The Fed has shocked us once again, and it’s probably right. There’s a firestorm on the horizon. It starts in Europe, but it threatens the U.S. economy just as surely, and the Fed is getting ready. The most fundamental role of any central bank is to deal with a financial market crisis, to ensure markets operate as normally as circumstances permit. A central bank does this primarily by ensuring an adequate flow of liquidity to market participants, whether banks, other financial institutions, or other central banks. It is in this …
The newly created Consumer Financial Protection Bureau (CFPB) took a step forward today to getting its first director, as the Senate Banking Committee voted 12–10 to confirm Richard Cordray in the post. Even before the vote, however, President Obama raised the stakes. Referring to Bank of America’s decision to impose a $5 debit card fees, he declared that “this is exactly why we need somebody whose sole job it is to prevent this kind of stuff from happening.” The White House later tried to back off the President’s threat of …
My recent post explained why President Obama’s newly proposed $447 billion spending package aimed at boosting total demand is doomed to fail. Some commenters offered a challenge to that assertion. The basis for assessing the spending package: Economic growth is determined by the supply side of the economy, beginning with productivity and labor supply. Recessions result from an external shock (for example, rapidly rising oil prices) combined with a structural distortion produced by a significant public policy (for example, encouraging rapid increases in home ownership by reducing loan requirements), that …
The world is in economic crisis. Quite understandably, much attention has been given to cutting runaway government spending, a fundamental cause of the crisis. Much less attention has been given to the fundamental defects of the monetary system. These defects are at the heart of the economic collapse. Both budgetary and monetary issues must be examined and resolved. The United States and the world should not be condemned to struggle with depreciating and appreciating currencies, with inflationary and deflationary monetary policies that are out of control. The Heritage Foundation’s upcoming Conference …
This week’s Heritage Libertad Radio program – half in English, half in Spanish – covered the recent S & P downgrade, including a discussion with economist JD Foster; a discussion on the recent report on poverty with expert Robert Rector; and a segment answering member questions. Among them: How does the Federal Reserve print money? What makes Obamacare unconstitutional? And how does the amendment process work? Listen to our show to find out answers to those questions and more!
Catching you up on clips, commentary and news of the day. Sign up for the daily email update from Scribe. Russian ‘reset’ malfunction – Ariel Cohen How Obama can get re-elected: Act like Reagan – Neil Reynolds After $65 billion, Fannie and Freddie want more of your money – Abby W. Schachter Federal Reserve to Markets: You’re On Your Own Now – Elizabeth MacDonald Obamacare Hides $50 Billion in Annual Costs – Tom O’Connell Sweden: Wealth Management In A “Social Democracy” – Max Skjönsberg Wisconsin GOP ‘Darling’ Deals Democrats a Blow …
It’s a continued slow pace of recovery for the U.S. economy, Federal Reserve Chairman Ben Bernanke said in testimony today before the House Financial Services Committee. MarketWatch reports: At the moment, Fed officials see a recovery that “will likely remain moderate,” Bernanke said, with the unemployment rate falling “only gradually.” Inflation is expected to subside in coming months, he said. Fed officials have forecast that the economy will expand at around a 3.5% rate over the next 18 months and Bernanke said this remained the forecast. Bernanke also reiterated a line that …
The U.S. economy continues to drag, but why’s the recovery going so slowly? The 13.9 million unemployed Americans aren’t the only ones who want to know. Yesterday, following a speech by Federal Reserve chairman Ben Bernanke (who described the economic recovery as “frustratingly slow”), JP Morgan Chase CEO Jamie Dimon grabbed the microphone and asked Bernanke whether excessive government regulations are hampering the growth. Dimon said: I have this great fear that someone’s going to write a book in 10 or 20 years, and the book is going to talk …
A House subcommittee on Wednesday approved legislation to modify the new Consumer Financial Protection Bureau (CFPB). Spawned by the vast Dodd–Frank financial regulation statute, the CFPB (as originally structured) enjoys sweeping powers over all manner of consumer credit—without adequate accountability. Yesterday’s action is a welcome start to taming the CFPB, but more fundamental reforms are still needed. The trio of bills endorsed by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit would replace the position of bureau director with a five-member bipartisan commission, enhance the authority of …
When economists forecast the economy, they tend to draw straight lines. They figure out where we are and where we’re going, and they plot a line. In fact, neither contractions nor expansions are ever smooth. For various anomalous reasons in the economy and in the data, reported GDP movements are jagged. The reported economy accelerates, slows down, jumps, and pauses. So one ought to hesitate before reading too much into the latest economic data. However … The recent report on second quarter growth showing a reasonably strong 2.4 percent pace …
