: In November Bitcoin (stock symbol BTC-USD) peaked at $67,802. It closed on Thursday at $28,315, a breathtaking decline of nearly 60 percent. At the same time, Wall Street’s S&P 500 Index (stock symbol SPX) declined by just 16 percent.

Commentators blame a combination of factors, including inflation, the decline on Wall Street, and the tweet from Elon Musk that Tesla will no longer be accepting Bitcoin to purchase his company’s cars.

One underlying cause, however, enjoyed scant exposure: the announcement by the White House, by executive order, that it was moving ahead with plans to develop a “central bank digital currency” (CBDC) as a tool to replace not only the dollar but the entire commercial banking system. Once in place, the U.S. CBDC would be melded into CBDCs of other central banks around the globe, making private cryptocurrencies not only irrelevant, but illegal.

It’s already happening in China, where the communists have banned Bitcoin while developing their own CBDC.

The Executive Order released by the White House on March 9 is just now resonating among supporters of cryptocurrencies who are seeing the implications. As that EO states explicitly, America “must play a leading role in international engagement and global governance of digital assets.” It orders Federal Reserve Chairman Jerome Powell “to continue its research, development, and assessment efforts for a U.S. CBDC.”

Powell is only too happy to oblige, declaring that a CBDC “could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollars, such as deposits at commercial banks.”

This is a canard of the first order. Once installed, all financial transactions will take place with the new digital currency, making those commercial banks irrelevant. Norbert Michel, writing in Forbes, makes it clear that CBDCs will not “complement” the existing private banking system in the U.S. but will replace it altogether. He wrote:

I believe that the Fed should not launch a CBDC. Ever.


And I think Congress should amend the Federal Reserve Act, just to be on the safe side….


[Under a CBDC] the federal government, not privately owned commercial banks, would be responsible for issuing deposits [which is] a major problem for anything that resembles a free society….


The problem is that there is no limit to the level of control that the government could exert over people if money is purely electronic and provided directly by the government. A CBDC would give federal officials full control over the money going into — and coming out of — every person’s account.

No less a worthy than Warren Buffet and his partner, Charlie Munger, have come out opposed to digital currencies, but only for practical and not political reasons. Buffet told his audience of shareholders in April that bitcoins aren’t a “productive asset,” that they don’t produce anything tangible:

Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything.


It’s got a magic to it and people have attached magic to lots of things.

But with the collapse in the price of Bitcoin and its close relatives, the magic is gone, and along with it the excitement the White House is trying to gin up over replacing the dollar with it.

Buffet made clear that he wouldn’t touch a Bitcoin even if one were handed to him:

If you said … for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon. [For] $25 billion I now own 1% of the farmland.


[If] you offer me 1% of all the apartment houses in the country and you want another $25 billion, I’ll write you a check. It’s very simple.


[But] if you told me you own all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it. Because what would I do with it? I’d have to sell it back to you one way or another.


It isn’t going to do anything. The apartments are going to produce rent and the farms are going to produce food.

Buffet’s partner Charlie Munger added:

In my life, I try to avoid things that are stupid and evil and make me look bad … and bitcoin does all three.


In the first place, it’s stupid because it’s still likely to go to zero. It’s evil because it undermines the Federal Reserve System….


And third, it makes us look foolish compared to the Communist leader in China. He was smart enough to ban bitcoin in China.

Munger is mostly correct (China is moving ahead with its own CBDC). But the losses the free market has inflicted on cryptocurrencies since last November have severely damaged their credibility along the way. That damage is likely to delay significantly any immediate implementation of the totalitarian scheme by the Fed.

The Fed Lies. Inflation Is Here and It’s Going to Get Worse, Not Better

This article was published by TheNewAmerican.com on Monday, May 10, 2021:  

In its Beige Book, a summary of the U.S. economy published eight times a year and largely based on anecdotal evidence, the Federal Reserve claims that recent price increases are “partly attributed to ongoing supply chain disruptions, temporarily exacerbated in some cases by winter weather events.”

Its authors are lying.

Keep reading…

Economic Growth Continues, But It Won’t Last Forever

This article was first published at TheNewAmerican.com on Monday, May 3, 2021: 

The melt-up in stock prices — increasingly being driven by the stampede of new investors operating out of fear of missing out (FOMO) — is breathtaking. The most commonly used indicator, the Standard & Poor’s 500 Index, has jumped more than 80 percent since its low last March.

Stockholdings among U.S. households have increased to 41 percent of their total financial assets in April, the highest level in history going back to 1952.

The rebound from the pandemic lows is historic:

Keep reading…

White House: No Inflation Threat, Yet

This article was first published by TheNewAmerican.com on Wednesday, April 14, 2021:  

To address increasing concerns that the $5 trillion-plus in new money being poured into the economy by the government will raise prices, the White House called together a group of Keynesian [read: interventionist] economists to sort things out. Their conclusion? Nothing to worry about here; move along.

Specifically, they created various models based upon different assumptions in an attempt to discover any “hint” of inflation. “It never appeared,” said the New York Times. Added the establishment mouthpiece:

Keep reading…

Price Increases at Retail Level Accelerating, Thanks to Massive Money Supply Increase

This article appeared online at TheNewAmerican.com on Friday, September 11, 2020:

The U.S. Bureau of Labor Statistics (BLS) reported on Friday that prices at the retail level in August increased at an annual rate of nearly five percent in August.

Retail prices dropped when the shutdown began and demand for retail items such as gas and services such as restaurants fell like stones. People nearly stopped buying, preferring to stash their “stimulus” checks from the government in savings or use them to pay off credit card debt.

In response, the government, with the help of the Federal Reserve, dumped massive amounts of newly created digital currency into the economy, hoping that the infusion would quickly revive it once the infection risk had passed.

Now that that perceived risk has abated, citizens are coming out of their homes and basements and spending, making up for lost time. They’re buying

Keep reading…

Producer and Consumer Prices Jumped in July Much More Than Expected

This article appeared online at TheNewAmerican.com on Wednesday, August 12, 2020: 

Prices for goods and services at both the producer and the consumer levels jumped far above forecasts in July. The CPI jumped 0.6 percent (an annual rate of more than seven percent — double the rate economists had predicted and the biggest monthly jump since 1991), while the PPI clocked in at 0.8 percent (an annual rate of nearly 10 percent).

Are these harbingers of the coming tsunami of price increases based on the huge jump in the money supply reported by the Fed? Or are they just a blip on the screen, as Bloomberg’s Conor Sen suggested?

Sen tried to soothe concerns, writing that

Keep reading…

National Debt Projected to Hit $41 Trillion by 2030

This article appeared online at TheNewAmerican.com on Wednesday, August 12, 2020: 

If the Manhattan Institute is correct, the national debt will reach $41 trillion no later than 2030, less than 10 years from now. Their calculations take into account the budget deficits baked into the numbers before the COVID crisis hit, the stimulus packages initiated since, the impact of an aging demographic on Social Security and Medicare, falling tax revenues due to a smaller economy, and rising interest rates.

Said the institute:

Over the full decade, the coronavirus recession is expected to add nearly $8 trillion to the national debt, pushing the debt held by the public to $41 trillion within a decade, or 128% of the economy….


This gives lawmakers six years or less to avert a potential debt crisis in which rising debt and interest costs would overwhelm Washington’s ability to tax and borrow.

Two key questions arise:

Keep reading…

Wholesale Prices Drop in June; Economists Confounded

This article appeared online at TheNewAmerican.com on Friday, July 10, 2020: 

The Bureau of Labor Statistics (BLS) announced on Friday that wholesale prices dropped by 0.2 percent in June. Economists were expecting an increase of 0.4 percent.

Confounding those economists further, wholesale prices have dropped by nearly one full percentage point over the last year. Common sense says that when the supply of money and currency increases, price increases are sure to follow.

And the money supply has certainly been increasing.

Keep reading…

Who’s Running the Show: the Fed or the U.S. Treasury?

This article appeared online at TheNewAmerican.com on Thursday, June 18, 2020: 

Scott Minerd, global chief investment officer at Guggenheim Partners, told CNN on Tuesday that the next effort by the Fed to keep the U.S. economy going will be to start buying U.S. stocks. As The New American has reported, the Fed has already expanded its powers so that it can purchase exchange-traded bond funds, junk bonds, and now corporate bonds.

All of this so far exceeds the Fed’s original powers that it has been forced to do a “workaround” by creating a number of intermediaries to accomplish its purposes. Each of these intermediaries needs a “special purpose vehicle” — an SPV — and the help of the U.S. Treasury.

Jim Bianco, president of Bianco Research & Trading, has been producing commentaries on the bond market for 30 years that are faithfully read by hundreds of portfolio managers. His commentary on these SPVs has raised the question, i.e., if the Fed needs the help of the Treasury to accomplish its purposes, who is in charge: the Fed, or the U.S. Treasury? If it’s the latter, and because U.S. Treasury is part of the Executive Branch of the U.S. government, does that mean that the Fed now has a new chairman, namely, President Trump?

Bianco explains:

The Treasury … will make an equity investment in each SPV and be in a “first loss” position.


What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is [merely] acting as banker and providing financing….


This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.

Bianco expanded on this thesis:

Keep reading…

Fed Plans to Buy Individual Corporate Bonds to “Support” Market

This article appeared online at TheNewAmerican.com on Tuesday, June 16, 2020:  

The announcement by the Federal Reserve on Monday afternoon that it would expand its efforts to “support” the economy by buying individual corporate bonds cheered Wall Street, which rebounded nearly 1,000 points on the news.

The fact that Fed officials voted unanimously for the extraordinary expansion of Fed powers suggests a degree of panic that the government shutdown of the economy using the COVID-19 virus as an excuse was also likely to shut down the $9.6 trillion corporate debt market as well.

For more than 100 years (the Fed began operations in 1914),

Keep reading…

Fed’s Gloomy Outlook Sinks Stocks

This article appeared online at TheNewAmercan.com on Thursday, June 11, 2020: 

Federal Reserve Chairman Jerome Powell’s assessment that the surprisingly favorable jobs report last week was likely a one-off blip is pushing stock prices lower on Wall Street on Thursday.

Following the meeting of the Federal Open Market Committee (FOMC) on Wednesday, Powell said that last week’s report “was a welcome surprise. We hope we get many more like it, but I think we have to be honest, that it’s a long road.”

This sent futures down more than two percent before the opening.

In its official statement issued by the FOMC, the Fed admitted that

Keep reading…

Stock Market Rallies Despite Negative News

This article appeared online at TheNewAmerican.com on Thursday, June 4, 2020:

The small-cap Nasdaq 100 Index has rallied more than 43 percent since its low set on March 23. The S&P 500 Index has posted its largest 50-day rally in history. The Dow Jones Industrial Average has gained 7,600 points.

With all that is going on in the country and the world, how is that possible? The national riots, the confrontation with China building over Hong Kong, and the deaths continuing to mount as a result of the coronavirus, would all seem to be negatives on the market, driving investors away.

But, no. Investors aren’t looking out the back window, but instead are looking out the front. And they are increasingly seeing what they want to see and hope to see: a recovery that justifies their decision to invest in companies that appear likely to benefit and profit from it.

The president is perhaps the most well-informed individual on the planet. On May 29 he said, “We’re going to have a great third quarter, a great fourth quarter. I think next year is going to be one of our better years.”

There are trillions of dollars just itching to hear such confidence coming from the president. During the lockdown, consumers hunkered down and hoarded many things — toilet paper, canned goods, cleaning supplies, and cash. The savings rate, which is normally around five percent of personal incomes, soared to 12.7 per cent March and then to 33 percent in April. As a result, economists are expecting a virtual tsunami of consumer spending to occur once the economy is fully open.

And the economy is already opening.

Keep reading…

Wall Street’s Monster Rally Unfazed by Record Unemployment Numbers

This article was published by The McAlvany Intelligence Advisor on Monday, April 13, 2020: 

Ned Davis, the head of Ned Davis Research, can’t explain it: Last week’s monster rally in stocks occurred while breathtaking unemployment numbers were reported. Said Davis: “It defies logic. My explanation is that … the market tends to look ahead.”

In the shortened trading week – the markets were closed on Good Friday – the popular averages all hit double digits: the Dow closed up 12.6 percent; the S&P 500 closed up 12.1 percent; and the tech-heavy Nasdaq closed up 10.6 percent.

This rally ignored the numbers from the Labor Department: 6.6 million people filed for unemployment insurance last week, bringing the total to 17 million claims in just the last three weeks. Some are expecting claims to exceed 25 million before the COVID-19 crisis is over.

Another indicator for a healthy and quick economic rebound is

Keep reading…

Stockman: The CARES Act is the Country’s “Greatest Folly”

This article was published by The McAlvany Intelligence Advisor on Good Friday, April 10, 2020:  

Never one to pull his punches, David Stockman, Reagan’s former OMB Director, unloaded at LewRockwell.com:

[CARES] … the greatest folly ever to beset our [country] is now racing full speed ahead.

Instead of belt-tightening, work-arounds, payment deferrals and negotiated price and wage adjustments for a few months … current and future taxpayers are being saddled with trillions of unnecessary obligations, which will prove to be the final straw on the debt-ridden camel’s back….


Because the ship-of-fools in the Eccles Building [which houses the Federal Reserve’s Open Market Committee] have led Washington and Wall Street alike to believe in what amounts to the greatest lie in financial history: that we can borrow and print our way back to prosperity!

His article is already out of date. The Fed and the Treasury are doubling down, adding an additional $2.3 trillion to the economy in the belief that such a flood can hasten the end of the economic depression caused by the powers-that-be.

That makes attempts to measure the real amount the Treasury owes by Truth in Lending and Boston University professor Laurence Kotlikoff irrelevant.

On April 7, Truth in Lending, the non-partisan think tank that tries to provide an accurate (read: full accounting of all promises) measure of the government’s true financial condition, released its latest report.

Instead of repeating the canard that the national debt is only around $23 trillion, it reported that the federal government actually owes more than $113 trillion when “off-budget” items like Social Security and Medicare are added back in.

For this, the think tank gave the Federal government a financial grade of “F.”

The report didn’t take into the account the CARES Act.

Professor Laurence Kotlikoff has developed the “intergenerational accounting” protocol that

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Don’t Panic: the Fed’s Offer to Stabilize Bond Markets Is not “QE-4”

This article appeared online at TheNewAmerican.com on Friday, March 13, 2020: 

Headlines from major financial sources virtually shouted that the Federal Reserve was suddenly employing “QE4” — quantitative easing — in a massive way to calm the bond markets roiled by the coronavirus. The Wall Street Journal declared: “Fed to Inject $1.5 Trillion” into the bond market while CNN shouted: “NY Fed to pump in $1.5 trillion to fight coronavirus-linked ‘highly unusual disruptions’ on Wall Street.”

London’s Financial Times, usually an island of calm in an ocean of panic, said that virus fears “prompted the US Federal Reserve to announce a sweeping package of measures … including pumping trillions of dollars into the financial system.” CNBC announced that “the new moves pump in up to $1.5 trillion into the system in an effort to combat potential freezes brought on by the coronavirus.” The Fed would do this, said CNBC, by “dramatically ramping up asset purchases amid the turmoil created by the coronavirus.”

The articles behind the headlines reflected the panic felt elsewhere over the coronavirus. Said the Journal,

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National Debt Is $122 Trillion, Not $23 Trillion, Says Non-profit Group

This article appeared online at TheNewAmerican.com on Tuesday, February 25, 2020:  

When Epoch Times’ Mark Tapscott checked the U.S. Treasury’s “Debt to the Penny” website on Monday, he reported that the U.S. national debt just ticked over to $23.3 trillion. That’s four times what it was 20 years ago.

Tapscott then checked in with the Chicago-based nonprofit advocacy group Truth in Accounting (TIA) to get a more accurate reading. Said Bill Bergman, the group’s director of research, the Treasury misses the real national debt by $100 trillion, explaining that “the U.S. Treasury does not include the unfunded obligations for Social Security and Medicare.”

That’s because those obligations can only be counted when they become liabilities. And because Congress can change the law at any time, said Bergman, the Treasury gets to hide the real numbers. Said Bergman, “The reasoning has been that the government controls the law, and can change it any time.”

An actuary from Social Security spelled out the deception at a public hearing in 2007:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2021 Bob Adelmann