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HomeR. Wenzel: Federal Reserve An Unmitigated FAILURE
Posted by Larry Doyle on April 28th, 2012 9:17 AM |
This commentary is a little lengthy but a great and absolute MUST READ!! LD
Who really runs America?
The media may actively and aggressively debate the pandering provided by those on both ends of the political spectrum. But to whom do these pols really answer? The American public? I do not think so.
The Washington establishment strikes me as little more than puppets played by the one controlling the money. Who might that be? The all powerful and, all assertions to the contrary, perpetually opaque Federal Reserve.
Let’s navigate deep into the chambers of the New York Federal Reserve. (more…)
Dollar Devaluation Is a Dangerous Game
Posted by Larry Doyle on October 8th, 2009 9:24 AM |
Can we ‘devalue’ our way back to our days of economic ‘wine and roses?’
Many debt-laden countries throughout economic history have chosen to implicitly or explicitly pursue a devaluation of their currency as a means of improving their economies. Are the ‘wizards in Washington’ taking this approach? Aside from a few perfunctory comments in defense of the greenback, Washington has been largely silent on the topic of the declining value of the dollar. Many believe Washington very much favors a weaker currency as a means of supporting our economy. I believe this of Washington, as well. Let’s navigate.
Going back to the G20 in London last Spring, the Obama administration has attempted to curry political favor with emerging economies, especially the BRIC nations, by ceding dollar sovereigncy as the preeminent international reserve currency in return for support of global economic stimulus programs. Why does Washington believe a weak currency serves our economic interests? A weak currency generates and supports the following:
1. Promotes inflation as imports decline. Washington would like some inflation, given the massive deflationary pressures presented by falling wages and declines in the value of commercial and residential real estate.
2. Promotes exports for corporations with a multi-national presence.
3. Supports labor by making it more attractive for companies to keep jobs here as opposed to opening factories or sending work overseas.
So, in light of our current economic crisis, why wouldn’t we want a substantially cheaper dollar to maximize these benefits?
Recall that economists always need to keep certain variables static in order to study the impact of a change in another variable or multiple variables. This approach, known as ‘ceteris paribus,’ is not quite as easy as some may think. Why? Variables are NEVER static, or ‘ceteris is NEVER paribus.’ (more…)
Cap and Trade or Cap and Close?
Posted by Larry Doyle on June 30th, 2009 8:18 AM |
Politics is a dirty business, as is pollution. Mixing the two is a very dirty and potentially explosive proposition. Let’s try to shed some light on this corner of our economic landscape.
For evidence of this ‘dark and dirty’ enterprise, we need look no further than the energy bill recently passed by the House and on its way to the Senate. This legislation, formally known as the Waxman-Markey Climate Bill but commonly referred to as ‘cap and trade,’ was recently highlighted by Bloomberg reporting Big Oil’s Answer to Carbon Law May Be Fuel Imports.
Whenever I assess an industry, I initially think of a few basic factors, including:
1. product
2. cost of sourcing product
3. cost of developing or refining product
4. targeted market for product
5. potential profit margin
6. ability to scale the business (i.e. grow the enterprise)
7. barriers to entry for competition
These basic business principles apply to virtually every business enterprise in the world. Any good businessman is always looking to cut costs, increase profit margins, and increase market share.
The goal of cap and trade, minimizing greenhouse gas emissions, is worthy. All other things being equal (our age old economic term, ceteris paribus), who would not be supportive of minimizing these emissions? As we know, though, all other things are NEVER equal. Let’s review our basic business principles. (more…)
