HR1207 as of 7/23 has 276 co-sponsors.
One of the only arguments I've seen against it, one that I've seen Marxist lovechild LegendKiller latch onto, is that full knowledge of what the Fed does will "politicize" the Fed. The problem with that argument is that the Fed has long since discarded the pretense of operating independently. They work for the short-term interest of government administrations all the time, to historically and unwisely lower interest rates and make the cost of borrowing artificially cheap in times when bad debt so badly needs to be liquidated. This is what turned the stock market bubble into something much worse, deferring short-term pain for greater long-term pain. It's what will turn the real estate bubble into possibly an even larger bubble. At some point, this strategy will fail to create another euphoric high in some sector and will instead cause a collapse in the U.S. bond market. It doesn't have to be a stampede out of dollar assets, it can simply be a protracted disinterest in making new and greater loans.
The fact of the matter is that America and its citizens are in too much consumer debt, and have promised themselves far more in health care and imported goods and international policing than they are capable of financing with their own production. As the savings rate has gone up among individuals, the government on their behalf has more than offset it with its record spending plans.
If we expect some kind of continuous never-ending purchase of our bonds while giving our consumers such cheap rates, we are as delusional as Madoff was at the height of his ponzi scheme. There has to be an expectation that Americans will at some point put all this supposed "investment" borrowing to productive rather than consumptive use, or the loans made to us are not loans, but gifts. Already, we have seen some pretty pathetic bond auctions and Obama will have to be one hell of a bond salesman given that we show no intention of doing anything more with foreign savings than buying foreign goods and domestic services.
I've made the argument before, nobody exports for the sake of exporting. You export to get imports. If you can't export for imports, you're better off consuming the goods yourself. If you're otherwise exporting for promises in the form of dollars, those promises have to be made good on. It is worthless to accumulate promises in perpetuity. China cannot dream of spending all of its dollars at once or it will cause their value to collapse. They hold a toxic asset, their best move actually is to stop adding to the pile and exchange it for goods now.
I think there's a very real chance that the U.S. central bank is working with foreign central banks to bribe local officials into continuing the dollar reserve dynamic. And I also think it's obvious that certain hedge funds posing as banks like Goldman Sachs have gotten preferential treatment, otherwise the bailout of AIG served no purpose. These guys have a risk-free betting operation going. They keep the winnings, taxpayers are strapped with the losses under the "systemic risk" and "too big to fail" mantras. Quite the opposite, these guys are too big to bailout. We will never know exactly where all this money went down a line, but we should at least know the initial recipient. The Fed should not be a government unto itself, but it acts like it and has been granted a total monopoly over our market's currency, not to mention federal insurance of private bank deposits. I don't know any sector in this economy that is more subsidized and privileged.
One of the only arguments I've seen against it, one that I've seen Marxist lovechild LegendKiller latch onto, is that full knowledge of what the Fed does will "politicize" the Fed. The problem with that argument is that the Fed has long since discarded the pretense of operating independently. They work for the short-term interest of government administrations all the time, to historically and unwisely lower interest rates and make the cost of borrowing artificially cheap in times when bad debt so badly needs to be liquidated. This is what turned the stock market bubble into something much worse, deferring short-term pain for greater long-term pain. It's what will turn the real estate bubble into possibly an even larger bubble. At some point, this strategy will fail to create another euphoric high in some sector and will instead cause a collapse in the U.S. bond market. It doesn't have to be a stampede out of dollar assets, it can simply be a protracted disinterest in making new and greater loans.
The fact of the matter is that America and its citizens are in too much consumer debt, and have promised themselves far more in health care and imported goods and international policing than they are capable of financing with their own production. As the savings rate has gone up among individuals, the government on their behalf has more than offset it with its record spending plans.
If we expect some kind of continuous never-ending purchase of our bonds while giving our consumers such cheap rates, we are as delusional as Madoff was at the height of his ponzi scheme. There has to be an expectation that Americans will at some point put all this supposed "investment" borrowing to productive rather than consumptive use, or the loans made to us are not loans, but gifts. Already, we have seen some pretty pathetic bond auctions and Obama will have to be one hell of a bond salesman given that we show no intention of doing anything more with foreign savings than buying foreign goods and domestic services.
I've made the argument before, nobody exports for the sake of exporting. You export to get imports. If you can't export for imports, you're better off consuming the goods yourself. If you're otherwise exporting for promises in the form of dollars, those promises have to be made good on. It is worthless to accumulate promises in perpetuity. China cannot dream of spending all of its dollars at once or it will cause their value to collapse. They hold a toxic asset, their best move actually is to stop adding to the pile and exchange it for goods now.
I think there's a very real chance that the U.S. central bank is working with foreign central banks to bribe local officials into continuing the dollar reserve dynamic. And I also think it's obvious that certain hedge funds posing as banks like Goldman Sachs have gotten preferential treatment, otherwise the bailout of AIG served no purpose. These guys have a risk-free betting operation going. They keep the winnings, taxpayers are strapped with the losses under the "systemic risk" and "too big to fail" mantras. Quite the opposite, these guys are too big to bailout. We will never know exactly where all this money went down a line, but we should at least know the initial recipient. The Fed should not be a government unto itself, but it acts like it and has been granted a total monopoly over our market's currency, not to mention federal insurance of private bank deposits. I don't know any sector in this economy that is more subsidized and privileged.
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