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This Is What Democracy Looks Like

Today's Note From a Madman

November 1, 2007


The Fed and Their America Vs. The Rest of US and Our Economy
(It's an unfair fight)

Democratic Presidential Candidate, and former Senator John Edwards (NC) says that there are "Two America's". And although this was said in the heat of a Political Battle, make no mistake - truer words have never been spoken, especially from the stump.

"Today, under George W. Bush, there are two Americas, not one: One America that does the work, another that reaps the reward. One America that pays the taxes, another America that gets the tax breaks. One America - middle-class America - whose needs Washington has long forgotten, another America - narrow-interest America - whose every wish is Washington's command. One America that is struggling to get by, another America that can buy anything it wants, even a Congress and a president. "

The words used by the Fed made me realize just which America they live in. But, more to the point, it made me wonder if they even get it that there is another America.

THE FED: The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points, to 4.5 percent.
Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.
MADMAN: The "growth" which the fed speaks of isn't felt by many, if not most Americans. And the "strains" of the financial markets pale in comparison to the strains of feeding a family and paying for health care for the great majority of our nation. You see, although statistics are available which report on things like how much "extra" money the average American has to spend (disposable income) and how much the Average American puts in their saving's account, the Fed doesn't really care about that. They measure what the Big Boys are doing and only measure the economy of America that way.
In other words (to use a favorite Bush phrase) The Fed only believes in the Trickle-Down theory of Economics, which, simply put, says that those at the top end of the economic ladder should be given charge of our money, spend it as they see fit, and allow the scraps to fall to the rest of us as they may. Considering that the American middle-class is the true driving force behind the American economy, the Fed's logic is twisted.

THE FED: Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
The committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
MADMAN: "Core Inflation" doesn't seem to include things like gas, home heating fuel, milk, and many of the other staples which we, the American middle-class seem to use every single day. The Fed sees inflation, overall, as better. But when nearly 20 cents out of every dollar produced by our nation (GDP) is spent on health care and we are no longer saving any money in our savings accounts and our real wages are falling, inflation is a real problem. The Fed here is right in pointing out that energy and commodity prices might apply "pressure" to inflation. But those in their Trickle-Down Upper Class aren't going to be affected the way we, the middle class, are affected by it.
Gas prices, home heating fuel, milk and health care are still going to be expenditures which the middle class must outlay. It's the other stuff like vacations and going out for dinner and taking you kid to a ballgame that are going to be affected, and it's all of those extra things which, in the end, drive the American economy and the American middle-class is sitting behind the steering wheel. It's just too bad that we're driving an old, beat up jalopy.

THE FED: Voting for the F.O.M.C. monetary policy action were: Ben S. Bernanke, chairman; Timothy F. Geithner, vice chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25 basis-point decrease in the discount rate, to 5 percent. In taking this action, the board approved the requests submitted by the boards of directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis and San Francisco.
MADMAN: As the Fed lowered the interest rate which they offer to banks and other lending institutions yet another quarter percent, something hit me: Every time the Fed allows the banks to borrow money at a discount (from the Federal Government), they're taking their discount from us, the American taxpayer. And when we borrow that same money from those very same institutions, we don't seem to get any break on the rate. You don't think so, huh? Take a look at what you pay your credit card company when you can't pay your whole bill at once? Take a look at what they'll charge you in late fees if you're just a day late.

In the end, The Fed, like the Bushies and their power-friendly pundits, stay within the Beltway and don't really know what their America's economy means to our America's economy.

-Noah Greenberg

I had to pass along these quotes from Rudy Giuliani. When speaking to the right wing Hoover Institute, Giuliani said:

"The GOP must redefine itself around economic issues -- health care, school choice, taxes -- as the 'Party of Freedom.'"

The "Party of Freedom" ... sounds nice until you dig into Giuliani's peculiar definition of "freedom":

"[F]reedom is not a concept in which people can do anything they want, be anything they can be," he once explained as mayor. "Freedom is about authority."

It's also about the freedom to inherit a vast fortune tax-free, or the freedom to get sick and die. Or, as another philosopher of the topic, Janis Joplin, once put it, "Freedom's just another word for nothing left to lose."

So, this clown wants to be President? His economic philosophy is even worst than Bush's "ownership society" flim-flam.

For the quotes see:
Rudy Giuliani, Economic Extremist
The New Republic: Republican Hopeful Strategically Embraces Punitive
Oct. 31, 2007

-Robert Scardapane

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-Noah Greenberg