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The Fed Stabilizes The Economy?

The Fed Stabilizes The Economy?

Via SchiffGold.com,

According to the Federal Reserve, it exists to “stabilize” the economy. Does it though?

Despite inflation coming in hotter than expected month after month this year, Federal Reserve…

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The Fed Stabilizes The Economy?

Via SchiffGold.com,

According to the Federal Reserve, it exists to “stabilize” the economy. Does it though?

Despite inflation coming in hotter than expected month after month this year, Federal Reserve Chairman Jerome Powell assures us we need not worry. This surge of inflation is “transitory.” But even if it isn’t we still don’t need to worry. He assures us that if inflation does prove to be significant and “materially” above its 2% goal, the Fed will use its tools to guide inflation back down.

Peter Schiff says this is nothing but a bluff. The Fed won’t fight inflation, because it can’t.

The Fed is really not as clueless as people think when it comes to inflation. They’re not missing the inflation problem. I think they understand that there’s an inflation problem. They also understand that they would create an even bigger problem, from their perspective, if they tried to do anything about it, which is why they’re not, which is why they are pretending that the situation is transitory.”

Loyola University Chicago finance professor and Truth in Accounting director of research Bill Bergman isn’t buying Powell’s assurances either. He points out that the Fed claims to “stabilize the economy. And he’s skeptical

The factors undermining confidence in the Fed’s credibility for inflation-fighting are related to its claims to serve as a source of financial system stability.”

The following article by Bill Bergman was originally published at the Mises Wire. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Before, during, and after the 2007–09 financial crisis, the masthead of the Federal Reserve Board’s main webpage included the following assertion right below its name at the top of the page:

The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible and stable monetary and financial system.

This statement is still there today. Can we all breathe easier now? Maybe not, if we endured one of the worst financial crises ever while the Fed was championing itself as a source of stability.

Rebranding to Inspire Confidence

Curiously, the board changed the wording of the statement at the top of the main page of its website during 2007, amid the onset of the 2007–09 disaster. Back in January 2007, the internet archive Wayback Machine shows the following saying to the right of the board’s name at the top:

The Federal Reserve, the central bank of the United States, was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.

In other words, at the beginning of the year, the assertion was an opinion of what Congress intended, not what the Federal Reserve said that it provided in reality. By the end of 2007, however, the statement had taken on the more assertive, confidence-inspiring tone it has today. The Fed has advertised itself as a sufficient condition for financial stability, period—not simply as a means by which Congress tried to promote that difficult goal.

This helps to explain why the Fed’s forecasting failed so dismally before 2008–09. When advertising itself as a source of stability, it may have been hard to predict what ended up being one of the worst financial crises in our nation’s history.

We should try to learn lessons from history, including this one. Can we take for granted the Fed’s continuing claims to be a guarantor of stability, today? Not just in terms of the Fed’s role in stabilizing and/or bailing out large financial institutions, but for a stable price level?

In this light, the Fed’s more recent claims that inflation threats are “transitory,” and that it has the tools to manage higher inflation if it arises may not be so comforting. And the factors undermining confidence in the Fed’s credibility for inflation-fighting are related to its claims to serve as a source of financial system stability.

The Financial Stability Report: Avoiding Liability for Crises

Back in 2010, reeling from the political effects of the 2007–09 financial crisis, Congress passed the 849-page “Dodd-Frank” legislation. It was signed by President Barack Obama with a statement that the law was intended “to make sure that a crisis like this never happens again.”

The first section of Dodd-Frank created a new Financial Stability Oversight Council (FSOC). The first listed member of the FSOC was the secretary of the Treasury and the second was the chairman of the Federal Reserve Board of Governors. The law made the Treasury secretary, not the chair of the Federal Reserve, the chair of the FSOC. And the law created ten voting members, with the chair of the Fed holding only one of those votes.

The law directed the FSOC to annually report on financial market developments with “potential emerging threats to the financial stability of the United States,” including developments relating to “accounting regulations and standards.”

In 2011, the FSOC issued its first annual report. That report listed a financial system that was “less vulnerable to crisis” first among three elements of the “stronger, more resilient financial system” the FSOC said the law was trying to promote. In turn, the first of six elements of policies to achieve those ends was “tougher constraints on excessive risk-taking and leverage across the financial system.”

Before 2011, and indeed before 2008, the Federal Reserve had assumed the lead role on such matters. That may help explain why, beginning in 2018, the Fed began publishing its own Financial Stability Report. The Fed doesn’t have a specific directive from Congress for this report, and it has justified enlightening the rest of us on financial stability developments as a means for promoting increased “transparency and accountability for the Federal Reserve’s views,” given that “promoting financial stability is a key element in meeting the Federal Reserve’s dual mandate for monetary policy regarding full employment and stable prices.”

But the Fed has already long reported semiannually on its performance in meeting Congress’s dual mandate in the Humphrey-Hawkins testimony, raising the question of whether this report is necessary or merely a means by which the Fed is trying to defend and promote its leadership role.

The latest version of the Fed’s Financial Stability Report arrived in May 2021. The Fed distinguishes “shocks” from “vulnerabilities,” with a view to promoting a financial system capable of performing intermediation services during and after the arrival of difficult-to-predict or control “shocks.” In making this distinction, the Fed risks a perception that is trying to wash its hands of responsibility for creating the conditions under which shocks arise.

In all of its financial stability reports issued since 2018, the Fed has reviewed developments in four categories established for its “vulnerabilities,” including asset valuations, funding risk, borrowing by businesses and households, and “leverage in the financial sector.” For the last category, the Fed has been tracking leverage among banks, broker-dealers, insurance companies, and hedge funds—but it has refused to look at itself in the mirror. The financial stability framework does not include leverage for the Federal Reserve Banks in monitoring vulnerabilities.

Doing More Harm Than Good

In its latest weekly consolidated balance sheet for the twelve reserve banks, the Fed reported $8.1 trillion in total assets, funded by $8.0 trillion in liabilities and $36.9 billion in capital. That’s a massive amount of leverage for an $8 trillion dollar “company,” one whose assets and liabilities quadrupled from 2007 to 2019, and have since doubled with the arrival of the pandemic and the impact of government lockdowns on the economy.

Assume a widely unforeseen but significant increase in inflationary expectations arrives in the coming months. That might qualify as a shock—under the Fed’s framework for financial stability, anyway—especially given the implications for the prices of trillions of dollars of “risk-free” Treasury bonds, as well as longer-term securities issued in the private sector. In turn, widespread losses in bond prices would have immediate consequences for the finances of the Federal Reserve Banks and the independent exercise of monetary policy.

In “normal” times, the Fed could try to manage rising inflationary expectations with contractionary monetary policy, selling bonds in open market operations with a view to drawing down reserves in the financial system. Given its high leverage, however, selling bonds could generate significant losses for the Reserve Banks. These would wipe out its reported capital were it not for an accounting change the Fed made to its own accounting standards a few years ago.

In 2014, Marvin Goodfriend identified Federal Reserve quantitative easing as a “bond market carry trade,” one that accumulated risk on the Fed’s balance sheet and threatened the independent exercise of monetary policy given the Fed’s implied reliance on the US Treasury and future fiscal policy. Goodfriend argued that the Fed should retain more of its earnings and build up its capital to reduce its leverage risk and bolster the credibility of its monetary policy.

In this light, the Fed’s ongoing efforts to monitor and advertise its ability to manage financial market stability bring to mind a prophetic article written by George Kaufman and Kenneth Scott in 2003, titled “What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It?” Kaufman and Scott decried the moral hazard implications of government safety net policies, concluding that “many bank regulatory actions have been double-edged, if not counterproductive,” and called for significantly reducing the government’s backup role in the financial sector.

Congress should explore a fundamental reexamination of that backup role today.

Tyler Durden Thu, 08/19/2021 - 14:59

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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