by @anarchyroll
2/1/2014
Part One | Part Two
Ex cons have a hard time getting jobs in America due to a stigma that they can’t be trusted due to past actions. Even though going through the incarceration process is supposed to bring you the other end rehabilitated with a clean slate, the reality of the situation is often quite the opposite. It also often only applies to racial minorities who commit blue collar crimes as opposed to white collar criminals who not only don’t go to jail but often barely get a metaphoric slap on the wrist. In the spirit of the latter example, Janet Yellen is the new Fed Chief.
Janet Yellen is a much better choice than Larry Summers. Summers is one of the forgotten architects of the 2008 economic collapse thanks to his economic policy of derivatives deregulation during the Clinton administration during the 1990s. Summers was thought to be getting the job last year before the liberal wing of the Democratic party threatened rebellion in the midterm elections if it happened.
Ben Bernanke who Yellen is replacing, well he is to the economy what George W Bush is to national security. 9/11 happened on Bush’s watch, the 2008 collapse happened on Bernanke’s watch, that’s all you need to know.
Janet Yellen was recently featured in a TIME magazine cover story since she is about to become the most powerful person in the economic world. Why does she fit into the Quantitative Easing conversation? Two reasons. One, she helped create it in 2010. Two, she will be responsible for the tapering (fading out of) and ending of it. But do drug dealers and drug addicts often voluntarily quit their habit? Or do they continuously justify their habit to themselves?
Yellen and QE have been, are presently, and will be in the future tied together for better and for worse. Wall Street has benefited immensely from QE. The massive bond buying program has held down interest rates (QE’s stated intent). This has allowed the casino that is the stock market to function smoothly and at times on steroids, seeing unprecedented highs.
But these highs are drug induced. When a person does blow, crack, or meth they get an intense high for a limited amount of time. Someone who drops acid sees walls melt and a new world of colors birth before their very eyes. But these things do not last, because they are induced by an outside substance. The crash afterwards can be brutal, even from a simple alcohol or marijuana high. The high may feel real, but not as real as the hangover.
The American economy was high after the recovery from the dot com bubble burst. Deregulation, default swaps, and derivatives were the drug of choice of the early 2000s and the high was tremendous making houses as affordable as cars, cars as affordable as vacations, and vacations as affordable as a credit card induced weekend shopping spree. The hangover that started in 2008 was and is very real. Make no mistake we are still in recession, the recovery is false.
The recovery is false because it is also drug induced, stock market highs snorted, smoked, and shot up thanks to quantitative easing. Asset bubbles have been created, inflation is inevitable, and any time tapering is stated or hinted at the stock market nose dives.
Tapering is occurring at about $5 to $10 billion a month, which is a good thing. Yellen has publically stated her support for stricter economic regulation and has the backing of Elizabeth Warren. My concern is that Yellen is a wolf in sheep’s clothing. In addition to being an architect of the current quantitative easing policy written about here, she is also proponent of trickle-down economics or Reaganomics.
The last paragraph of her TIME interview is a quote which that TIME tries to spin as “a rising tide can lift all boats” and then point out that phrase was first used by President Kennedy. The problem is Yellen states that the purpose of QE is directly tied to trickle-down theory. The more money rich people have, the more they will spend, and that will mean more money for the poor by osmosis. Aka when a drunk person drinks a lot, they’ll piss a lot more. QE is nothing more than a tax cut substitute in the Reaganomics equation. She claims to have main street on her mind, but her economic actions indicate she is looking out for the people at the top, hoping their crumbs become big enough to feed the poor when they trickle down after their hedge fund has enough capital freed up to buy another section of homes.
Better than Larry Summers? Yes. Does she deserve some time as the Fed Chair to prove herself? Yes. But QE is her baby. The stock market and unemployment numbers are her master. She is going to nurture her baby and serve her master as long as they are tied together. And all economic indicators show that QE is directly tied to stock market gains and losses as well as the unemployment numbers. Yellen has stated as long as unemployment remains high, QE will remain.
Drug cartel kingpins tend not to be at the forefront of legalization movements. Why? Because the status quo makes them rich. Janet Yellen helped devise QE and now she’s in charge of ending it? Next thing you know you’re going to tell me the insurance companies helped write the Affordable Health Care Act…..
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