Monday, November 15, 2010

Why Democrats can't explicitly advertise what they are doing...

Very simple.

The United States currency is the world's reserve currency.  Thus, we can do many things and the demand for the dollar remains.  China, buys Dollars.  Countries around the world buy dollars.
People and investment institutions globally buy dollars as a safe haven for their money.

Result:  The dollar value maintains itself.

"Quantitative Easing" and Ben Bernanke


The Fed is printing money right now.  600 Billion dollars worth.  Then the Fed is loaning the money by purchasing Treasuries.  The Fed is hereby loaning money to... well... the United States.

It is loaning money, that it is printing right now.  To... well, America.
At zero percent interest.

So, then America has 600 Billion Dollars existing in its economy.

Theoretically, printing all that money should debase the value of our currency.  However, today even, our currency rose against most of the top currencies in the world.

So:  Right now, we are able to print money, loan it to ourselves for free, and the value of the dollar still gets stronger.

Money Usage: Lets consider the figure the 800 billion dollar stimulus program.

Projects happening everywhere - particularly in my area - have triggered massive investment in the infrastructure and technology of this country at a time when most world governments are practicing "austerity."

The previous measures of Quantitative Easing, printed far more dollars than the cost of the actual stimulus.
Those measures were in the trillion dollar range.

So, we spurred mass investment in our economy.  Every road being bought now was far less expensive than anticipated because construction companies, literally wanted to just be here tomorrow.  So, bids were far below normal.  Political leaders found their money going so much further than expected that they have been able to do double and triple the projects.

We triggered a recovery in the largest economy in the world.  And in the process "Value deflation" has occurred.  Which, means - pre-inflation - there is a move where businesses don't raise their price, they just offer a little less value within their products.  Aka - shaving cream bottles and boxes of cereal are smaller.

Prices for commodities have been rising.  This effects economies around the world.  Essentially, they will have to churn forward faster to be able to afford things - aka - they will have to work harder - which will trigger more recovery globally.

In America - our prices are depressed on most of our large assets - so we can pump a tremendous amount of money into the economy just to bring our markets back to where they were.  When we reach the level where we were - recovery ends - and we move forward into economic expansion.

Except - America has been able to expand with trillions of dollars in printed money - and the world has still been gobbling up our currency.

So - America is having massive massive investment in all sides of the economy.  Emerging technology and industry is receiving R+D.  We are shifting the medical system over to digital records, which will slash costs across the board.  Health reform is focusing on efforts to target the biggest problems we have in American Health.  And leaders like Arnold Schwartzeneggar and Obama have been taking large contingents of business leaders to ink deals around the world - including Boeing, which sold 10 Billion dollars worth of their massive cargo Jets to India on Obama's trip.

And - as there is commodity inflation - the value of local currencies in emerging markets will actually be reduced relative to what can be bought.  So American's buying power maintains and global buying power shrinks.  Unless, globally they are holding onto Dollars - which is the currency that is maintaining its strength.

So - there is a feedback loop right now - where the more money we print to loan ourselves at zero percent interest - the more important other nations and entities find it to purchase our reserve currency the dollar.

The American economy is "Reflated" because the dollars exist within our markets to support the market prices required for growth in the economy.  Aka - dollars are printed until the market can support housing prices as they were before the crash.

The value of American's most expensive asset - houses - increases back to where it was.
The value of total assets in the stock market grows and the market goes up because money is in the economy to find it's way there.
We are able to spend massive amounts of money that we print for free - to trigger new industries and infrastructure.
We shift our economy into green energy, which could save us from a global climate crisis.
We position ourselves so that the worse it gets in terms of the climate crisis, the more people across the globe will need to buy our products.
We axe the major expenditure of Health care costs by bringing our approach into the new Millenium.
We expand coverage to all American's thereby creating the opportunity for a major expansion of the vitality of Americans.  And - we cut back on the problems that have been costing us more each year.
Aka.  We trim a ball and chain from around our neck.
We doubled the entire education budget nationally and are investing massively in updated schools that creates the next generation of brains that our economy will be built on.

Bottom Line:  While deficits look bad.  We essentially have done this all for free.  Because through quantitative easing... we just have to pay back - OURSELVES!

So - if more money is circulating in the economy now... loans are less expensive because of QE2 - and as an entrepreneur I know - a project takes about two years to get off the ground.  I see between March 2011 and March 2012 a large economic expansion.  And after that - we are building for an economic boom on the new foundation that is built - and we leave all the other countries in the dust.

WHY?  Because we can print money, which should devalue our currency, but it doesn't.  It just devalues the buying power of all the other nations we compete with.

Post great-recession - we are then standing on a new, firm-foundation, for the entire economy to flourish for a generation.

Ppppppsssst.  Here is the point of this entire article.

(The Democrats can't go around bragging about what we have been doing.  6 Billion people on the Earth might get really angry if they realize we are printing money like crazy - building our country extensively - lowering their purchasing power - while investing in our own economy to an extent that under ordinary circumstances is completely impossible - giving us a baked in lead for the next 50 years.)
(Debt is not all bad if invested well.  Also, credit card debt at 29% is worse than a line of credit at 8% interest  rate.  Take a look at treasury rates and the rates we are borrowing from China and the Fed.  We are getting all this money at 0% interest rates to build an economy that out-competes every economy in the world.  The by-product of inflation would be that every bit of debt held by Americans and America remains the same dollar amount - but, dollars are much easier to come by.  Aka - We shrink our debt not by decreasing the #'s we see - the $$ signs we see - but, by expanding our currency base - thus Shrinking the impact of our debt.)

(SHHhhhhhh - China is gonna be PISSED!  They've been manipulating their currency, keeping it low so they could build a massive export economy.  We borrowed all that money back by the trillions and then devalued that money on a global stage while we made ourselves more competitive.)



  1. Quick note: For a while, as this happens. Unemployment will go down and it will look like failure.

    That is because unemployment data as reported uses a column of data from the Office of Management and budget called u3.

    In the same table of data - column u6 shows a higher percent than the regular unemployment number.

    When people get the feeling that jobs are available they start looking for jobs again. In the monthly survey of 60,000 households, where data is gathered from, that shows up.

    Column u3 stops counting people who gave up and haven't looked for jobs in over four weeks.

    Column u6 counts those people and all the other unemployed.

    In October 151,000 jobs were added, and unemployment remained precisely the same.

    That is a result of people moving from Column u6 to column u3. (Not a result of the employment situation staying the same or being worse.)

    Why use an unemployment figure like this?
    Well, the unemployment at its worst times will never really appear as bad as it actually is.
    Thus, stemming some pessimism.

    And the unemployment number as the economy is improving won't get better with as much ease as it should. So, as jobs begin to be created people governments and those who want to boost the economy will feel that they need to work harder to move the jobs numbers... so they will rise to the challenge.

    Aka - it is a statistical mind game.

    1) Click option 5 to see who is counted as unemployed.

    2) go to page 2 in this PDF to see the alternative measures of workforce utilization and how they function.
    Column u3 is reported unemployment level
    Column u6, which is usually several percent higher is the actual people not working - "underutilized" vs. "unemployed" because they are not looking for employment.

    Then do a search and find the data as it exists in the current workforce underutilization.

  2. Note: As jobs are added unemployment will go up.

    Click option 5 to see how unemployment is calculated. That number does not count people who have stopped looking for work for more than four weeks.

    On this PDF go to page 2. Unemployment as reported is defined in column u3. "Under-utilized work force" appears in column u6.

    As jobs begin to add, people who gave up and stopped looking, will start to look. The survey of 60,000 people monthly, will pick up this change. Those people move from column u6 to column u3 and unemployment goes up as jobs are added to the market.

    There is several percent of slack in the market now. So, unemployment rate will look like failure for a while as slack works out of the system - EVEN as jobs are added.

    Google - current percent of work force under-utilization to see where that percentage lies.

    (Our problem is bigger than it appears, but we are moving in the right direction)

  3. Note: When I first posted my comment - it said my post was too long and it would not allow it to post.

    So, I shortened the comment and reposted.

    Both have value - one has a little bit more opinion.