The Fed's Low Interest Rates Prevent Growth!

It appears some people never learn. On Tuesday, the Federal Reserve’s Open Market Committee announced they would be keeping interest rates at record lows until at least mid 2013. In a statement from the FOMC, the Fed stated “To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent”. The FOMC has decided to keep interest rates at record lows in an attempt to pick up growth since the recovery has been slower so far this year than expected, but keeping rates this low will have the opposite effect.

After the financial collapse of 2008, the FOMC decided to lower the federal funds rate to 0-0.25% in December of 2008 to have credit flow more freely to financial institutions in an attempt for these institutions to recover after experiencing near bankruptcy. Many mainstream economists said the Fed’s decision to set interest rates at record low levels was a brilliant idea, and was necessary in order to prevent an economic depression. Government officials and the Fed stated that more liquidity in the US markets was the answer to solving our problems and putting a halt to the recession. However, the decision to significantly lower interest rates has not shown any real results in economic recovery, as the unemployment stays high, stocks have not shown any real growth, and the US dollar continues to lose its value against commodities and foreign currencies.

Although some argue that significantly low interest rates by the Fed prevented a depression after the 2008 financial collapse since we haven’t seen depression level figures for the US economy, it can be refuted by stating these artificially low interest rates have just prolonged the harsh recession that should have happened in late 2008. When the Fed decided to lower interest rates to a 0% level for the first time in its history in December of 2008, they took action in lending trillions of dollars in 0% interest loans to banks, corporations and financial institutions in the US and abroad from late 2008 to present day. These no interest rate loans have allowed these companies to pump their bank accounts full of temporary assets based off credit from the Federal Reserve. These assets have allowed companies to prop up their books and avoid having to record any significant losses as they can cover such losses with temporary cash they have on hand from the 0% interest loans.

Since the Fed has artificially propped up US markets by allowing some of the largest corporations in the world to borrow money without having to pay interest, the Fed has allowed these corporations to avoid showing losses which will be inevitable in the long run. Since the majority of the companies that are borrowing at 0% interest rates right now should have declared bankruptcy in 2008-2009, no true recovery will begin to happen for the US economy as long as they borrow money from the Fed on cheap credit to avoid having to report significant losses. The Fed’s recent decision to keep interest rates at all time lows until at least 2013 will just continue the trend these companies have been on in artificially propping up the assets on their books. The best and only decision the Fed should make at this time is to raise interest rates and allow the US economy to face reality before things get worse.

- Liberty_Mike

Tourture Is Not Ok!

For years, the United States Military and Secret Service have been performing torture techniques on prisoners of war who have been captured by the US during its involvement in Iraq and Afghanistan. The excuse the US has used for performing enhanced interrogation techniques against detainees is that the US will be able to gather beneficial information in advancing our mission in the Middle East through torture that they would otherwise not be able to capture. The use of enhanced interrogation by the US against prisoners of war has been a very controversial issue with many people in the US and around the world who disagree with the use of such techniques.

After the US military assassinated Osama Bin Laden a couple weeks ago, many questions were asked about how the military became informed of the whereabouts of Bin Laden. In attempting to find the answer to this question, Senator John McCain (ranking member of the Armed Services Committee) asked CIA Director Leon Panetta how information was gathered in finding the exact location of Bin Laden.  In Panetta’s response to McCain, he stated that the years spent interrogating Al Qaeda detainee Khalid Sheikh Mohammed through techniques such as waterboarding did not lead to any information that helped the CIA find the whereabouts of Bin Laden, and that the information gathered from Mohammed via waterboarding was actually counterproductive in their mission. In a statement made by McCain after learning this information, he said that using torture techniques against Mohammed and other detainees produced false and misleading information in finding Bin Laden. McCain also stated that he had learned the most beneficial information gathered by the CIA in finding Bin Laden was gathered by detainees through non-coercive means. Also, the exact whereabouts of Bin Laden were not fully released by any CIA detainee who had been through enhanced interrogation or not.

The US Military and secret service has been using enhanced interrogation techniques on members of Al Qaeda and other insurgents since 2002, and did not find the exact whereabouts of Bin Laden until 2011. Although some people thought such techniques were beneficial in advancing the US’s mission against Al Qaeda, it took the US 9 years after the implementation of enhanced interrogation on detainees to finally find and kill Bin Laden. Considering the capture of Bin Laden was the top objective of the US in the War on Terror and recent statements by the CIA show enhanced interrogation was more destructive than productive in completing this objective, the US government should rethink such policies. If the US wants to maintain its reputation as being the land of the free and a nation that supports human rights, it should not continue to lower itself to a level where the government views torture as a proper means in gathering information. It is time the US government ban inhumane techniques such as torture and act in a non coercive manner when attempting to gather information that will help the US succeed in fighting the war on terror.

- Liberty_Mike

Bernanke, What Are You Talking About??

Last week, Federal Reserve Chairman Ben Bernanke held the first ever Fed press conference. During this press conference, Bernanke discussed the labor market, inflation, commodity prices, the housing sector, monetary policy and the overall health of the US economy. After listening to this staged event hosted by Bernanke, it is all too clear that the press conference was nothing more than a publicity stunt by the Federal Reserve in an attempt to gain public support for recent Fed policies. Since the Federal Reserve has been under attack by critics due to a serious lack of Fed transparency, Bernanke figured that holding a press conference would be a good way to give the public more insight about the Federal Reserve’s policies to calm overall criticism. In reality, this conference gave no real insight about recent policies, and showed how out of touch Bernanke is with American consumers by stating overall inflation is not affecting the US economy.

In his opening statement, Bernanke stated that increases in commodity prices are due to geopolitical developments and robust global demand. He also stated that there have not been any indications that inflation is getting bad enough to prompt the Federal Reserve to tighten monetary policy, and that the Fed will in fact carry out the rest of their US Treasury bond purchases to complete QE2 by this summer. When asked about QE2 and whether or not the program was successful, Bernanke stated the program has been very successful so far, and that the program has led to overall better economic conditions for the US. In making these statements during the press conference, Bernanke is either trying to trick the American people, or he truly is clueless about inflation and the current devaluation of the US dollar.

Since November 2010 when the Fed took action in pursuing QE2, commodity prices across the board have increased, and the US dollar index has declined. When looking at recent increases in commodity prices and the appreciation of foreign currencies in comparison to the US dollar, it is clear that inflation of the money supply has affected the value of the dollar, and that the Fed should do the exact opposite of what Bernanke stated they would do during last week’s press conference.

Two commodities that are the most sensitive to inflation are the monetary metals gold and silver. Gold hit all time record highs in 2010, and has skyrocketed since January 2011, now priced at over $1500/oz. Silver is near all time record highs ($50/oz in the 1980s), floating around $48/oz. In November 2010 when QE2 had just been announced, Silver was priced under $30/oz. Other metals such as Platinum, Palladium and Copper have increased in price over the past few months as well. Looking at commodities other than metals, oil/gas prices have also increased. Crude oil has significantly increased along with unleaded gas and heating oil. Natural gas prices have also increased since November 2010, although the increase hasn’t been as significant as the increase of other gas prices. Most food based traded commodities such as corn, soybeans, wheat, cattle, hogs and coffee have also increased in price since QE2 began. Along with these across the board increases in commodity prices, the US dollar index has declined in the past few months to around 73, approaching a 5 year low. Foreign currencies such as the Canadian and Australian dollars have recently surpassed the US dollar in value. When looking at the numbers, it is not hard to determine that the current increase in inflation is a problem, and that it is starting to affect the American people. If Ben Bernanke and the Fed do not wake up to this reality soon and take action in tightening monetary policy, the value of the US dollar will continue to decline and American consumers will continue to see a decrease in their standard of living.

- Liberty_Mike

Situation in Libya Proves US Involvement in the UN Irrelevant!

The United States, Britain and France have taken action in performing a bombing spree on Libya in order to enforce a United Nations Security Council vote last week to implement a no-fly zone over Libya. The intent of the UN imposed no-fly zone was to protect Libyan rebels from air attacks by Dictator Muammar Gaddafi’s forces.  Although the UN Security Council voted 10-0 in favor of enforcing a no-fly zone over Libya, 5 members of the council abstained from voting. Two of the nations that abstained from voting, China and Russia, have veto power in the Security Council, and could have prevented the UN from imposing the no-fly zone by casting a “Nay” vote. Considering 5 member nations, including the 2 with veto power, abstained from voting on this action, the United Nations has once again shown the world how irrelevant its role in global policy really is. 

The United Nations was created in 1945 for the purpose of assuring international law enforcement, providing international security, upholding human rights, and most importantly, preventing war. The organization is comprised of 5 different organs, and the Security Council is the only organ of the UN that has the power to make binding decisions that member nations agree to carry out (the other 4 organs that make up the UN only have the ability to make recommendations). The countries who voted in favor of the no-fly zone over Libya decided someone was obligated to use force against Gaddafi and his supporters due to the fact UNSC decisions must be carried out. Although 10 member nations of the UNSC voted in favor of the no-fly zone, only the US, France and Britain have taken action in enforcing the measure at the UN’s demand. It appears the other 7 member nations of the Security Council who voted in favor of the no-fly zone do not want to get their hands dirty in Libya or bear the financial costs associated with using force.

I am not sure about Britain or France, but according to the law of the United States, the US may only get involved militarily in a foreign nation after first passing through the Congress and then going to the President. The US executive branch and military do not have the authority to use force against another nation due to a resolution from any sort of governing body, such as the UN, other than the US Congress. If the federal government is going to act outside the confines of the Constitution by using force without passing a resolution through Congress and do so without the help of the majority of members of the UN, what is the purpose of the United State’s involvement in the UN at all? The United States is the top financial contributor to the UN, providing 22% of their overall funding ($598 million in 2009 alone), with all other member nations contributing significantly less. Considering the US is carrying out the situation in Libya at the UN’s request with help from only France and Britain, the United State’s involvement in the UN is worthless. As lawmakers begin to look for areas to cut wasteful spending in an attempt to fix the massive budgetary problems facing the US, federal funding to the UN would be a great place to start!

-Liberty_Mike

Gas Out

All things considering, I thought that this would be a good topic for my first article since it exemplifies the need for an education reform (I'm making a bit of a joke here):

So apparently there is another petition making its way around to "boycott" selected oil companies.  The link is here:   http://www.facebook.com/permalink.php?story_fbid=152319464828818&id=151363471591084&notif_t=feed_comment#!/event.php?eid=151363471591084
 
After reading the article in the link, I'm certain it wouldn't work...here's why:

"If they [Exxon, Mobil] reduce their prices, the other companies will follow suit."
 
My Rebuttal: hahaha yeah right! Do you even understand how global economics works? This will just turn the new companies into conglomerates.  The only way oil prices can be reduced is by controlling the price of CRUDE OIL...not boycotting two companies.


"If you don't understand how we can reach 300 Million people...well let's just face it, you just aren't mathematician."

My Rebuttal:  Actually, I am an Applied Mathematician.  There are a grand total of only 311,000,000 US citizens according to the 2010 census.  24.3% of the US population is made up of children.  YOU do the math. 


Moral of the story:  If you don't want to have to worry about gas prices, either purchase your own drilling company or buy an electric car.


-Steely Dan

The US Should Leave Afghanistan Now, Not 2014!

How much longer should the United States stay in Afghanistan? That is a question many people have been asking both the Bush and Obama administrations for years. It seems like every year we hear the White House give a time frame of how much longer US troops will remain in Afghanistan, but the following year they retract their previous statement and come up with a new arbitrary time frame. It appears this year, the Obama administration is once again extending the time frame they foresee US involvement in Afghanistan, stating the military would remain there well past 2014. The executive branch’s annual time frame extension of our presence in Afghanistan is trending into a never ending cycle.

On June 7th, 2010, the War in Afghanistan had become the longest war in US history, reaching 104 months in length at that point in time.  This 104 month period exceeded the time frame of the Vietnam War which lasted 103 months in total, and until that point was the longest war in US history. 9 months have passed since June, and the war has reached almost 9 ½ years in length. Considering our involvement in Afghanistan has reached such a lengthy period of time, the Obama administration should be working as hard as they can to assure the US withdraw forces from Afghanistan as soon as possible, and not prolong the war’s end past 2014 as Secretary of Defense Robert Gates recently stated the US will do.

The reason the United States decided to attack Afghanistan in 2001 was to remove the Taliban from power after the September 11^th attacks since the Taliban was a known supporter of Al Qaeda. This objective was completed very quickly, with every major Taliban controlled city falling after a few months of US occupation. Although the main objective of the war had been successful for the US by early 2002, the Bush administration insisted we remain in Afghanistan to assure the Taliban would not come back to power and that the region would become stable. 9 years later, US and NATO forces remain in Afghanistan for those exact same reasons.

In the almost 9 ½  year period the United States has been involved in Afghanistan, 1,495 US troops have been killed and over a trillion dollars has been spent. The stability of the region has not been getting progressively better as the White House and Pentagon have anticipated, and the Afghan people are getting sick and tired of the United States’ presence. The Afghan people and government are especially angry at the US right now for a NATO bombing last week that killed 9 young boys who were out collecting firewood, mistaking them as insurgents. The US, NATO and people of Afghanistan can no longer afford to keep this occupation going. This war cannot keep going until after 2014, nor should it ever have lasted as long as it has. The only sensible thing the US can do at this point in time is end the war in Afghanistan now, or this trend will continue for many administrations to come.

- Liberty_Mike

US Involvement in Libya Will Offer Same Results as Iraq

As civil unrest unfolds in Northern Africa, the United States doesn’t have to think twice about whether or not it should get involved. Right now, the people of Libya are in the act of carrying out a full blown revolution in an attempt to overthrow their dictatorial government.  In the process of these events, the government of Libya is failing to step down, and has shown its willingness to fight back. Considering some form of fighting is going to occur in Libya until its people and government settle their differences, the United States government has felt the need to once again act as the policemen of the world and intervene.

On Monday, the Pentagon announced it had begun to move warships and carriers closer to Libya in the Mediterranean Sea. Pentagon officials reported that this move was made in order to have closer access to Libya in case the US decides to pursue military action to help aid the revolution. The excuse the US is using for potential military involvement is that they want to liberate the people of Libya from their oppressive dictator, Muammar Gaddafi, who is responsible for turning the Libyan military on its citizens. Does this situation sound familiar?

When the Bush administration officially decided to intervene militarily in Iraq in 2003, they publicly stated many different excuses for attacking the nation, including the fear of weapons of mass destruction and a harboring ground for Al Qaeda. However, one of most commonly used excuses by the Bush administration for illegally attacking Iraq was to free its people from Saddam Hussein’s dictatorship, calling the war “Operation Iraqi Freedom”. Although the US military removed Saddam’s regime from power after only a couple weeks of military action, we continue to have troops in Iraq 8 years later with a few trillion dollars wasted, 4,400 US troops killed, and no true end in sight.

Putting recent historical facts into consideration, the US should not get involved in aiding Libya’s revolution. It is more than understandable that people all around the world should be outraged with Gaddafi’s actions in attacking his own citizens who are in opposition to his rule, but the reality of the situation is that outside involvement will only make problems worse than they already are. Not only will US military involvement make problems worse for both Libya and America in the long run, it will be illegal for the US government to take any military action unless it is officially voted on and declared a war by the US Congress. Article 1 Section 8 of the United States Constitution states that Congress must be the first to take any sort of action in declaring war and using military action. Nowhere in the Constitution does it give the executive branch or Pentagon the authority to send troops into a foreign nation (the way the Bush administration did with Iraq) as the Obama administration appears to be considering. The more the US intervenes militarily in other nations such as Libya, the more it will cost the American taxpayer, lives of innocent civilians, and our respect around the world.

 - Liberty_Mike