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Three Years Behind The Curve Too Late Federal Open Market Committee (FOMC) Increases Target Federal Funds Rate to .75-1.0% — Financial Repression of Savers Slowly Continues — Videos

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Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy

March 15, 2017, 1:00 PM CDT March 15, 2017, 5:02 PM CDT
  • Policy makers still project three total rate hikes for 2017
  • FOMC sticks with ‘gradual’ plan for removing accommodation

Fed Raises Benchmark Lending Rate a Quarter Point

Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation.

Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshootingits 2 percent goal and that it intended to keep its policy accommodative for “some time.”

“The simple message is the economy’s doing well. We have confidence in the robustness of the economy and its resilience to shocks,” she said.

As a result, the Fed is sticking with its policy of gradually raising interest rates, Yellen said. In their first forecasts in three months, Fed policy makers penciled in two more quarter-point rate increases this year and three in 2018, unchanged from their projections in December.

Today’s decision “does not represent a reassessment of the economic outlook or of the appropriate course for monetary policy,” the Fed chief said.

Speculation of a more aggressive Fed had mounted in recent days after a host of central bank officials, including Yellen herself, went out of their way to telegraph to financial markets that a rate hike was imminent. The expectations were further fueled by news of rising inflation.

Stocks Advance

Stocks rose and bond yields fell as investors viewed the statement from the Federal Open Market Committee and Yellen’s remarks afterward as a sign that the Fed isn’t in a hurry to remove monetary stimulus. The FOMC raised the target range for the federal funds rate to 0.75 percent to 1 percent, as expected, but Yellen’s lack of urgency to snuff out inflation was a surprise.

R.J. Gallo, a fixed-income investment manager at Federated Investors in Pittsburgh, said the chorus of Fed speakers before this meeting led investors to expect a move up in the number of projected rate hikes this year, and even upgrades by Fed officials in the levels of inflation and growth they anticipated.

None of that materialized.

“You didn’t get any of those things,” Gallo said, which explains why Treasury yields quickly dropped after the Fed released the FOMC statement and a new set of economic projections. “The expectation that Fed was getting more hawkish had to come out of the market.”

The U.S. economy has mostly met the central bank’s goals of full employment and stable prices, and may get further support if President Donald Trump delivers promised fiscal stimulus. Investor and business confidence has soared since Trump won the presidency in November, buoyed by his vows to cut taxes, lift infrastructure spending and ease regulations.

Still, the data don’t show an economy that’s heating up rapidly — a point Yellen herself made after the third rate hike since the 2007-2009 recession ended. In fact, the economy may have “more room to run,” she said.

Stronger business and consumer confidence hasn’t yet translated into increased investment and spending, said Yellen.

“It’s uncertain just how much sentiment actually impacts spending decisions, and I wouldn’t say at this point that I have seen hard evidence of any change in spending decisions,” said the Fed Chair. “Most of the business people that we’ve talked to also have a wait-and-see attitude.”

Retail sales in February grew at the slowest pace since August, a government report showed earlier Wednesday. The Atlanta Fed’s model for GDP predicts an expansion of 0.9 percent in the first quarter, less than a third the pace Trump is aiming for.

Fiscal Stimulus

Asked about the potential for a fiscal boost, Yellen made clear the Fed is still waiting for more concrete policy plans to emerge from the Trump administration before adapting monetary policy in reaction.

“There is great uncertainty about the timing, the size and the character of policy changes that may be put in place,” Yellen said. “I don’t think that’s a decision or set of decisions that we need to make until we know more about what policy changes will go into effect.”

Yellen disputed suggestions that the Fed was on a collision course with the Trump administration over its plans to foster faster economic growth through tax cuts and deregulation. “We would welcome stronger economic growth in the context of price stability,” she said.

She said she had met Trump briefly and had gotten together a couple of times with Treasury Secretary Steven Mnuchin to discuss the economy and financial regulation.

Further underscoring their lack of urgency, Fed officials repeated a commitment to maintain their balance-sheet reinvestment policy until rate increases were well under way. Yellen said officials had discussed the process of reducing the balance sheet gradually, but had made no decisions and would continue to debate the topic.

Policy makers forecast inflation will reach 1.9 percent in the fourth quarter this year, and 2 percent in both 2018 and 2019, according to quarterly median estimates released with the FOMC statement. The Fed’s preferred measure of inflation rose 1.9 percent in the 12 months through January, just shy of its target.

Yellen pointed out, though, that core inflation continues to run somewhat further below 2 percent. That rate, which strips out food and energy costs, stood at 1.7 percent in January. The Fed’s new forecast for the core rate at the end of this year edged up to 1.9 percent, from 1.8 percent in December.

“The committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal,” the Fed said. Discussing the word symmetric in the statement, Yellen said during her press conference that the Fed was not shooting to push inflation over 2 percent but recognized that it could temporarily go above it. Two percent is a target, she reiterated, not a ceiling.

https://www.bloomberg.com/news/articles/2017-03-15/fed-raises-benchmark-rate-as-inflation-approaches-2-target

Changes in the federal funds rate will always affect the U.S. dollar. When the Federal Reserve increases the federal funds rate, it normally reduces inflationary pressure and works to appreciate the dollar.

Since June 2006, however, the Fed has maintained a federal funds rate of close to 0%. In the wake of the 2008 financial crisis, the federal funds rate fluctuated between 0-0.25%, and is now 0.75%.

The Fed used this monetary policy to help achieve maximum employment and stable prices. Now that the 2008 financial crisis has largely subsided, the Fed will look to increase interest rates to continue to achieve employment and to stabilize prices.

Inflation of the U.S. Dollar

The best way to achieve full employment and stable prices is to set the inflation rate of the dollar at 2%. In 2011, the Fed officially adopted a 2% annual increase in the price index for personal consumption expenditures as its target. When the economy is weak, inflation naturally falls; when the economy is strong, rising wages increase inflation. Keeping inflation at a growth rate of 2% helps the economy grow at a healthy rate.

Adjustments to the federal funds rate can also affect inflation in the United States. The Fed controls the economy by increasing interest rates when the economy is growing too fast. This encourages people to save more and spend less, reducing inflationary pressure. Conversely, when the economy is in a recession or growing too slowly, the Fed reduces interest rates to stimulate spending, which increases inflation.

During the 2008 financial crisis, the low federal funds rate should have increased inflation. Over this period, the federal funds rate was set near 0%, which encouraged spending and would normally increase inflation.

However, inflation is still well below the 2% target, which is contrary to the normal effects of low interest rates. The Fed cites one-off factors, such as falling oil prices and the strengthening dollar, as the reasons why inflation has remained low in a low interest environment.

The Fed believes that these factors will eventually fade and that inflation will increase above the target 2%. To prevent this eventual increase in inflation, hiking the federal funds rate reduces inflationary pressure and cause inflation of the dollar to remain around 2%.

Appreciation of the U.S. Dollar

Increases in the federal funds rate also result in a strengthening of the U.S. dollar. Other ways that the dollar can appreciate include increases in average wages and increases in overall consumption. However, although jobs are being created, wage rates are stagnant.

Without an increase in wage rates to go along with a strengthening job market, consumption won’t increase enough to sustain economic growth. Additionally, consumption remains subdued due to the fact that the labor force participation rate was close to its 35-year low in 2015. The Fed has kept interest rates low because a lower federal funds rate supports business expansions, which leads to more jobs and higher consumption. This has all worked to keep appreciation of the U.S. dollar low.

However, the U.S. is ahead of the other developed markets in terms of its economic recovery. Although the Fed raises rates cautiously, the U.S. could see higher interest rates before the other developed economies.

Overall, under normal economic conditions, increases in the federal funds rate reduce inflation and increase the appreciation of the U.S. dollar.

http://www.investopedia.com/articles/investing/101215/how-fed-fund-rate-hikes-affect-us-dollar.asp

Financial repression

From Wikipedia, the free encyclopedia
Not to be confused with economic repression, a type of political repression.

Financial repression refers to “policies that result in savers earning returns below the rate of inflation” in order to allow banks to “provide cheap loans to companies and governments, reducing the burden of repayments”.[1] It can be particularly effective at liquidating government debt denominated in domestic currency.[2] It can also lead to a large expansions in debt “to levels evoking comparisons with the excesses that generated Japan’s lost decade and the Asian financial crisis” in 1997.[1]

The term was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon[3][4] in order to “disparage growth-inhibiting policies in emerging markets“.

Mechanism

Financial repression consists of the following:[5]

  1. Explicit or indirect capping of interest rates, such as on government debt and deposit rates (e.g., Regulation Q).
  2. Government ownership or control of domestic banks and financial institutions with barriers that limit other institutions from entering the market.
  3. High reserve requirements.
  4. Creation or maintenance of a captive domestic market for government debt, achieved by requiring banks to hold government debt via capital requirements, or by prohibiting or disincentivising alternatives.
  5. Government restrictions on the transfer of assets abroad through the imposition of capital controls.

These measures allow governments to issue debt at lower interest rates. A low nominal interest rate can reduce debt servicing costs, while negative real interest rates erodes the real value of government debt.[5] Thus, financial repression is most successful in liquidating debts when accompanied by inflation and can be considered a form of taxation,[6] or alternatively a form of debasement.[7]

The size of the financial repression tax for 24 emerging markets from 1974 to 1987. Their results showed that financial repression exceeded 2% of GDP for seven countries, and greater than 3% for five countries. For five countries (India, Mexico, Pakistan, Sri Lanka, and Zimbabwe) it represented approximately 20% of tax revenue. In the case of Mexico financial repression was 6% of GDP, or 40% of tax revenue.[8]

Financial repression is categorized as “macroprudential regulation“—i.e., government efforts to “ensure the health of an entire financial system.[2]

Examples

After World War II

Financial repression “played an important role in reducing debt-to-GDP ratios after World War II” by keeping real interest rates for government debt below 1% for two-thirds of the time between 1945 and 1980, the United States was able to “inflate away” the large debt (122% of GDP) left over from the Great Depression and World War II.[2] In the UK, government debt declined from 216% of GDP in 1945 to 138% ten years later in 1955.[9]

China

China‘s economic growth has been attributed to financial repression thanks to “low returns on savings and the cheap loans that it makes possible”. This has allowed China to rely on savings-financed investments for economic growth. However, because low returns also dampens consumer spending, household expenditures account for “a smaller share of GDP in China than in any other major economy”.[1] However, as of December 2014, the People’s Bank of China “started to undo decades of financial repression” and the government now allows Chinese savers to collect up to a 3.3% return on one-year deposits. At China’s 1.6% inflation rate, this is a “high real-interest rate compared to other major economies”.[1]

After the 2008 economic recession

In a 2011 NBER working paper, Carmen Reinhart and Maria Belen Sbrancia speculate on a possible return by governments to this form of debt reduction in order to deal with high debt levels following the 2008 economic crisis.[5]

“To get access to capital, Austria has restricted capital flows to foreign subsidiaries in central and eastern Europe. Select pension funds have also been transferred to governments in France, Portugal, Ireland and Hungary, enabling them to re-allocate toward sovereign bonds.”[10]

Criticism

Critics[who?] argue that if this view was true, investors (i.e., capital-seeking parties) would be inclined to demand capital in large quantities and would be buying capital goods from this capital. This high demand for capital goods would certainly lead to inflation and thus the central banks would be forced to raise interest rates again. As a boom pepped by low interest rates fails to appear these days in industrialized countries, this is a sign that the low interest rates seem to be necessary to ensure an equilibrium on the capital market, thus to balance capital-supply—i.e., savers—on one side and capital-demand—i.e., investors and the government—on the other. This view argues that interest rates would be even lower if it were not for the high government debt ratio (i.e., capital demand from the government).

Free-market economists argue that financial repression crowds out private-sector investment, thus undermining growth. On the other hand, “postwar politicians clearly decided this was a price worth paying to cut debt and avoid outright default or draconian spending cuts. And the longer the gridlock over fiscal reform rumbles on, the greater the chance that ‘repression’ comes to be seen as the least of all evils”.[11]

Also, financial repression has been called a “stealth tax” that “rewards debtors and punishes savers—especially retirees” because their investments will no longer generate the expected return, which is income for retirees.[10][12] “One of the main goals of financial repression is to keep nominal interest rates lower than they would be in more competitive markets. Other things equal, this reduces the government’s interest expenses for a given stock of debt and contributes to deficit reduction. However, when financial repression produces negative real interest rates (nominal rates below the inflation rate), it reduces or liquidates existing debts and becomes the equivalent of a tax—a transfer from creditors (savers) to borrowers, including the government.”[2]

See also

Reform:

General:

References

  1. ^ Jump up to:a b c d “China Savers Prioritized Over Banks by PBOC”. Bloomberg. November 25, 2014.
  2. ^ Jump up to:a b c d Carmen M. Reinhart, Jacob F. Kirkegaard, and M. Belen Sbrancia, “Financial Repression Redux”, IMF Finance and Development, June 2011, p. 22-26
  3. Jump up^ Shaw, Edward S. Financial Deepening in Economic Development. New York: Oxford University Press, 1973
  4. Jump up^ McKinnon, Ronald I. Money and Capital in Economic Development. Washington, D.C.: Brookings Institution, 1973
  5. ^ Jump up to:a b c Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt”, IMF, 2011, p. 19
  6. Jump up^ Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly. Princeton and Oxford: Princeton University Press, 2008, p. 143
  7. Jump up^ Bill Gross, “The Caine Mutiny Part 2”, PIMCO
  8. Jump up^ Giovannini, Alberto and de Melo, Martha, “Government Revenue from Financial Repression”, The American Economic Review, Vol. 83, No. 4 Sep. 1993 (pp. 953-963)
  9. Jump up^ “The great repression”. The Economist. 16 June 2011.
  10. ^ Jump up to:a b “Financial Repression 101”. Allianz Global Investors. Retrieved 2 December 2014.
  11. Jump up^ Gillian Tett, “Policymakers learn a new and alarming catchphrase”, Financial Times, May 9, 2011
  12. Jump up^ Amerman, Daniel (September 12, 2011). “The 2nd Edge of Modern Financial Repression: Manipulating Inflation Indexes to Steal from Retirees & Public Wor

https://en.wikipedia.org/wiki/Financial_repression

Federal funds rate

From Wikipedia, the free encyclopedia

10 year treasury compared to the Federal Funds Rate

Federal funds rate and capacity utilization in manufacturing.

In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions’ reserve requirements. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets.[1][2]

The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

The Federal Reserve uses open market operations to influence the supply of money in the U.S. economy[3] to make the federal funds effective rate follow the federal funds target rate.

Mechanism

Financial Institutions are obligated by law to maintain certain levels of reserves, either as reserves with the Fed or as vault cash. The level of these reserves is determined by the outstanding assets and liabilities of each depository institution, as well as by the Fed itself, but is typically 10%[4] of the total value of the bank’s demand accounts (depending on bank size). In the range of $9.3 million to $43.9 million, for transaction deposits (checking accounts, NOWs, and other deposits that can be used to make payments) the reserve requirement in 2007-2008 was 3 percent of the end-of-the-day daily average amount held over a two-week period. Transaction deposits over $43.9 million held at the same depository institution carried a 10 percent reserve requirement.

For example, assume a particular U.S. depository institution, in the normal course of business, issues a loan. This dispenses money and decreases the ratio of bank reserves to money loaned. If its reserve ratio drops below the legally required minimum, it must add to its reserves to remain compliant with Federal Reserve regulations. The bank can borrow the requisite funds from another bank that has a surplus in its account with the Fed. The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The nominal rate is a target set by the governors of the Federal Reserve, which they enforce by open market operations and adjusting the interest paid on required and excess reserve balances. That nominal rate is almost always what is meant by the media referring to the Federal Reserve “changing interest rates.” The actual federal funds rate generally lies within a range of that target rate, as the Federal Reserve cannot set an exact value through open market operations.

Another way banks can borrow funds to keep up their required reserves is by taking a loan from the Federal Reserve itself at the discount window. These loans are subject to audit by the Fed, and the discount rate is usually higher than the federal funds rate. Confusion between these two kinds of loans often leads to confusion between the federal funds rate and the discount rate. Another difference is that while the Fed cannot set an exact federal funds rate, it does set the specific discount rate.

The federal funds rate target is decided by the governors at Federal Open Market Committee (FOMC) meetings. The FOMC members will either increase, decrease, or leave the rate unchanged depending on the meeting’s agenda and the economic conditions of the U.S. It is possible to infer the market expectations of the FOMC decisions at future meetings from the Chicago Board of Trade (CBOT) Fed Funds futures contracts, and these probabilities are widely reported in the financial media.

Applications

Interbank borrowing is essentially a way for banks to quickly raise money. For example, a bank may want to finance a major industrial effort but may not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate.

Raising the federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely.[5] This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

By setting a higher discount rate the Federal Bank discourages banks from requisitioning funds from the Federal Bank, yet positions itself as a lender of last resort.

Comparison with LIBOR

Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:

  • The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
  • The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies’ securities).[6]
  • LIBOR is based on a questionnaire where a selection of banks guess the rates at which they could borrow money from other banks.
  • LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.[7]

Predictions by the market

Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures (traded on the Chicago Board of Trade) can be used to infer the market’s expectations of future Fed policy changes. Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike. One set of such implied probabilities is published by the Cleveland Fed.

Historical rates

As of December 16, 2008, the most recent change the FOMC has made to the funds target rate is a 75 to 100 basis point cut from 1.0% to a range of zero to 0.25%. According to Jack A. Ablin, chief investment officer at Harris Private Bank, one reason for this unprecedented move of having a range, rather than a specific rate, was because a rate of 0% could have had problematic implications for money market funds, whose fees could then outpace yields.[8] This followed the 50 basis point cut on October 29, 2008, and the unusually large 75 basis point cut made during a special January 22, 2008 meeting, as well as a 50 basis point cut on January 30, 2008, a 75 basis point cut on March 18, 2008, and a 50 basis point cut on October 8, 2008.[9]

Federal funds rate history and recessions.png

Explanation of federal funds rate decisions

When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, price normally falls. The price here is the interest rate (cost of money) and specifically refers to the Federal Funds Rate. Conversely, when the Committee wishes to increase the Fed Funds Rate, they will instruct the Desk Manager to sell government securities, thereby taking the money they earn on the proceeds of those sales out of circulation and reducing the money supply. When supply is taken away and everything else remains constant, price (or in this case interest rates) will normally rise.[10]

The Federal Reserve has responded to a potential slow-down by lowering the target federal funds rate during recessions and other periods of lower growth. In fact, the Committee’s lowering has recently predated recessions,[9] in order to stimulate the economy and cushion the fall. Reducing the Fed Funds Rate makes money cheaper, allowing an influx of credit into the economy through all types of loans.

The charts linked below show the relation between S&P 500 and interest rates.

  • July 13, 1990 — Sept 4, 1992: 8.00%–3.00% (Includes 1990–1991 recession)[11][12]
  • Feb 1, 1995 — Nov 17, 1998: 6.00–4.75 [13][14][15]
  • May 16, 2000 — June 25, 2003: 6.50–1.00 (Includes 2001 recession)[16][17][18]
  • June 29, 2006 — (Oct. 29 2008): 5.25–1.00[19]
  • Dec 16, 2008 — 0.0–0.25[20]
  • Dec 16, 2015 — 0.25-0.50[21]
  • Dec 14, 2016 — 0.50-0.75[22]
  • Mar 15, 2017 — 0.75-1.00[23]

Bill Gross of PIMCO suggested that in the prior 15 years ending in 2007, in each instance where the fed funds rate was higher than the nominal GDP growth rate, assets such as stocks and/or housing fell.[24]

See also

References

  1. Jump up^ “Fedpoints: Federal Funds”. Federal Reserve Bank of New York. August 2007. Retrieved 2 October 2011.
  2. Jump up^ “The Implementation of Monetary Policy”. The Federal Reserve System: Purposes & Functions (PDF). Washington, D.C.: Federal Reserve Board. 24 August 2011. p. 4. Retrieved 2 October 2011.
  3. Jump up^ “Monetary Policy, Open Market Operations”. Federal Reserve Bank. 2008-01-30. Retrieved 2008-01-30.
  4. Jump up^ “Reserve Requirements”. Board of Governors of The Federal Reserve System. December 16, 2015.
  5. Jump up^ “Fed funds rate”. Bankrate, Inc. March 2016.
  6. Jump up^ Cheryl L. Edwards (November 1997). Gerard Sinzdak. “Open Market Operations in the 1990s” (PDF). Federal Reserve Bulletin (PDF).
  7. Jump up^ “BBA LIBOR – Frequently asked questions”. British Bankers’ Association. March 21, 2006. Archived from the original on 2007-02-16.
  8. Jump up^ “4:56 p.m. US-Closing Stocks”. Associated Press. December 16, 2008.[dead link]
  9. ^ Jump up to:a b “Historical Changes of the Target Federal Funds and Discount Rates, 1971 to present”. New York Federal Reserve Branch. February 19, 2010. Archived from the original on December 21, 2008.
  10. Jump up^ David Waring (2008-02-19). “An Explanation of How The Fed Moves Interest Rates”. InformedTrades.com. Archived from the original on 2015-05-05. Retrieved 2009-07-20.
  11. Jump up^ “$SPX 1990-06-12 1992-10-04 (rate drop chart)”. StockCharts.com.
  12. Jump up^ “$SPX 1992-08-04 1995-03-01 (rate rise chart)”. StockCharts.com.
  13. Jump up^ “$SPX 1995-01-01 1997-01-01 (rate drop chart)”. StockCharts.com.
  14. Jump up^ “$SPX 1996-12-01 1998-10-17 (rate drop chart)”. StockCharts.com.
  15. Jump up^ “$SPX 1998-09-17 2000-06-16 (rate rise chart)”. StockCharts.com.
  16. Jump up^ “$SPX 2000-04-16 2002-01-01 (rate drop chart)”. StockCharts.com.
  17. Jump up^ “$SPX 2002-01-01 2003-07-25 (rate drop chart)”. StockCharts.com.
  18. Jump up^ “$SPX 2003-06-25 2006-06-29 (rate rise chart)”. StockCharts.com.
  19. Jump up^ “$SPX 2006-06-29 2008-06-01 (rate drop chart)”. StockCharts.com.
  20. Jump up^ “Press Release”. Board of Governors of The Federal Reserve System. December 16, 2008.
  21. Jump up^ “Open Market Operations”. Board of Governors of The Federal Reserve System. December 16, 2015.
  22. Jump up^ “Decisions Regarding Monetary Policy Implementation”. Board of Governors of The Federal Reserve System.
  23. Jump up^ Cox, Jeff (2017-03-15). “Fed raises rates at March meeting”. CNBC. Retrieved 2017-03-15.
  24. Jump up^ Shaw, Richard (January 7, 2007). “The Bond Yield Curve as an Economic Crystal Ball”. Retrieved 3 April 2011.

External links

https://en.wikipedia.org/wiki/Federal_funds_rate

Monetary policy of the United States

From Wikipedia, the free encyclopedia
  (Redirected from U.S. monetary policy)
United States M2 money supply
% change in money supply
Money supply changes monthly basis

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply.

In the United States, the Federal Reserve is in charge of monetary policy, and implements it primarily by performing operations that influence short-term interest rates.

Money supply[edit]

Main article: Money supply

The money supply has different components, generally broken down into “narrow” and “broad” money, reflecting the different degrees of liquidity (‘spendability’) of each different type, as broader forms of money can be converted into narrow forms of money (or may be readily accepted as money by others, such as personal checks).[1]

For example, demand deposits are technically promises to pay on demand, while savings deposits are promises to pay subject to some withdrawal restrictions, and Certificates of Deposit are promises to pay only at certain specified dates; each can be converted into money, but “narrow” forms of money can be converted more readily. The Federal Reserve directly controls only the most narrow form of money, physical cash outstanding along with the reserves of banks throughout the country (known as M0 or the monetary base); the Federal Reserve indirectly influences the supply of other types of money.[1]

Broad money includes money held in deposit balances in banks and other forms created in the financial system. Basic economics also teaches that the money supply shrinks when loans are repaid;[2][3] however, the money supply will not necessarily decrease depending on the creation of new loans and other effects. Other than loans, investment activities of commercial banks and the Federal Reserve also increase and decrease the money supply.[4] Discussion of “money” often confuses the different measures and may lead to misguided commentary on monetary policy and misunderstandings of policy discussions.[5]

Structure of modern US institutions[edit]

Federal Reserve[edit]

Monetary policy in the US is determined and implemented by the US Federal Reserve System, commonly referred to as the Federal Reserve. Established in 1913 by the Federal Reserve Act to provide central banking functions,[6] the Federal Reserve System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations;[7][8][9] they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors.

The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C.[10] It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official with regard to actions on the money supply,[11]and its methods of funding also preserve independence. The Governors are nominated by the President of the United States, and nominations must be confirmed by the U.S. Senate.[12]

The presidents of the Federal Reserve Banks are nominated by each bank’s respective Board of Directors, but must also be approved by the Board of Governors of the Federal Reserve. The Chairman of the Federal Reserve Board is generally considered to have the most important position, followed by the president of the Federal Reserve Bank of New York.[12] The Federal Reserve System is primarily funded by interest collected on their portfolio of securities from the US Treasury, and the Fed has broad discretion in drafting its own budget,[13] but, historically, nearly all the interest the Federal Reserve collects is rebated to the government each year.[14]

The Federal Reserve has three main mechanisms for manipulating the money supply. It can buy or sell treasury securities. Selling securities has the effect of reducing the monetary base (because it accepts money in return for purchase of securities), taking that money out of circulation. Purchasing treasury securities increases the monetary base (because it pays out hard currency in exchange for accepting securities). Secondly, the discount rate can be changed. And finally, the Federal Reserve can adjust the reserve requirement, which can affect the money multiplier; the reserve requirement is adjusted only infrequently, and was last adjusted in 1992.[15]

In practice, the Federal Reserve uses open market operations to influence short-term interest rates, which is the primary tool of monetary policy. The federal funds rate, for which the Federal Open Market Committee announces a target on a regular basis, reflects one of the key rates for interbank lending. Open market operations change the supply of reserve balances, and the federal funds rate is sensitive to these operations.[16]

In theory, the Federal Reserve has unlimited capacity to influence this rate, and although the federal funds rate is set by banks borrowing and lending funds to each other, the federal funds rate generally stays within a limited range above and below the target (as participants are aware of the Fed’s power to influence this rate).

Assuming a closed economy, where foreign capital or trade does not affect the money supply, when money supply increases, interest rates go down. Businesses and consumers have a lower cost of capital and can increase spending and capital improvement projects. This encourages short-term growth. Conversely, when the money supply falls, interest rates go up, increasing the cost of capital and leading to more conservative spending and investment. The Federal reserve increases interest rates to combat Inflation.

U.S. Treasury[edit]

Private commercial banks[edit]

When money is deposited in a bank, it can then be lent out to another person. If the initial deposit was $100 and the bank lends out $100 to another customer the money supply has increased by $100. However, because the depositor can ask for the money back, banks have to maintain minimum reserves to service customer needs. If the reserve requirement is 10% then, in the earlier example, the bank can lend $90 and thus the money supply increases by only $90. The reserve requirement therefore acts as a limit on this multiplier effect. Because the reserve requirement only applies to the more narrow forms of money creation (corresponding to M1), but does not apply to certain types of deposits (such as time deposits), reserve requirements play a limited role in monetary policy.[17]

Money creation[edit]

Main article: Money creation

Currently, the US government maintains over US$800 billion in cash money (primarily Federal Reserve Notes) in circulation throughout the world,[18][19] up from a sum of less than $30 billion in 1959. Below is an outline of the process which is currently used to control the amount of money in the economy. The amount of money in circulation generally increases to accommodate money demanded by the growth of the country’s production. The process of money creation usually goes as follows:

  1. Banks go through their daily transactions. Of the total money deposited at banks, significant and predictable proportions often remain deposited, and may be referred to as “core deposits.” Banks use the bulk of “non-moving” money (their stable or “core” deposit base) by loaning it out.[20] Banks have a legal obligation to keep a certain fraction of bank deposit money on-hand at all times.[21]
  2. In order to raise additional money to cover excess spending, Congress increases the size of the National Debt by issuing securities typically in the form of a Treasury Bond[22] (see United States Treasury security). It offers the Treasury security for sale, and someone pays cash to the government in exchange. Banks are often the purchasers of these securities, and these securities currently play a crucial role in the process.
  3. The 12-person Federal Open Market Committee, which consists of the heads of the Federal Reserve System (the seven Federal governors and five bank presidents), meets eight times a year to determine how they would like to influence the economy.[23] They create a plan called the country’s “monetary policy” which sets targets for things such as interest rates.[24]
  4. Every business day, the Federal Reserve System engages in Open market operations.[25] If the Federal Reserve wants to increase the money supply, it will buy securities (such as U.S. Treasury Bonds) anonymously from banks in exchange for dollars. If the Federal Reserve wants to decrease the money supply, it will sell securities to the banks in exchange for dollars, taking those dollars out of circulation.[26][27] When the Federal Reserve makes a purchase, it credits the seller’s reserve account (with the Federal Reserve). The money that it deposits into the seller’s account is not transferred from any existing funds, therefore it is at this point that the Federal Reserve has created High-powered money.
  5. By means of open market operations, the Federal Reserve affects the free reserves of commercial banks in the country.[28] Anna Schwartz explains that “if the Federal Reserve increases reserves, a single bank can make loans up to the amount of its excess reserves, creating an equal amount of deposits”.[26][27][29]
  6. Since banks have more free reserves, they may loan out the money, because holding the money would amount to accepting the cost of foregone interest[28][30] When a loan is granted, a person is generally granted the money by adding to the balance on their bank account.[31]
  7. This is how the Federal Reserve’s high-powered money is multiplied into a larger amount of broad money, through bank loans; as written in a particular case study, “as banks increase or decrease loans, the nation’s (broad) money supply increases or decreases.”[3] Once granted these additional funds, the recipient has the option to withdraw physical currency (dollar bills and coins) from the bank, which will reduce the amount of money available for further on-lending (and money creation) in the banking system.[32]
  8. In many cases, account-holders will request cash withdrawals, so banks must keep a supply of cash handy. When they believe they need more cash than they have on hand, banks can make requests for cash with the Federal Reserve. In turn, the Federal Reserve examines these requests and places an order for printed money with the US Treasury Department.[33] The Treasury Department sends these requests to the Bureau of Engraving and Printing (to make dollar bills) and the Bureau of the Mint (to stamp the coins).
  9. The U.S. Treasury sells this newly printed money to the Federal Reserve for the cost of printing.[citation needed] This is about 6 cents per bill for any denomination.[34] Aside from printing costs, the Federal Reserve must pledge collateral (typically government securities such as Treasury bonds) to put new money, which does not replace old notes, into circulation.[35]This printed cash can then be distributed to banks, as needed.

Though the Federal Reserve authorizes and distributes the currency printed by the Treasury (the primary component of the narrow monetary base), the broad money supply is primarily created by commercial banks through the money multiplier mechanism.[29][31][36][37] One textbook summarizes the process as follows:

“The Fed” controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made …[38]

This type of money is convertible into cash when depositors request cash withdrawals, which will require banks to limit or reduce their lending.[39][32] The vast majority of the broad money supply throughout the world represents current outstanding loans of banks to various debtors.[38][40][41] A very small amount of U.S. currency still exists as “United States Notes“, which have no meaningful economic difference from Federal Reserve notes in their usage, although they departed significantly in their method of issuance into circulation. The currency distributed by the Federal Reserve has been given the official designation of “Federal Reserve Notes.”[42]

Significant effects[edit]

Main article: Monetary policy

In 2005, the Federal Reserve held approximately 9% of the national debt[43] as assets against the liability of printed money. In previous periods, the Federal Reserve has used other debt instruments, such as debt securities issued by private corporations. During periods when the national debt of the United States has declined significantly (such as happened in fiscal years 1999 and 2000), monetary policy and financial markets experts have studied the practical implications of having “too little” government debt: both the Federal Reserve and financial markets use the price information, yield curve and the so-called risk free rate extensively.[44]

Experts are hopeful that other assets could take the place of National Debt as the base asset to back Federal Reserve notes, and Alan Greenspan, long the head of the Federal Reserve, has been quoted as saying, “I am confident that U.S. financial markets, which are the most innovative and efficient in the world, can readily adapt to a paydown of Treasury debt by creating private alternatives with many of the attributes that market participants value in Treasury securities.”[45] In principle, the government could still issue debt securities in significant quantities while having no net debt, and significant quantities of government debt securities are also held by other government agencies.

Although the U.S. government receives income overall from seigniorage, there are costs associated with maintaining the money supply.[41][46] Leading ecological economist and steady-state theorist Herman Daly, claims that “over 95% of our [broad] money supply [in the United States] is created by the private banking system (demand deposits) and bears interest as a condition of its existence,”[41] a conclusion drawn from the Federal Reserve’s ultimate dependence on increased activity in fractional reserve lending when it exercises open market operations.[47]Economist Eric Miller criticizes Daly’s logic because money is created in the banking system in response to demand for the money,[48] which justifies cost.[citation needed]

Thus, use of expansionary open market operations typically generates more debt in the private sector of society (in the form of additional bank deposits).[49] The private banking system charges interest to borrowers as a cost to borrow the money.[3][31][50] The interest costs are borne by those that have borrowed,[3][31] and without this borrowing, open market operations would be unsuccessful in maintaining the broad money supply,[30] though alternative implementations of monetary policy could be used. Depositors of funds in the banking system are paid interest on their savings (or provided other services, such as checking account privileges or physical security for their “cash”), as compensation for “lending” their funds to the bank.

Increases (or contractions) of the money supply corresponds to growth (or contraction) in interest-bearing debt in the country.[3][30][41] The concepts involved in monetary policy may be widely misunderstood in the general public, as evidenced by the volume of literature on topics such as “Federal Reserve conspiracy” and “Federal Reserve fraud.”[51]

Uncertainties

A few of the uncertainties involved in monetary policy decision making are described by the federal reserve:[52]

  • While these policy choices seem reasonably straightforward, monetary policy makers routinely face certain notable uncertainties. First, the actual position of the economy and growth in aggregate demand at any time are only partially known, as key information on spending, production, and prices becomes available only with a lag. Therefore, policy makers must rely on estimates of these economic variables when assessing the appropriate course of policy, aware that they could act on the basis of misleading information. Second, exactly how a given adjustment in the federal funds rate will affect growth in aggregate demand—in terms of both the overall magnitude and the timing of its impact—is never certain. Economic models can provide rules of thumb for how the economy will respond, but these rules of thumb are subject to statistical error. Third, the growth in aggregate supply, often called the growth in potential output, cannot be measured with certainty.
  • In practice, as previously noted, monetary policy makers do not have up-to-the-minute information on the state of the economy and prices. Useful information is limited not only by lags in the collection and availability of key data but also by later revisions, which can alter the picture considerably. Therefore, although monetary policy makers will eventually be able to offset the effects that adverse demand shocks have on the economy, it will be some time before the shock is fully recognized and—given the lag between a policy action and the effect of the action on aggregate demand—an even longer time before it is countered. Add to this the uncertainty about how the economy will respond to an easing or tightening of policy of a given magnitude, and it is not hard to see how the economy and prices can depart from a desired path for a period of time.
  • The statutory goals of maximum employment and stable prices are easier to achieve if the public understands those goals and believes that the Federal Reserve will take effective measures to achieve them.
  • Although the goals of monetary policy are clearly spelled out in law, the means to achieve those goals are not. Changes in the FOMC’s target federal funds rate take some time to affect the economy and prices, and it is often far from obvious whether a selected level of the federal funds rate will achieve those goals.

Opinions of the Federal Reserve

The Federal Reserve is lauded by some economists, while being the target of scathing criticism by other economists, legislators, and sometimes members of the general public. The former Chairman of the Federal Reserve Board, Ben Bernanke, is one of the leading academic critics of the Federal Reserve’s policies during the Great Depression.[53]

Achievements

One of the functions of a central bank is to facilitate the transfer of funds through the economy, and the Federal Reserve System is largely responsible for the efficiency in the banking sector. There have also been specific instances which put the Federal Reserve in the spotlight of public attention. For instance, after the stock market crash in 1987, the actions of the Fed are generally believed to have aided in recovery. Also, the Federal Reserve is credited for easing tensions in the business sector with the reassurances given following the 9/11 terrorist attacks on the United States.[54]

Criticisms

The Federal Reserve has been the target of various criticisms, involving: accountability, effectiveness, opacity, inadequate banking regulation, and potential market distortion. Federal Reserve policy has also been criticized for directly and indirectly benefiting large banks instead of consumers. For example, regarding the Federal Reserve’s response to the 2007–2010 financial crisis, Nobel laureate Joseph Stiglitz explained how the U.S. Federal Reserve was implementing another monetary policy —creating currency— as a method to combat the liquidity trap.[55]

By creating $600 billion and inserting this directly into banks the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. However, banks instead were spending the money in more profitable areas by investing internationally in emerging markets. Banks were also investing in foreign currencies which Stiglitz and others point out may lead to currency wars while China redirects its currency holdings away from the United States.[56]

Auditing

The Federal Reserve is subject to different requirements for transparency and audits than other government agencies, which its supporters claim is another element of the Fed’s independence. Although the Federal Reserve has been required by law to publish independently audited financial statements since 1999, the Federal Reserve is not audited in the same way as other government agencies. Some confusion can arise because there are many types of audits, including: investigative or fraud audits; and financial audits, which are audits of accounting statements; there are also compliance, operational, and information system audits.

The Federal Reserve’s annual financial statements are audited by an outside auditor. Similar to other government agencies, the Federal Reserve maintains an Office of the Inspector General, whose mandate includes conducting and supervising “independent and objective audits, investigations, inspections, evaluations, and other reviews of Board programs and operations.”[57] The Inspector General’s audits and reviews are available on the Federal Reserve’s website.[58][59]

The Government Accountability Office (GAO) has the power to conduct audits, subject to certain areas of operations that are excluded from GAO audits; other areas may be audited at specific Congressional request, and have included bank supervision, government securities activities, and payment system activities.[60][61] The GAO is specifically restricted any authority over monetary policy transactions;[60] the New York Times reported in 1989 that “such transactions are now shielded from outside audit, although the Fed influences interest rates through the purchase of hundreds of billions of dollars in Treasury securities.”[62] As mentioned above, it was in 1999 that the law governing the Federal Reserve was amended to formalize the already-existing annual practice of ordering independent audits of financial statements for the Federal Reserve Banks and the Board;[63] the GAO’s restrictions on auditing monetary policy continued, however.[61]

Congressional oversight on monetary policy operations, foreign transactions, and the FOMC operations is exercised through the requirement for reports and through semi-annual monetary policy hearings.[61] Scholars have conceded that the hearings did not prove an effective means of increasing oversight of the Federal Reserve, perhaps because “Congresspersons prefer to bash an autonomous and secretive Fed for economic misfortune rather than to share the responsibility for that misfortune with a fully accountable Central Bank,” although the Federal Reserve has also consistently lobbied to maintain its independence and freedom of operation.[64]

Fulfillment of wider economic goals

By law, the goals of the Fed’s monetary policy are: high employment, sustainable growth, and stable prices.[65]

Critics say that monetary policy in the United States has not achieved consistent success in meeting the goals that have been delegated to the Federal Reserve System by Congress. Congress began to review more options with regard to macroeconomic influence beginning in 1946 (after World War II), with the Federal Reserve receiving specific mandates in 1977 (after the country suffered a period of stagflation).

Throughout the period of the Federal Reserve following the mandates, the relative weight given to each of these goals has changed, depending on political developments.[citation needed] In particular, the theories of Keynesianism and monetarism have had great influence on both the theory and implementation of monetary policy, and the “prevailing wisdom” or consensus view of the economic and financial communities has changed over the years.[66]

  • Elastic currency (magnitude of the money multiplier): the success of monetary policy is dependent on the ability to strongly influence the supply of money available to the citizens. If a currency is highly “elastic” (that is, has a higher money multiplier, corresponding to a tendency of the financial system to create more broad money for a given quantity of base money), plans to expand the money supply and accommodate growth are easier to implement. Low elasticity was one of many factors that contributed to the depth of the Great Depression: as banks cut lending, the money multiplier fell, and at the same time the Federal Reserve constricted the monetary base. The depression of the late 1920s is generally regarded as being the worst in the country’s history, and the Federal Reserve has been criticized for monetary policy which worsened the depression.[67] Partly to alleviate problems related to the depression, the United States transitioned from a gold standard and now uses a fiat currency; elasticity is believed to have been increased greatly.[68]

The value of $1 over time, in 1776 dollars.[70]

  • Stable prices – While some economists would regard any consistent inflation as a sign of unstable prices,[71] policymakers could be satisfied with 1 or 2%;[72] the consensus of “price stability” constituting long-run inflation of 1-2% is, however, a relatively recent development, and a change that has occurred at other central banks throughout the world. Inflation has averaged a 4.22% increase annually following the mandates applied in 1977; historic inflation since the establishment of the Federal Reserve in 1913 has averaged 3.4%.[73] In contrast, some research indicates that average inflation for the 250 years before the system was near zero percent, though there were likely sharper upward and downward spikes in that timeframe as compared with more recent times.[74] Central banks in some other countries, notably the German Bundesbank, had considerably better records of achieving price stability drawing on experience from the two episodes of hyperinflation and economic collapse under the country’s previous central bank.

Inflation worldwide has fallen significantly since former Federal Reserve Chairman Paul Volcker began his tenure in 1979, a period which has been called the Great Moderation; some commentators attribute this to improved monetary policy worldwide, particularly in the Organisation for Economic Co-operation and Development.[75][76]BusinessWeek notes that inflation has been relatively low since mid-1980s[77] and it was during this time that Volcker wrote (in 1995), “It is a sobering fact that the prominence of central banks [such as the Federal Reserve] in this century has coincided with a general tendency towards more inflation, not less. By and large, if the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.'”.

  • Sustainable growth – The growth of the economy may not be sustainable as the ability for households to save money has been on an overall decline[78] and household debt is consistently rising.[79]

Cause of The Great Depression

Money supply decreased significantly between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs

Monetarists who believe that the Great Depression started as an ordinary recession but significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression.

Public confusion

The Federal Reserve has established a library of information on their websites, however, many experts have spoken about the general level of public confusion that still exists on the subject of the economy; this lack of understanding of macroeconomic questions and monetary policy, however, exists in other countries as well. Critics of the Fed widely regard the system as being “opaque“, and one of the Fed’s most vehement opponents of his time, Congressman Louis T. McFadden, even went so far as to say that “Every effort has been made by the Federal Reserve Board to conceal its powers….”[80]

There are, on the other hand, many economists who support the need for an independent central banking authority, and some have established websites that aim to clear up confusion about the economy and the Federal Reserve’s operations. The Federal Reserve website itself publishes various information and instructional materials for a variety of audiences.

Criticism of government interference

Some economists, especially those belonging to the heterodox Austrian School, criticize the idea of even establishing monetary policy, believing that it distorts investment. Friedrich Hayek won the Nobel Prize for his elaboration of the Austrian business cycle theory.

Briefly, the theory holds that an artificial injection of credit, from a source such as a central bank like the Federal Reserve, sends false signals to entrepreneurs to engage in long-term investments due to a favorably low interest rate. However, the surge of investments undertaken represents an artificial boom, or bubble, because the low interest rate was achieved by an artificial expansion of the money supply and not by savings. Hence, the pool of real savings and resources have not increased and do not justify the investments undertaken.

These investments, which are more appropriately called “malinvestments”, are realized to be unsustainable when the artificial credit spigot is shut off and interest rates rise. The malinvestments and unsustainable projects are liquidated, which is the recession. The theory demonstrates that the problem is the artificial boom which causes the malinvestments in the first place, made possible by an artificial injection of credit not from savings.

According to Austrian economics, without government intervention, interest rates will always be an equilibrium between the time-preferences of borrowers and savers, and this equilibrium is simply distorted by government intervention. This distortion, in their view, is the cause of the business cycle. Some Austrian economists—but by no means all—also support full reserve banking, a hypothetical financial/banking system where banks may not lend deposits. Others may advocate free banking, whereby the government abstains from any interference in what individuals may choose to use as money or the extent to which banks create money through the deposit and lending cycle.

Reserve requirement

The Federal Reserve regulates banking, and one regulation under its direct control is the reserve requirement which dictates how much money banks must keep in reserves, as compared to its demand deposits. Banks use their observation that the majority of deposits are not requested by the account holders at the same time.

Currently, the Federal Reserve requires that banks keep 10% of their deposits on hand.[81] Some countries have no nationally mandated reserve requirements—banks use their own resources to determine what to hold in reserve, however their lending is typically constrained by other regulations.[82] Other factors being equal, lower reserve percentages increases the possibility of Bank runs, such as the widespread runs of 1931. Low reserve requirements also allow for larger expansions of the money supply by actions of commercial banks—currently the private banking system has created much of the broad money supply of US dollars through lending activity. Monetary policy reform calling for 100% reserves has been advocated by economists such as: Irving Fisher,[83] Frank Knight,[84] many ecological economists along with economists of the Chicago School and Austrian School. Despite calls for reform, the nearly universal practice of fractional-reserve banking has remained in the United States.

Criticism of private sector involvement

Historically and to the present day, various social and political movements (such as social credit) have criticized the involvement of the private sector in “creating money”, claiming that only the government should have the power to “make money”. Some proponents also support full reserve banking or other non-orthodox approaches to monetary policy. Various terminology may be used, including “debt money”, which may have emotive or political connotations. These are generally considered to be akin to conspiracy theories by mainstream economists and ignored in academic literature on monetary policy.

See also

https://en.wikipedia.org/wiki/Monetary_policy_of_the_United_States

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Wealth Inequality in America — What To Do About It? — Absolutely Nothing — The World Has Never Been A Level Playing Field — Videos

Posted on March 2, 2017. Filed under: Banking, Blogroll, Business, Communications, Congress, Corruption, Culture, Documentary, Federal Government, History of Economic Thought, Monetary Policy, Money, Trade Policiy | Tags: , , , , |

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Image result for cartoons branco wealth inequality in america
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Wealth Inequality in America

Published on Nov 20, 2012

Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.

References:
http://www.motherjones.com/politics/2…
http://danariely.com/2010/09/30/wealt…
http://thinkprogress.org/economy/2011…
http://money.cnn.com/2012/04/19/news/…

EAT THE RICH!

What Creates Wealth?

Income Inequality is Good

Don’t Follow Your Passion

Don’t Compare Yourself to Others

Do the Rich Pay Their Fair Share?

Is America’s Tax System Fair?

What’s Killing the American Dream?

Rockefeller: The Richest American Who Ever Lived

Coolidge: The Best President You Don’t Know

Hoover and the Great Depression

Summary of the Latest Federal Income Tax Data, 2015 Update

November 19, 2015

Download FISCAL FACT No. 491: Summary of the Latest Federal Income Tax Data, 2015 Update (PDF)Download Summary of the Latest Federal Income Tax Data, 2015 Update (EXCEL)The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2013, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.[1] The data demonstrates that the U.S. individual income tax continues to be progressive, borne mainly by the highest income earners.

Key Findings

  • In 2013, 138.3 million taxpayers reported earning $9.03 trillion in adjusted gross income and paid $1.23 trillion in income taxes.
  • Every income group besides the top 1 percent of taxpayers reported higher income in 2013 than the previous year. All income groups paid higher taxes in 2013 than the previous year.
  • The share of income earned by the top 1 percent of taxpayers fell to 19.0 percent in 2013. Their share of federal income taxes fell slightly to 37.8 percent.
  • In 2012, the top 50 percent of all taxpayers (69.2 million filers) paid 97.2 percent of all income taxes while the bottom 50 percent paid the remaining 2.8 percent.
  • The top 1 percent (1.3 million filers) paid a greater share of income taxes (37.8 percent) than the bottom 90 percent (124.5 million filers) combined (30.2 percent).
  • The top 1 percent of taxpayers paid a higher effective income tax rate than any other group, at 27.1 percent, which is over 8 times higher than taxpayers in the bottom 50 percent (3.3 percent).

Reported Income Decreased in 2013, but Taxes Increase

Taxpayers reported $9.03 trillion in adjusted gross income (AGI) on 138.3 million tax returns in 2013. While the U.S. economy grew in 2013, total AGI fell by $8 billion from 2012 levels. Furthermore, there were 2.2 million more returns filed in 2013 than 2012, meaning that average AGI fell by $1,131 per return. The most likely explanation behind lower AGI in 2013 is unusually high capital gains realizations in 2012.[2] Because the top tax rate on long-term capital gains and qualified dividends was set to rise from 15 percent to 23.8 percent in 2013, many high-income Americans realized their capital gains in 2012, to take advantage of low tax rates. As capital gains realizations fell to normal levels in 2013, overall AGI decreased. Accordingly, only the top 1 percent of taxpayers saw a decrease in income in 2013; all other groups saw their income increase. Despite the decrease in overall income reported, taxes paid increased by $46 billion to $1.232 trillion in 2013. Taxes paid increased for all income groups. The share of income earned by the top 1 percent fell to 19.04 percent of total AGI, down from 21.86 percent in 2012. The share of the income tax burden for the top 1 percent also fell slightly, from 38.09 percent in 2012 to 37.80 percent in 2013.

Table 1. Summary of Federal Income Tax Data, 2013
Number of Returns* AGI ($ millions) Income Taxes Paid ($ millions) Group’s Share of Total AGI Group’s Share of Income Taxes Income Split Point Average Tax Rate
Does not include dependent filers.
Source: Internal Revenue Service.
All Taxpayers 138,313,155 $9,033,840 $1,231,911 100.00% 100.00%
Top 1% 1,383,132 $1,719,794 $465,705 19.04% 37.80% $428,713 27.08%
1-5% 5,532,526 $1,389,594 $255,537 15.38% 20.74% 18.39%
Top 5% 6,915,658 $3,109,388 $721,242 34.42% 58.55% $179,760 23.20%
5-10% 6,915,658 $1,034,110 $138,621 11.45% 11.25% 13.40%
Top 10% 13,831,316 $4,143,498 $859,863 45.87% 69.80% $127,695 20.75%
10-25% 20,746,973 $2,008,180 $202,935 22.23% 16.47% 10.11%
Top 25% 34,578,289 $6,151,678 $1,062,798 68.10% 86.27% $74,955 17.28%
25-50% 34,578,289 $1,843,925 $134,805 20.41% 10.94% 7.31%
Top 50% 69,156,578 $7,995,603 $1,197,603 88.51% 97.22% $36,841 14.98%
Bottom 50% 69,156,578 $1,038,237 $34,307 11.49% 2.78% $36,841 3.30%

High-Income Americans Paid the Majority of Federal Taxes

In 2013, the bottom 50 percent of taxpayers (those with AGIs below $36,841) earned 11.49 percent of total AGI. This group of taxpayers paid approximately $34 billion in taxes, or 2.78 percent of all income taxes in 2013. In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $428,713 and above), earned 19.04 percent of all AGI in 2013, but paid 37.80 percent of all federal income taxes. In 2013, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $465 billion, or 37.80 percent of all income taxes, while the bottom 90 percent paid $372 billion, or 30.20 percent of all income taxes.

High-Income Taxpayers Pay the Highest Average Tax Rates The 2013 IRS data shows that taxpayers with higher incomes pay much higher average income tax rates than lower-income taxpayers. The bottom 50 percent of taxpayers (taxpayers with AGIs below $36,841) faced an average income tax rate of 3.3 percent. Other taxpayers face much higher rates: for example, taxpayers with AGIs between the 10th and 5th percentile ($127,695 and $179,760) pay an average effective rate of 13.4 percent – four times the rate paid by those in the bottom 50 percent. The top 1 percent of taxpayers (AGI of $428,713 and above) paid the highest effective income tax rate at 27.1 percent, 8.19 times the rate faced by the bottom 50 percent of taxpayers.

Taxpayers at the very top of the income distribution, the top 0.1 percent (with AGIs over $1.86 million), paid an even higher average tax rate, of 27.9 percent. The average tax rate of the top 1 percent of taxpayers rose significantly in 2013, from 21.9 percent in 2012 to 27.1 percent in 2013. This increase in the average tax rate of the 1 percent was largely due to several changes to the federal tax code, imposed at the end of 2012 as part of the “fiscal cliff” tax deal: a new 39.6 percent income tax bracket, a higher top rate on capital gains and dividends, and the reintroduction of the Pease limitation on itemized deductions.[3]

Appendix

Table 2. Number of Federal Individual Income Tax Returns Filed, 1980–2013 (in thousands)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 93,239 932 4,662 4,662 9,324 13,986 23,310 23,310 46,619 46,619
1981 94,587 946 4,729 4,729 9,459 14,188 23,647 23,647 47,293 47,293
1982 94,426 944 4,721 4,721 9,443 14,164 23,607 23,607 47,213 47,213
1983 95,331 953 4,767 4,767 9,533 14,300 23,833 23,833 47,665 47,665
1984 98,436 984 4,922 4,922 9,844 14,765 24,609 24,609 49,218 49,219
1985 100,625 1,006 5,031 5,031 10,063 15,094 25,156 25,156 50,313 50,313
1986 102,088 1,021 5,104 5,104 10,209 15,313 25,522 25,522 51,044 51,044
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 106,155 1,062 5,308 5,308 10,615 15,923 26,539 26,539 53,077 53,077
1988 108,873 1,089 5,444 5,444 10,887 16,331 27,218 27,218 54,436 54,436
1989 111,313 1,113 5,566 5,566 11,131 16,697 27,828 27,828 55,656 55,656
1990 112,812 1,128 5,641 5,641 11,281 16,922 28,203 28,203 56,406 56,406
1991 113,804 1,138 5,690 5,690 11,380 17,071 28,451 28,451 56,902 56,902
1992 112,653 1,127 5,633 5,633 11,265 16,898 28,163 28,163 56,326 56,326
1993 113,681 1,137 5,684 5,684 11,368 17,052 28,420 28,420 56,841 56,841
1994 114,990 1,150 5,749 5,749 11,499 17,248 28,747 28,747 57,495 57,495
1995 117,274 1,173 5,864 5,864 11,727 17,591 29,319 29,319 58,637 58,637
1996 119,442 1,194 5,972 5,972 11,944 17,916 29,860 29,860 59,721 59,721
1997 121,503 1,215 6,075 6,075 12,150 18,225 30,376 30,376 60,752 60,752
1998 123,776 1,238 6,189 6,189 12,378 18,566 30,944 30,944 61,888 61,888
1999 126,009 1,260 6,300 6,300 12,601 18,901 31,502 31,502 63,004 63,004
2000 128,227 1,282 6,411 6,411 12,823 19,234 32,057 32,057 64,114 64,114
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 119,371 119 1,194 5,969 5,969 11,937 17,906 29,843 29,843 59,685 59,685
2002 119,851 120 1,199 5,993 5,993 11,985 17,978 29,963 29,963 59,925 59,925
2003 120,759 121 1,208 6,038 6,038 12,076 18,114 30,190 30,190 60,379 60,379
2004 122,510 123 1,225 6,125 6,125 12,251 18,376 30,627 30,627 61,255 61,255
2005 124,673 125 1,247 6,234 6,234 12,467 18,701 31,168 31,168 62,337 62,337
2006 128,441 128 1,284 6,422 6,422 12,844 19,266 32,110 32,110 64,221 64,221
2007 132,655 133 1,327 6,633 6,633 13,265 19,898 33,164 33,164 66,327 66,327
2008 132,892 133 1,329 6,645 6,645 13,289 19,934 33,223 33,223 66,446 66,446
2009 132,620 133 1,326 6,631 6,631 13,262 19,893 33,155 33,155 66,310 66,310
2010 135,033 135 1,350 6,752 6,752 13,503 20,255 33,758 33,758 67,517 67,517
2011 136,586 137 1,366 6,829 6,829 13,659 20,488 34,146 34,146 68,293 68,293
2012 136,080 136 1,361 6,804 6,804 13,608 20,412 34,020 34,020 68,040 68,040
2013 138,313 138 1,383 6,916 6,916 13,831 20,747 34,578 34,578 69,157 69,157
Table 3. Adjusted Gross Income of Taxpayers in Various Income Brackets, 1980–2013 (in Billions of Dollars)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 $1,627 $138 $342 $181 $523 $400 $922 $417 $1,339 $288
1981 $1,791 $149 $372 $201 $573 $442 $1,015 $458 $1,473 $318
1982 $1,876 $167 $398 $207 $605 $460 $1,065 $478 $1,544 $332
1983 $1,970 $183 $428 $217 $646 $481 $1,127 $498 $1,625 $344
1984 $2,173 $210 $482 $240 $723 $528 $1,251 $543 $1,794 $379
1985 $2,344 $235 $531 $260 $791 $567 $1,359 $580 $1,939 $405
1986 $2,524 $285 $608 $278 $887 $604 $1,490 $613 $2,104 $421
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 $2,814 $347 $722 $316 $1,038 $671 $1,709 $664 $2,374 $440
1988 $3,124 $474 $891 $342 $1,233 $718 $1,951 $707 $2,658 $466
1989 $3,299 $468 $918 $368 $1,287 $768 $2,054 $751 $2,805 $494
1990 $3,451 $483 $953 $385 $1,338 $806 $2,144 $788 $2,933 $519
1991 $3,516 $457 $943 $400 $1,343 $832 $2,175 $809 $2,984 $532
1992 $3,681 $524 $1,031 $413 $1,444 $856 $2,299 $832 $3,131 $549
1993 $3,776 $521 $1,048 $426 $1,474 $883 $2,358 $854 $3,212 $563
1994 $3,961 $547 $1,103 $449 $1,552 $929 $2,481 $890 $3,371 $590
1995 $4,245 $620 $1,223 $482 $1,705 $985 $2,690 $938 $3,628 $617
1996 $4,591 $737 $1,394 $515 $1,909 $1,043 $2,953 $992 $3,944 $646
1997 $5,023 $873 $1,597 $554 $2,151 $1,116 $3,268 $1,060 $4,328 $695
1998 $5,469 $1,010 $1,797 $597 $2,394 $1,196 $3,590 $1,132 $4,721 $748
1999 $5,909 $1,153 $2,012 $641 $2,653 $1,274 $3,927 $1,199 $5,126 $783
2000 $6,424 $1,337 $2,267 $688 $2,955 $1,358 $4,314 $1,276 $5,590 $834
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 $6,116 $492 $1,065 $1,934 $666 $2,600 $1,334 $3,933 $1,302 $5,235 $881
2002 $5,982 $421 $960 $1,812 $660 $2,472 $1,339 $3,812 $1,303 $5,115 $867
2003 $6,157 $466 $1,030 $1,908 $679 $2,587 $1,375 $3,962 $1,325 $5,287 $870
2004 $6,735 $615 $1,279 $2,243 $725 $2,968 $1,455 $4,423 $1,403 $5,826 $908
2005 $7,366 $784 $1,561 $2,623 $778 $3,401 $1,540 $4,940 $1,473 $6,413 $953
2006 $7,970 $895 $1,761 $2,918 $841 $3,760 $1,652 $5,412 $1,568 $6,980 $990
2007 $8,622 $1,030 $1,971 $3,223 $905 $4,128 $1,770 $5,898 $1,673 $7,571 $1,051
2008 $8,206 $826 $1,657 $2,868 $905 $3,773 $1,782 $5,555 $1,673 $7,228 $978
2009 $7,579 $602 $1,305 $2,439 $878 $3,317 $1,740 $5,058 $1,620 $6,678 $900
2010 $8,040 $743 $1,517 $2,716 $915 $3,631 $1,800 $5,431 $1,665 $7,096 $944
2011 $8,317 $737 $1,556 $2,819 $956 $3,775 $1,866 $5,641 $1,716 $7,357 $961
2012 $9,042 $1,017 $1,977 $3,331 $997 $4,328 $1,934 $6,262 $1,776 $8,038 $1,004
2013 $9,034 $816 $1,720 $3,109 $1,034 $4,143 $2,008 $6,152 $1,844 $7,996 $1,038
Table 4. Total Income Tax after Credits, 1980–2013 (in Billions of Dollars)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 $249 $47 $92 $31 $123 $59 $182 $50 $232 $18
1981 $282 $50 $99 $36 $135 $69 $204 $57 $261 $21
1982 $276 $53 $100 $34 $134 $66 $200 $56 $256 $20
1983 $272 $55 $101 $34 $135 $64 $199 $54 $252 $19
1984 $297 $63 $113 $37 $150 $68 $219 $57 $276 $22
1985 $322 $70 $125 $41 $166 $73 $238 $60 $299 $23
1986 $367 $94 $156 $44 $201 $78 $279 $64 $343 $24
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 $369 $92 $160 $46 $205 $79 $284 $63 $347 $22
1988 $413 $114 $188 $48 $236 $85 $321 $68 $389 $24
1989 $433 $109 $190 $51 $241 $93 $334 $73 $408 $25
1990 $447 $112 $195 $52 $248 $97 $344 $77 $421 $26
1991 $448 $111 $194 $56 $250 $96 $347 $77 $424 $25
1992 $476 $131 $218 $58 $276 $97 $374 $78 $452 $24
1993 $503 $146 $238 $60 $298 $101 $399 $80 $479 $24
1994 $535 $154 $254 $64 $318 $108 $425 $84 $509 $25
1995 $588 $178 $288 $70 $357 $115 $473 $88 $561 $27
1996 $658 $213 $335 $76 $411 $124 $535 $95 $630 $28
1997 $727 $241 $377 $82 $460 $134 $594 $102 $696 $31
1998 $788 $274 $425 $88 $513 $139 $652 $103 $755 $33
1999 $877 $317 $486 $97 $583 $150 $733 $109 $842 $35
2000 $981 $367 $554 $106 $660 $164 $824 $118 $942 $38
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 $885 $139 $294 $462 $101 $564 $158 $722 $120 $842 $43
2002 $794 $120 $263 $420 $93 $513 $143 $657 $104 $761 $33
2003 $746 $115 $251 $399 $85 $484 $133 $617 $98 $715 $30
2004 $829 $142 $301 $467 $91 $558 $137 $695 $102 $797 $32
2005 $932 $176 $361 $549 $98 $647 $145 $793 $106 $898 $33
2006 $1,020 $196 $402 $607 $108 $715 $157 $872 $113 $986 $35
2007 $1,112 $221 $443 $666 $117 $783 $170 $953 $122 $1,075 $37
2008 $1,029 $187 $386 $597 $115 $712 $168 $880 $117 $997 $32
2009 $863 $146 $314 $502 $101 $604 $146 $749 $93 $842 $21
2010 $949 $170 $355 $561 $110 $670 $156 $827 $100 $927 $22
2011 $1,043 $168 $366 $589 $123 $712 $181 $893 $120 $1,012 $30
2012 $1,185 $220 $451 $699 $133 $831 $193 $1,024 $128 $1,152 $33
2013 $1,232 $228 $466 $721 $139 $860 $203 $1,063 $135 $1,198 $34
Table 5. Adjusted Gross Income Shares, 1980–2013 (Percent of Total AGI Earned by Each Group)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 100% 8.46% 21.01% 11.12% 32.13% 24.57% 56.70% 25.62% 82.32% 17.68%
1981 100% 8.30% 20.78% 11.20% 31.98% 24.69% 56.67% 25.59% 82.25% 17.75%
1982 100% 8.91% 21.23% 11.03% 32.26% 24.53% 56.79% 25.50% 82.29% 17.71%
1983 100% 9.29% 21.74% 11.04% 32.78% 24.44% 57.22% 25.30% 82.52% 17.48%
1984 100% 9.66% 22.19% 11.06% 33.25% 24.31% 57.56% 25.00% 82.56% 17.44%
1985 100% 10.03% 22.67% 11.10% 33.77% 24.21% 57.97% 24.77% 82.74% 17.26%
1986 100% 11.30% 24.11% 11.02% 35.12% 23.92% 59.04% 24.30% 83.34% 16.66%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 100% 12.32% 25.67% 11.23% 36.90% 23.85% 60.75% 23.62% 84.37% 15.63%
1988 100% 15.16% 28.51% 10.94% 39.45% 22.99% 62.44% 22.63% 85.07% 14.93%
1989 100% 14.19% 27.84% 11.16% 39.00% 23.28% 62.28% 22.76% 85.04% 14.96%
1990 100% 14.00% 27.62% 11.15% 38.77% 23.36% 62.13% 22.84% 84.97% 15.03%
1991 100% 12.99% 26.83% 11.37% 38.20% 23.65% 61.85% 23.01% 84.87% 15.13%
1992 100% 14.23% 28.01% 11.21% 39.23% 23.25% 62.47% 22.61% 85.08% 14.92%
1993 100% 13.79% 27.76% 11.29% 39.05% 23.40% 62.45% 22.63% 85.08% 14.92%
1994 100% 13.80% 27.85% 11.34% 39.19% 23.45% 62.64% 22.48% 85.11% 14.89%
1995 100% 14.60% 28.81% 11.35% 40.16% 23.21% 63.37% 22.09% 85.46% 14.54%
1996 100% 16.04% 30.36% 11.23% 41.59% 22.73% 64.32% 21.60% 85.92% 14.08%
1997 100% 17.38% 31.79% 11.03% 42.83% 22.22% 65.05% 21.11% 86.16% 13.84%
1998 100% 18.47% 32.85% 10.92% 43.77% 21.87% 65.63% 20.69% 86.33% 13.67%
1999 100% 19.51% 34.04% 10.85% 44.89% 21.57% 66.46% 20.29% 86.75% 13.25%
2000 100% 20.81% 35.30% 10.71% 46.01% 21.15% 67.15% 19.86% 87.01% 12.99%
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 100% 8.05% 17.41% 31.61% 10.89% 42.50% 21.80% 64.31% 21.29% 85.60% 14.40%
2002 100% 7.04% 16.05% 30.29% 11.04% 41.33% 22.39% 63.71% 21.79% 85.50% 14.50%
2003 100% 7.56% 16.73% 30.99% 11.03% 42.01% 22.33% 64.34% 21.52% 85.87% 14.13%
2004 100% 9.14% 18.99% 33.31% 10.77% 44.07% 21.60% 65.68% 20.83% 86.51% 13.49%
2005 100% 10.64% 21.19% 35.61% 10.56% 46.17% 20.90% 67.07% 19.99% 87.06% 12.94%
2006 100% 11.23% 22.10% 36.62% 10.56% 47.17% 20.73% 67.91% 19.68% 87.58% 12.42%
2007 100% 11.95% 22.86% 37.39% 10.49% 47.88% 20.53% 68.41% 19.40% 87.81% 12.19%
2008 100% 10.06% 20.19% 34.95% 11.03% 45.98% 21.71% 67.69% 20.39% 88.08% 11.92%
2009 100% 7.94% 17.21% 32.18% 11.59% 43.77% 22.96% 66.74% 21.38% 88.12% 11.88%
2010 100% 9.24% 18.87% 33.78% 11.38% 45.17% 22.38% 67.55% 20.71% 88.26% 11.74%
2011 100% 8.86% 18.70% 33.89% 11.50% 45.39% 22.43% 67.82% 20.63% 88.45% 11.55%
2012 100% 11.25% 21.86% 36.84% 11.03% 47.87% 21.39% 69.25% 19.64% 88.90% 11.10%
2013 100% 9.03% 19.04% 34.42% 11.45% 45.87% 22.23% 68.10% 20.41% 88.51% 11.49%
Table 6. Total Income Tax Shares, 1980–2013 (Percent of Federal Income Tax Paid by Each Group)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 100% 19.05% 36.84% 12.44% 49.28% 23.74% 73.02% 19.93% 92.95% 7.05%
1981 100% 17.58% 35.06% 12.90% 47.96% 24.33% 72.29% 20.26% 92.55% 7.45%
1982 100% 19.03% 36.13% 12.45% 48.59% 23.91% 72.50% 20.15% 92.65% 7.35%
1983 100% 20.32% 37.26% 12.44% 49.71% 23.39% 73.10% 19.73% 92.83% 7.17%
1984 100% 21.12% 37.98% 12.58% 50.56% 22.92% 73.49% 19.16% 92.65% 7.35%
1985 100% 21.81% 38.78% 12.67% 51.46% 22.60% 74.06% 18.77% 92.83% 7.17%
1986 100% 25.75% 42.57% 12.12% 54.69% 21.33% 76.02% 17.52% 93.54% 6.46%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 100% 24.81% 43.26% 12.35% 55.61% 21.31% 76.92% 17.02% 93.93% 6.07%
1988 100% 27.58% 45.62% 11.66% 57.28% 20.57% 77.84% 16.44% 94.28% 5.72%
1989 100% 25.24% 43.94% 11.85% 55.78% 21.44% 77.22% 16.94% 94.17% 5.83%
1990 100% 25.13% 43.64% 11.73% 55.36% 21.66% 77.02% 17.16% 94.19% 5.81%
1991 100% 24.82% 43.38% 12.45% 55.82% 21.46% 77.29% 17.23% 94.52% 5.48%
1992 100% 27.54% 45.88% 12.12% 58.01% 20.47% 78.48% 16.46% 94.94% 5.06%
1993 100% 29.01% 47.36% 11.88% 59.24% 20.03% 79.27% 15.92% 95.19% 4.81%
1994 100% 28.86% 47.52% 11.93% 59.45% 20.10% 79.55% 15.68% 95.23% 4.77%
1995 100% 30.26% 48.91% 11.84% 60.75% 19.62% 80.36% 15.03% 95.39% 4.61%
1996 100% 32.31% 50.97% 11.54% 62.51% 18.80% 81.32% 14.36% 95.68% 4.32%
1997 100% 33.17% 51.87% 11.33% 63.20% 18.47% 81.67% 14.05% 95.72% 4.28%
1998 100% 34.75% 53.84% 11.20% 65.04% 17.65% 82.69% 13.10% 95.79% 4.21%
1999 100% 36.18% 55.45% 11.00% 66.45% 17.09% 83.54% 12.46% 96.00% 4.00%
2000 100% 37.42% 56.47% 10.86% 67.33% 16.68% 84.01% 12.08% 96.09% 3.91%
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 100% 15.68% 33.22% 52.24% 11.44% 63.68% 17.88% 81.56% 13.54% 95.10% 4.90%
2002 100% 15.09% 33.09% 52.86% 11.77% 64.63% 18.04% 82.67% 13.12% 95.79% 4.21%
2003 100% 15.37% 33.69% 53.54% 11.35% 64.89% 17.87% 82.76% 13.17% 95.93% 4.07%
2004 100% 17.12% 36.28% 56.35% 10.96% 67.30% 16.52% 83.82% 12.31% 96.13% 3.87%
2005 100% 18.91% 38.78% 58.93% 10.52% 69.46% 15.61% 85.07% 11.35% 96.41% 3.59%
2006 100% 19.24% 39.36% 59.49% 10.59% 70.08% 15.41% 85.49% 11.10% 96.59% 3.41%
2007 100% 19.84% 39.81% 59.90% 10.51% 70.41% 15.30% 85.71% 10.93% 96.64% 3.36%
2008 100% 18.20% 37.51% 58.06% 11.14% 69.20% 16.37% 85.57% 11.33% 96.90% 3.10%
2009 100% 16.91% 36.34% 58.17% 11.72% 69.89% 16.85% 86.74% 10.80% 97.54% 2.46%
2010 100% 17.88% 37.38% 59.07% 11.55% 70.62% 16.49% 87.11% 10.53% 97.64% 2.36%
2011 100% 16.14% 35.06% 56.49% 11.77% 68.26% 17.36% 85.62% 11.50% 97.11% 2.89%
2012 100% 18.60% 38.09% 58.95% 11.22% 70.17% 16.25% 86.42% 10.80% 97.22% 2.78%
2013 100% 18.48% 37.80% 58.55% 11.25% 69.80% 16.47% 86.27% 10.94% 97.22% 2.78%
Table 7. Dollar Cut-Off, 1980–2013 (Minimum AGI for Tax Returns to Fall into Various Percentiles; Thresholds Not Adjusted for Inflation)
Year Top 0.1% Top 1% Top 5% Top 10% Top 25% Top 50%
Source: Internal Revenue Service.
1980 $80,580 $43,792 $35,070 $23,606 $12,936
1981 $85,428 $47,845 $38,283 $25,655 $14,000
1982 $89,388 $49,284 $39,676 $27,027 $14,539
1983 $93,512 $51,553 $41,222 $27,827 $15,044
1984 $100,889 $55,423 $43,956 $29,360 $15,998
1985 $108,134 $58,883 $46,322 $30,928 $16,688
1986 $118,818 $62,377 $48,656 $32,242 $17,302
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 $139,289 $68,414 $52,921 $33,983 $17,768
1988 $157,136 $72,735 $55,437 $35,398 $18,367
1989 $163,869 $76,933 $58,263 $36,839 $18,993
1990 $167,421 $79,064 $60,287 $38,080 $19,767
1991 $170,139 $81,720 $61,944 $38,929 $20,097
1992 $181,904 $85,103 $64,457 $40,378 $20,803
1993 $185,715 $87,386 $66,077 $41,210 $21,179
1994 $195,726 $91,226 $68,753 $42,742 $21,802
1995 $209,406 $96,221 $72,094 $44,207 $22,344
1996 $227,546 $101,141 $74,986 $45,757 $23,174
1997 $250,736 $108,048 $79,212 $48,173 $24,393
1998 $269,496 $114,729 $83,220 $50,607 $25,491
1999 $293,415 $120,846 $87,682 $52,965 $26,415
2000 $313,469 $128,336 $92,144 $55,225 $27,682
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 $1,393,718 $306,635 $132,082 $96,151 $59,026 $31,418
2002 $1,245,352 $296,194 $130,750 $95,699 $59,066 $31,299
2003 $1,317,088 $305,939 $133,741 $97,470 $59,896 $31,447
2004 $1,617,918 $339,993 $140,758 $101,838 $62,794 $32,622
2005 $1,938,175 $379,261 $149,216 $106,864 $64,821 $33,484
2006 $2,124,625 $402,603 $157,390 $112,016 $67,291 $34,417
2007 $2,251,017 $426,439 $164,883 $116,396 $69,559 $35,541
2008 $1,867,652 $392,513 $163,512 $116,813 $69,813 $35,340
2009 $1,469,393 $351,968 $157,342 $114,181 $68,216 $34,156
2010 $1,634,386 $369,691 $161,579 $116,623 $69,126 $34,338
2011 $1,717,675 $388,905 $167,728 $120,136 $70,492 $34,823
2012 $2,161,175 $434,682 $175,817 $125,195 $73,354 $36,055
2013 $1,860,848 $428,713 $179,760 $127,695 $74,955 $36,841
Table 8. Average Tax Rate, 1980–2013 (Percent of AGI Paid in Income Taxes)
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Source: Internal Revenue Service.
1980 15.31% 34.47% 26.85% 17.13% 23.49% 14.80% 19.72% 11.91% 17.29% 6.10%
1981 15.76% 33.37% 26.59% 18.16% 23.64% 15.53% 20.11% 12.48% 17.73% 6.62%
1982 14.72% 31.43% 25.05% 16.61% 22.17% 14.35% 18.79% 11.63% 16.57% 6.10%
1983 13.79% 30.18% 23.64% 15.54% 20.91% 13.20% 17.62% 10.76% 15.52% 5.66%
1984 13.68% 29.92% 23.42% 15.57% 20.81% 12.90% 17.47% 10.48% 15.35% 5.77%
1985 13.73% 29.86% 23.50% 15.69% 20.93% 12.83% 17.55% 10.41% 15.41% 5.70%
1986 14.54% 33.13% 25.68% 15.99% 22.64% 12.97% 18.72% 10.48% 16.32% 5.63%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line are not strictly comparable.
1987 13.12% 26.41% 22.10% 14.43% 19.77% 11.71% 16.61% 9.45% 14.60% 5.09%
1988 13.21% 24.04% 21.14% 14.07% 19.18% 11.82% 16.47% 9.60% 14.64% 5.06%
1989 13.12% 23.34% 20.71% 13.93% 18.77% 12.08% 16.27% 9.77% 14.53% 5.11%
1990 12.95% 23.25% 20.46% 13.63% 18.50% 12.01% 16.06% 9.73% 14.36% 5.01%
1991 12.75% 24.37% 20.62% 13.96% 18.63% 11.57% 15.93% 9.55% 14.20% 4.62%
1992 12.94% 25.05% 21.19% 13.99% 19.13% 11.39% 16.25% 9.42% 14.44% 4.39%
1993 13.32% 28.01% 22.71% 14.01% 20.20% 11.40% 16.90% 9.37% 14.90% 4.29%
1994 13.50% 28.23% 23.04% 14.20% 20.48% 11.57% 17.15% 9.42% 15.11% 4.32%
1995 13.86% 28.73% 23.53% 14.46% 20.97% 11.71% 17.58% 9.43% 15.47% 4.39%
1996 14.34% 28.87% 24.07% 14.74% 21.55% 11.86% 18.12% 9.53% 15.96% 4.40%
1997 14.48% 27.64% 23.62% 14.87% 21.36% 12.04% 18.18% 9.63% 16.09% 4.48%
1998 14.42% 27.12% 23.63% 14.79% 21.42% 11.63% 18.16% 9.12% 16.00% 4.44%
1999 14.85% 27.53% 24.18% 15.06% 21.98% 11.76% 18.66% 9.12% 16.43% 4.48%
2000 15.26% 27.45% 24.42% 15.48% 22.34% 12.04% 19.09% 9.28% 16.86% 4.60%
The IRS changed methodology, so data above and below this line are not strictly comparable.
2001 14.47% 28.17% 27.60% 23.91% 15.20% 21.68% 11.87% 18.35% 9.20% 16.08% 4.92%
2002 13.28% 28.48% 27.37% 23.17% 14.15% 20.76% 10.70% 17.23% 8.00% 14.87% 3.86%
2003 12.11% 24.60% 24.38% 20.92% 12.46% 18.70% 9.69% 15.57% 7.41% 13.53% 3.49%
2004 12.31% 23.06% 23.52% 20.83% 12.53% 18.80% 9.41% 15.71% 7.27% 13.68% 3.53%
2005 12.65% 22.48% 23.15% 20.93% 12.61% 19.03% 9.45% 16.04% 7.18% 14.01% 3.51%
2006 12.80% 21.94% 22.80% 20.80% 12.84% 19.02% 9.52% 16.12% 7.22% 14.12% 3.51%
2007 12.90% 21.42% 22.46% 20.66% 12.92% 18.96% 9.61% 16.16% 7.27% 14.19% 3.56%
2008 12.54% 22.67% 23.29% 20.83% 12.66% 18.87% 9.45% 15.85% 6.97% 13.79% 3.26%
2009 11.39% 24.28% 24.05% 20.59% 11.53% 18.19% 8.36% 14.81% 5.76% 12.61% 2.35%
2010 11.81% 22.84% 23.39% 20.64% 11.98% 18.46% 8.70% 15.22% 6.01% 13.06% 2.37%
2011 12.54% 22.82% 23.50% 20.89% 12.83% 18.85% 9.70% 15.82% 6.98% 13.76% 3.13%
2012 13.11% 21.67% 22.83% 20.97% 13.33% 19.21% 9.96% 16.35% 7.21% 14.33% 3.28%
2013 13.64% 27.91% 27.08% 23.20% 13.40% 20.75% 10.11% 17.28% 7.31% 14.98% 3.30%

To access this data on GitHub, click here.

(1) For data prior to 2001, all tax returns that have a positive AGI are included, even those that do not have a positive income tax liability. For data from 2001 forward, returns with negative AGI are also included, but dependent returns are excluded. (2) Income tax after credits (the measure of “income taxes paid” above) does not account for the refundable portion of EITC. If it were included, the tax share of the top income groups would be higher. The refundable portion is classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures. (3) The only tax analyzed here is the federal individual income tax, which is responsible for about 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes. (4) AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others. (5) The unit of analysis here is that of the tax return. In the figures prior to 2001, some dependent returns are included. Under other units of analysis (like the Treasury Department’s Family Economic Unit), these returns would likely be paired with parents’ returns. (6) These figures represent the legal incidence of the income tax. Most distributional tables (such as those from CBO, Tax Policy Center, Citizens for Tax Justice, the Treasury Department, and JCT) assume that the entire economic incidence of personal income taxes falls on the income earner.

 


[1] Individual Income Tax Rates and Tax Shares, Internal Revenue Service Statistics of Income, http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Rates-and-Tax-Shares.

[2] See Richard Rubin, Capital Gains Rose 60% in Year Before U.S. Tax Increase, Bloomberg, Mar. 2014, http://www.bloomberg.com/news/articles/2014-03-20/capital-gains-rose-60-in-year-before-u-s-tax-increase

[3] Scott Greenberg, Here’s How Much Taxes on the Rich Rose in 2013, Tax Foundation, Aug. 2015, https://taxfoundation.org/blog/here-s-how-much-taxes-rich-rose-2013

https://taxfoundation.org/summary-latest-federal-income-tax-data-2015-update/

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Thomas Sowell is Back Again to Discuss His Book Wealth, Poverty, and Politics

Wealth, Poverty, and Politics

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Patrick J. Buchhanan — The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of The Global Economy — Videos

Posted on February 21, 2017. Filed under: American History, Blogroll, Books, Catholic Church, Communications, Culture, Employment, Family, Federal Government, Foreign Policy, government, government spending, history, media, Non-Fiction, Patrick J. Buchanan, People, Philosophy, Photos, Politics, Psychology, Rants, Raves, Raymond Thomas Pronk, Religion, Trade, Trade Policiy, Unemployment, War, Wealth, Weapons, Welfare, Wisdom, Writing | Tags: , , , , |

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Suicide of a Superpower: Pat Buchanan on the Death of Western Civilization

Published on Apr 25, 2012

Peter Robinson sits with author, journalist and former presidential candidate, Patrick J Buchanan. From declining birth rates, to shifting values, to the decline of Christianity, Buchanan thinks Western civilization is falling apart. Buchanan is worried that the American melting pot has stopped assimilating immigrants the way it once did. Is America dying? Are you a racist if you think America is breaking apart? Find out.

Pat Buchanan: Biography, Apartheid, Culture War, Foreign Policy, Free Trade, Interview (1988)

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Master of Disaster President Obama — Legacy of Failure: Domestically and Abroad — One Success: Destroyed Democratic Party! — Videos

Posted on December 30, 2016. Filed under: American History, Articles, Blogroll, British History, Central Intelligence Agency (CIA), College, Communications, Congress, Constitution, Corruption, Crime, Crisis, Dirty Bomb, Documentary, Drones, Economics, Education, Elections, Employment, Energy, European History, Faith, Family, Federal Bureau of Investigation (FBI), Federal Bureau of Investigation (FBI), Federal Government, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, Friends, Genocide, government, government spending, history, Homicide, Illegal, Immigration, Islam, Law, Legal, liberty, Life, Links, Macroeconomics, media, Middle East, Monetary Policy, Money, Money, National Security Agency (NSA), National Security Agency (NSA_, Natural Gas, Natural Gas, Newspapers, Nuclear, Nuclear Power, Nuclear Proliferation, Oil, Oil, People, Philosophy, Photos, Politics, Press, Radio, Rants, Raves, Raymond Thomas Pronk, Resources, Security, Strategy, Tax Policy, Taxation, Taxes, Television, Trade Policiy, Video, War, Wealth, Weapons, Welfare, Wisdom, Work, Writing | Tags: |

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Obama unleashes 3,853 regs, 18 for every law, record 97,110 pages of red tape

President Obama‘s lame duck administration poured on thousands more new regulations in 2016 at a rate of 18 for every new law passed, according to a Friday analysis of his team’s expansion of federal authority.

While Congress passed just 211 laws, Obama’s team issued an accompanying 3,852 new federal regulations, some costing billions of dollars.

The 2016 total was the highest annual number of regulations under Obama. Former President Bush issued more in the wake of 9/11.

The proof that it was an overwhelming year for rules and regulations is in the Federal Register, which ended the year Friday by printing a record-setting 97,110 pages, according to the analysis from the Competitive Enterprise Institute.

The annual “Unconstitutional Index” from Clyde Wayne Crews, CEI’s vice president for policy, said that it was much higher under Obama than under former President George W. Bush.

“The multiple did tend to be higher during Obama administration. Bush’s eight years averaged 20, while Obama’s almost-eight have averaged 29,” said his report, first provided to Secrets.

His index is meant to show that it is the federal bureaucracy, not Congress, that levies the most rules. “There’s no pattern to any of this, since the numerators and denominators can vary widely; there had been 114 laws in 2015, and a multiple of 39. The multiple can be higher with fewer laws, or with more regulations, holding the other constant. The point is that agencies do the bulk of lawmaking, no matter the party in power,” he wrote.

President-elect Trump has promised to slash federal regulations, even pledging to cut two current rules for every one he imposes. Congressional leaders have also promised to slash rules and regulations that have escalated under Obama.

http://www.washingtonexaminer.com/obama-unleashes-3853-regs-18-for-every-law-record-97110-pages-of-red-tape/article/2610592#!

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People vs. “Elites”: Nationalist Capitalism Winning — Global Socialism Losing — Videos

Posted on December 29, 2016. Filed under: American History, Articles, Banking, Blogroll, British History, Business, College, Communications, Constitution, Corruption, Crime, Crisis, Documentary, Economics, Education, Elections, Employment, European History, Faith, Family, Federal Government Budget, Fiscal Policy, Foreign Policy, Fraud, Freedom, Friends, Genocide, government, history, History of Economic Thought, Illegal, Immigration, Law, Legal, liberty, Life, Links, Macroeconomics, media, Microeconomics, Middle East, Monetary Policy, Money, Money, People, Philosophy, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Religious, Speech, Tax Policy, Trade Policiy, Video, War, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , |

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Dawn of the New World Order: 2017 will be the year EVERYTHING changes

A NEW World Order is set to emerge next year as huge political changes sweep across Europe including the rise of the mega-alliance under Vladimir Putin and Donald Trump.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTY/DSNEW WORLD ORDER: Vladimir Putin and Donald Trump will trigger a revolution across Europe
Putin’s growing power and Trump’s extraordinary US Election victory are both herald’s of a growing movement against the established world governments.Anti-establishment parties raging against the political class could sweep to victory in a swathes of elections next year and change the face of the West.

From Germany, to France, to the Netherlands – fringe and extremist parties are gaining momentum hand over fist and looked primed to seize power.

Notable victories have already been won – with a shocking referendum win in Italy causing Prime Minister Matteo Renzi to resign in a move said to pave the way for the collapse of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUDSEND OF THE EU: Anti-establishment parties are set to sweep to power in Europe

“The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix”

Fredrik Wesslau

Fredrik Wesslau, from the European Council of Foreign Relations, predicted the “unthinkable is now thinkable” after Trump was swept into the White House.

He said the political parties are trying to unseat the “liberal order” in a campaign backed by Putin and Trump.

Politicians look to overthrow the established order are hailing Trump’s election victory as the beginning of the “Patriotic Spring”.

There are six key elections coming up in 2017 which could very easily be won by right-wing parties with nationalist policies which would spell the end of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGOLDEN DAWN: The Neo-nazi movement in Greece is the most extreme example
Marine Le Pen, leader of France’s National Front, could be poised to take power after the election in May in a move which could pull France out of the EU.
She has described the coming year as a “global revolution” after the election of Trump and the victory of Brexit.Mrs Le Pen has promised to pull france out of NATO and “push migrants who want to come to Europe back into international waters”.The alliance is feared to be a further casualty of the looming political shift – with NATO bosses “preparing for the worst” as they fear Putin will invade Eastern Europe and Trump will pull all US support.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYMARINE LE PEN: France’s National Front leader could seize power next year
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGEERT WILDERS: The Netherlands’ Party for Freedom leader has compared the Koran to Mein Kampf
Meanwhile, anti-Islam and anti-migrant leader of the Party of Freedom Geert Wilders ended 2016 leading the polls in the Netherlands – contesting the general election in March.He tweeted a picture of Angela Merkel with blood on her hands following the Berlin Christmas market attack – and shared the message “they hate and kill us. An nobody protects us”.He has also compared the Koran to Adolf Hitler’s book Mein Kampf – campaigning to have the Muslim holy book banned – and coined the phrase “patriotic spring”.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUFRAUKE PETRY: Angela Merkel faces losing Chancellor’s seat next year after major unrest
Frauke Petry is also contesting the German federal election next year as the aftermath of the Berlin attack rocks the government of Angelea Merkel.While she does not have a seat in the Bundestag – the German parliament – approval of her Alternative for Germany party has been swelling in wake of backlash against refugees following terrorist attacks.In her first election manifesto she declared “Islam is not part of Germany” and has previously called on border guard to use “firearms if necessary” when dealing with refugees. 
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGERMANY: Unrest is sweeping across the European nation after terror attacks
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYBEPE GRILLO: This comedian turned politician has already struck a blow to the EU
Leader of Italy’s Five Star Movement TV comedian Beppe Grillo has already caused a stir as the the Italian government lost a key referendum.Savagedly anti-EU, he has said “political amateurs are conquering the world”, called Trump’s victory an “extraordinary turning point” and his party won two key mayoral seats in Turin and Rome.He has been called the “Italian Donald Trump” and his party could be a key player with elections expected to be held in 2017.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYJIMMIE AKESSON: Sweden Democrats’ outspoken leader led a campaign against migrants
The Czech Republic is also set to hold elections in 2017 while Sweden goes to the polls in 2018, both with own Trump-esque leaders who could make a shocking grab for power.Andrej Babis, the second richest man in the Czech Republic, is expected to win the general election for the ANO party and has been reported to have close ties to Putin’s Russia.While in Sweden, anti-immigration Jimmie Akesson of the Sweden Democrats is gaining in popularity – campaigning against his nation’s membership of the EU and advocating a campaign to tell people not to come to Sweden.
With Europe’s biggest economies set to go to the polls, struggling Greece could also follow suit.The extreme right fringes of their politics is dominated by the neo-nazi party Golden Dawn – who have launched attacks on refugee camps.While it is very unlikely they have any chance at power, their nationalist cause is of the most intense and hate-filed in Europe.Centre-right party New Democracy is the most likely to unseat the government should a snap election be called.
The former EU diplomat Wesslau said: “The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix for the liberal order in Europe.”He added: “Within Europe, populists on the left and right are trying to roll back the liberal order.”This insurgency is being actively backed by Putin’s Russia, and, now, it seems, Trump’s America.”The European Union itself risks being an early casualty.”

The Globalists Have Declared War on Nationalists

 

Trump’s populist views of self-determination are sweeping the planet and the elite are in a sheer panic. Only a few weeks ago, the sheep of the planet were being marched to their Armageddon. The dumbed down masses have managed to mount a ninth inning rally that have sent the elite into frenzy.

 

Hillary Clinton Was Supposed to Usher in the New World Order Through the Fall of America

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

Two months ago, I called upon the Independent Media to step up their attacks on Hillary Clinton’s criminal behavior in a last-ditch and desperate effort to derail her presidential aspirations. After issuing my plea, I can happily report that I got more than I had hoped for. Merely a year ago, I was one of the few voices that was pounding away at Hillary Clinton’s sociopathic behavior. Today, the attacks are so bombastic and vitriolic, that I am joyfully reporting that I feel that my voice is being drowned out by a relentless chorus of voices that has Hillary Clinton in a death grip and they won’t let go. This is a great time for humanity. Even if the criminal elite unleash genocidal hell on Earth, at least humanity will die on their feet. There is absolutely no way that the criminal elite can stem the tide of rebellion against their corrupt and satanically inspired rule over the people.

The criminal elite had pinned their hopes on Hillary Clinton ushering in the NWO by tearing down what was left of American sovereignty. From a Bilderberg, Trilateral and CFR perspective, this woman was sociopathic enough to do what would need to be done to complete this task. However, the criminal elite forgot to do one thing. They neglected to manage her public image. It is leaders like Clinton and Cameron which have awakened the masses, through their abject criminality, and the people are saying enough is enough.

Clinton’s role in the emails, her treason by selling uranium to the Russians to raise money for her foundation, the Benghazi affair, etc., etc, are exploding on the national scene. Former Clinton campaign leaders and Secret Service personnel are speaking out against this despot. The genie will not fit back into the bottle. The elite know this and they are on the verge of a mass nervous breakdown. The playground bully has just been punched in the nose by the 98 pound weakling.

Zbigniew Brzezinski saw this awakening coming in 2011 which prompted him to say the following:

brzezinski kill a million

This is what wounded animals do, they lash out in an uncontrollable manner.

The following op-ed piece written for the Council on Foreign Relations captures the criminal elite’s sense of desperation.

The Face of Global Elite Arrogance

face of pomposity

Meet the face of global pomposity and unbridled arrogance. His disdain for “your type” is noteworthy and speaks to the desperation of global criminal elite.

His name is James Traub and he and his kind are the absolute enemy of every American. He is the heir to the Bloomingdale industries and a prominent member of the Council on Foreign Relations (CFR).

Traub’s elitist views leave nothing to the imagination. Writing for the mouthpiece of The Council on Foreign Relations, he leaves little doubt that the the evil empire is going to strike back.

It is clear that Traub and his fellow CFR elitist snobs are declaring war on any kind self-determination. He expects every Westerner to relish in their servitude to the globalists as he states the following in the article:

  • “the Brexit vote…utter repudiation of….bankers and economists”…
  • “…establishment political parties in major western countries must combine forces to keep out the nationalists”.
  • “…globalization means culture as well as economics: Older people whose familiar world is vanishing beneath a welter of foreign tongues and multicultural celebrations are waving their fists at cosmopolitan elites.”
  • “…(describes) the pro-Trump Republican base as “know nothing” voters…”

In one fell swoop, Traub validated several conspiracy theories, as being conspiracy facts as his statements admit to the following conspiratorial beliefs held by much of the Independent Media:

  • The bankers are involved in a conspiracy that work against the interests of the common man…all wars are bankers’ wars. 
  • The Democrats and the Republicans are “establishment” parties and for all intents and purposes these two parties are two flavors of the same party. 
  • There is an overt admission that illegal immigration is about decultralizing the west. 
  • The “Know-nothing voters” who support Trump should be viewed with extreme disdain (e.g. extremists and domestic terrorists). 

Conclusion

After reading Traub’s article, there is nothing left to the imagination, the elite are in absolute panic. This is what makes the criminal elite so very dangerous. It is my considered opinion that the panicked elite may resort to one of more of the following to reassert control over dumbed down masses, who are awake to the corruption that has ruled over them for so long:

  1. False flag induced martial law, followed by mass incarcerations and genocide.

  2. A complete economic collapse which will pit one useless eater vs. another useless eater. 

  3. Bankers start world wars of epic proportions. World War III could be right around the corner. 

If this is not the future that you want for your children, you best get off of your backside and get involved in the planet-changing conflict.

http://www.thecommonsenseshow.com/2016/06/29/the-globalists-have-declared-war-on-nationalists/

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Appeared in: Volume 12, Number 1
Published on: July 10, 2016
NATIONALISM RISING

When and Why Nationalism Beats Globalism

And how moral psychology can help explain and reduce tensions between the two.

Jonathan Haidt is a social psychologist and professor in the Business and Society Program at New York University—Stern School of Business. He is the author of The Righteous Mind: Why Good People are Divided by Politics and Religion.
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Lawrence B. Lindsey — The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are The Best Hope For Recover — Videos

Posted on September 18, 2016. Filed under: Articles, Banking, Books, Business, Communications, Computers, Congress, Constitution, Corruption, Crisis, Economics, Education, Elections, Employment, Federal Government Budget, Fiscal Policy, Freedom, government, History of Economic Thought, Illegal, Immigration, Inflation, Law, Legal, liberty, Life, Links, Literacy, Macroeconomics, Microeconomics, Monetary Policy, Money, Non-Fiction, People, Philosophy, Photos, Raves, Tax Policy, Trade Policiy, Video, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , |

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Malzberg | Lawrence B. Lindsey discusses his book

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Larry Lindsey – Global Economic Collapse 2016 2017

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A Keynote Conversation with Dr. Lawrence Lindsey

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People Who Control America ? Mind Blowing Documentary HQ

Overdose: The Next Financial Crisis

Lawrence B. Lindsey

From Wikipedia, the free encyclopedia
Lawrence B. Lindsey
Director of the National Economic Council
In office
January 20, 2001 – December 12, 2002
President George W. Bush
Preceded by Gene Sperling
Succeeded by Steve Friedman
Personal details
Born July 18, 1954 (age 62)
Peekskill, New York, U.S.
Political party Republican
Spouse(s) Susan Lindsey
Children 3
Alma mater Bowdoin College
Harvard University

Lawrence B. Lindsey was director of the National Economic Council (2001–2002), and the assistant to the president on economic policy for the U.S. President George W. Bush. He played a leading role in formulating President Bush’s $1.35 trillion tax cut plan, convincing candidate Bush that he needed an “insurance policy” against an economic turndown. He left the White House in December 2002 and was replaced by Stephen Friedman after a dispute over the projected cost of the Iraq War. Lindsey estimated the cost of the Iraq War could reach $200 billion, while Defense Secretary Donald Rumsfeld estimated that it would cost less than $50 billion.[1]

Biography and achievements

Lindsey was born on July 18, 1954 in Peekskill, New York. He graduated from Lakeland Senior High School in Shrub Oak, New York in 1972. An alumnus of Alpha Rho Upsilon fraternity at Bowdoin College, he received his A.B. magna cum laude and Phi Beta Kappa from Bowdoin and his A.M. and Ph.D. in economics from Harvard University.

He is the author of The Growth Experiment: How the New Tax Policy is Transforming the U.S. Economy (Basic Books, New York, 1990, ISBN 978-0465050703), Economic Puppetmasters: Lessons from the Halls of Power (AEI Press, Washington, D.C., 1999, ISBN 978-0844740812), What A President Should Know …but most learn too late: An Insiders View On How To Succeed In The Oval Office (Rowman & Littlefield Publishers, Inc., Maryland, 2008, ISBN 978-0742562226), and Conspiracies of the Ruling Class: How to Break Their Grip Forever (Simon & Schuster, 2016, ISBN 978-1501144233). Also he has contributed numerous articles to professional publications. His honors and awards include the Distinguished Public Service Award of the Boston Bar Association, 1994; an honorary degree from Bowdoin College, 1993; selection as a Citicorp/Wriston Fellow for Economic Research, 1988; and the Outstanding Doctoral Dissertation Award from the National Tax Association, 1985.

During the Reagan Administration, he served three years on the staff of the Council of Economic Advisers as Senior Staff Economist for Tax Policy. He then served as Special Assistant to the President for Policy Development during the first Bush administration

Lindsey served as a Member of the Board of Governors of the Federal Reserve System for five years from November 1991 to February 1997. Additionally, Lindsey was Chairman of the Board of the Neighborhood Reinvestment Corporation, a national public/private community redevelopment organization, from 1993 until his departure from the Federal Reserve.

From 1997 to January 2001, Lindsey was a Resident Scholar and holder of the Arthur F. Burns Chair in Economics at the American Enterprise Institute in Washington, D.C. He was also Managing Director of Economic Strategies, an economic advisory service based in New York City. During 1999 and throughout 2000 he served as then-Governor George W. Bush’s chief economic advisor for his presidential campaign. He is a former associate professor of Economics at Harvard University.

Lindsey is Chief Executive Officer of the Lindsey Group, which he runs with a former colleague from the National Economic Council and writes for The Wall Street Journal, Weekly Standard and other publications. He is a visiting scholar at the American Enterprise Institute.

Controversies

Lindsey is famous for spotting the emergence of the late 1990s U.S. stock market bubble back in 1996 while a Governor of the Federal Reserve. According to the meeting transcripts for September of that year, Lindsey challenged the expectation that corporate earnings would grow 11½ percent a year continually. He said, “Readers of this transcript five years from now can check this fearless prediction: profits will fall short of this expectation.” According to the Bureau of Economic Analysis, corporate profits as a share of national income eroded from 1997 until 2001. Stock prices eventually collapsed, starting their decline in March 2000, though the S&P500 remained above its 1996 level, casting doubt on the assertion that there was a stock market bubble in 1996.

In contrast to Chairman Greenspan, Lindsey argued that the Federal Reserve had an obligation to prevent the stock market bubble from growing out of control. He argued that “the long term costs of a bubble to the economy and society are potentially great…. As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights.” During the 2000 Presidential campaign, Governor Bush was criticized for picking an economic advisor who had sold all of his stock in 1998.[citation needed]

According to the Washington Post,[2] Lindsey was on an advisory board to Enron along with Paul Krugman before joining the White House. Lindsey and his colleagues warned Enron that the economic environment was riskier than they perceived.

Cost of the Iraq War

On September 15, 2002, in an interview with the Wall Street Journal, Lindsey estimated the high limit on the cost of the Bush administration’s plan in 2002 of invasion and regime change in Iraq to be 1–2% of GNP, or about $100–$200 billion.[3][4] Mitch Daniels, Director of the Office of Management and Budget, discounted this estimate as “very, very high” and Defense Secretary Donald Rumsfeld stated that the costs would be under $50 billion.[1] Rumsfeld called Lindsey’s estimate “baloney”.[5]

As of 2007 the cost of the invasion and occupation of Iraq exceeded $400 billion, and the Congressional Budget Office in August 2007 estimated that appropriations would eventually reach $1 trillion or more.[6]

In October 2007, the Congressional Budget Office estimated that by 2017, the total costs of the wars in Iraq and Afghanistan could reach $2.4 trillion. In response, Democratic Representative Allen Boyd criticized the administration for firing Lindsey, saying “They found him a job outside the administration.”[7]

References

  1. ^ Jump up to:a b Wolk, Martin (2006-05-17). “Cost of Iraq war could surpass $1 trillion”. MSNBC. Retrieved 2008-03-10. Back in 2002, the White House was quick to distance itself from Lindsey’s view. Mitch Daniels, director of the White House budget office, quickly called the estimate “very, very high.” Lindsey himself was dismissed in a shake-up of the White House economic team later that year, and in January 2003, Defense Secretary Donald Rumsfeld said the budget office had come up with “a number that’s something under $50 billion.” He and other officials expressed optimism that Iraq itself would help shoulder the cost once the world market was reopened to its rich supply of oil.
  2. Jump up^ Once a Friend and Ally, Now a Distant Memory. Washington Post
  3. Jump up^ Davis, Bob (September 16, 2002). “Bush Economic Aide Says the Cost Of Iraq War May Top $100 Billion”. The Wall Street Journal. Reprinted in Congressional Record, vol. 148, issue 117, 107th Congress, pp. S8643-S8644.[dead link]
  4. Jump up^ Engel, Matthew (September 17, 2002). “Cost of war put at $200bn, but that’s nothing, says US adviser”. The Guardian. Retrieved July 23, 2011.
  5. Jump up^ Bryne, John (2008-03-18). “Price of Iraq war now outpaces Vietnam”. The Raw Story. Archived from the original on 2008-03-21. Retrieved 2008-03-18.
  6. Jump up^ Bender, Bryan (2007-08-01). “Analysis says war could cost $1 trillion”. The Boston Globe. Retrieved 2008-03-10.
  7. Jump up^ “Congress told of war costs up to $2.4 trillion by 2017”. The Register-Guard. October 25, 2007. Retrieved 2007-10-25.[dead link]

External links

Political offices
Preceded by
Gene Sperling
Director of the National Economic Council
2001–2002
Succeeded by
Steve Friedman
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Arthur C. Brooks — The Road To Freedom: How To Win The Fight For Free Enterprise — Revised and Updated — Videos

Posted on September 17, 2016. Filed under: American History, Banking, Blogroll, Books, Business, College, Communications, Computers, Congress, Constitution, Economics, Education, Elections, Employment, Faith, Family, Federal Government, Federal Government Budget, Fiscal Policy, Food, Foreign Policy, Freedom, government, government spending, Health Care, Heroes, history, History of Economic Thought, Internal Revenue Service (IRS), Investments, Law, liberty, Life, Links, Macroeconomics, media, Microeconomics, Monetary Policy, Money, Money, Non-Fiction, People, Philosophy, Photos, Political Correctness, Politics, Raves, Raymond Thomas Pronk, Resources, Security, Talk Radio, Tax Policy, Taxation, Taxes, Technology, Trade Policiy, Unemployment, Vacations, Video, War, Wealth, Welfare, Wisdom, Work, Writing | Tags: , , , , , , , , , , , , |

 

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The Promise of Free Enterprise

Arthur C. Brooks on the Battle Between Free Enterprise and Big Government

Why Capitalism Works

What Creates Wealth?

The War on Work

WSJ Opinion: Arthur Brooks: The Road to Freedom

The Road to Freedom: The Moral Case for Free Enterprise

Arthur C. Brooks On Glenn Beck Radio Book “The Road to Freedom” Win Fight for Free Enterprise

Arthur C. Brooks on The Secret to Happiness

Arthur Brooks on the Morality of Free Enterprise

An Evening with Arthur Brooks

Is Free Enterprise Moral?

A debate between Arthur Brooks, President, American Enterprise Institute, and Jim Wallis, President and CEO, Sojourners Inc.
November 30, 2011

The Morality of Capitalism – executive director of the Ayn Rand Institute, Yaron Brook

Dr. Yaron Brook – Free Market Revolution: Capitalism and Self Interest

The Power of Choice: The Life and Ideas of Milton Friedman

Milton Friedman Speaks: Equality and Freedom in the Free Enterprise System (B1238) – Full Video

Thomas Sowell — Dismantling America

Thomas Sowell Brings the World into Focus through an Economics Lens

Wealth, Poverty, and Politics

Hoover Institution fellow Thomas Sowell discusses poverty around the world and in the United States. Poverty in America, he says, compared to the rest of the world, is not severe. Many poor people in poverty in the United States have one or two cars, central heating, and cell phones. The real problem for the poor is the destruction of the family, which Sowell argues dramatically increased once welfare policies were introduced in the 1960s.

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Why is the Wealth of Nations So Damn Long? — Increasing Returns For Pinheads — Videos

Posted on August 20, 2016. Filed under: Articles, Blogroll, Books, College, Data, Defense Intelligence Agency (DIA), Documentary, Economics, Education, Elections, Employment, Macroeconomics, Microeconomics, Monetary Policy, Trade Policiy | Tags: , , , , , , , , , , , , , , , , |

Four Horsemen – Feature Documentary – Official Version

The Real Adam Smith: Ideas That Changed The World – Full Video

The Real Adam Smith: Morality and Markets – Full Video

Adam Smith and the Birth of Economics | Lawrence Reed

The Division of Labor and Social Order | Jörg Guido Hülsmann

The Pin Factory

How Its Made Needles and Pins

Cato Events – On the Wealth of Nations

Increasing Returns and the New World of Business

The Law of Increasing Returns

By Ronald A. Bailey
This essay originally appeared in the National Interest.

Two hundred years after Thomas Robert Malthus published An Essay on the Principle of Population, demographers, ecologists, economists, biologists and policymakers still debate his theory of population. Leading foundations spend scores of millions of dollars on population programs, while the United Nations holds international conferences on the topic and even has a specialized agency, the United Nations Population Fund, devoted to the issue. Last year the Fund portentously declared that the world’s population reached six billion on October 12. Every year, hundreds of weighty studies and books pour from the universities and think tanks discussing what is to be done.Malthus advanced two propositions that he regarded as completely self-evident. First, that “food is necessary for the existence of man”, and second, that “the passion between the sexes is necessary and will remain nearly in its present state.” Based on these propositions, Malthus famously concluded that “the power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will show the immensity of the first power in comparison with the second.”

Malthus illustrated his hypothesis using two sets of numbers: “the human species would increase in the ratio of—1, 2, 4, 8, 16, 32, 64, 128, 256, 512, &c. and subsistence as—1, 2, 3, 4, 5, 6, 7, 8, 9, 10, &c.” He further asserted that “population does invariably increase where there are the means of subsistence.” Malthus’ dismal summary of the situation in which humanity finds itself is that some portion of mankind must forever be starving to death; and, further, efforts to aid the starving will only lead to more misery, as those initially spared from famine bear too many children to feed with existing food supplies.

In his first edition of the Essay, Malthus argued that there were two “checks” on population, “preventive” and “positive.” Preventive checks, those that prevent births, include abortion, infanticide and prostitution; positive checks include war, pestilence and famine. In later editions, he added a third check that he called “moral restraint”, which includes voluntary celibacy, late marriage and the like. Moral restraint is basically just a milder version of the earlier preventive check. If all else fails to keep human numbers under control, Malthus chillingly concludes,

“Famine seems to be the last, the most dreadful resource of nature. The power of population is so superior to the power in the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague, advance in terrific array, and sweep off their thousands and ten thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow, levels the population with the food of the world.”

Malthus’ principle of population has proved to be one of the most influential and contested theories in history. It provided a crucial insight for Charles Darwin as he was developing his theory of natural selection. In his autobiography, Darwin wrote that in October 1838,

“I happened to read for amusement Malthus on Population, and being well prepared to appreciate the struggle for existence which everywhere goes on, from long-continued observation of the habits of animals and plants, it at once struck me that under these circumstances favourable variations would tend to be preserved, and unfavourable ones would be destroyed. The result of this would be the formation of a new species. Here, then, I had at last got a theory by which to work.”

Naturalists, biologists and ecologists have since applied Malthusian theory not only to animals and plants, but to humans as well. Undeniably, his principle of population has an appealing simplicity, and has proved a fruitful hypothesis for ecology and population biology. It undergirds such biological concepts as carrying capacity, which is a measure of the population that a given ecosystem can support. The Kaibab Plateau deer, for example, is a famous case of an animal population outstripping its food supply. In the 1920s, the deer population expanded dramatically. In the absence of predators, a forage shortage ensued, which in turn led to a dramatic reduction of the deer population.

If the concept of carrying capacity can explain fluctuations in animal populations, some intellectuals have reasoned in the second half of the twentieth century, it should apply equally well to human populations. As Stanford University entomologist Paul Ehrlich has explained: “To ecologists who study animals, food and population often seem like sides of the same coin. If too many animals are devouring it, the food supply declines; too little food, the supply of animals declines… . Homo sapiens is no exception to that rule, and at the moment it seems likely that food will be our limiting resource.”

In the late 1960s, Ehrlich was one of many biologists and agronomists who began to issue dire warnings about human “overpopulation”, the most famous of which appeared in his book, The Population Bomb (1968). “The battle to feed all of humanity is over”, Ehrlich wrote. “In the 1970s, the world will undergo famines—hundreds of millions of people are going to starve to death in spite of any crash programs embarked on now.” Later, in an article for the first Earth Day in 1970, Ehrlich outlined a horrific scenario in which 65 million Americans and 4 billion other people would die of starvation in a “Great Die-Off” between 1980 and 1989. And in 1990 Ehrlich and his wife Anne published The Population Explosion, where they once again asserted that, “One thing seems safe to predict: starvation and epidemic disease will raise the death rates over most of the planet.” In these gloomy forecasts, Ehrlich was far from alone. In 1967, William and Paul Paddock asserted in their book, Famine 1975!, that, “The famines which are now approaching … are for a surety, inevitable… . In fifteen years the famines will be catastrophic.” Today, the Worldwatch Institute, a Washington, dc environmentalist advocacy group chaired by Lester Brown, still has a solid Malthusian focus.

Food is not the only resource said to be in short supply. In 1972 the Club of Rome, a group of politicians, businessmen and senior international bureaucrats, famously commissioned The Limits to Growth report, which concluded: “If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime in the next one hundred years. The probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.”

This is Malthus writ large: not only will humanity run out of food, but it will also run out of non-renewable resources like minerals and fossil fuels… .

The Primacy of Ideas

For decades, economists essentially used a two-factor model in which economic growth was accounted for by adding more labor and more capital to create more goods. The problem with this model is that over time growth must halt when the marginal value of the goods produced equals the cost of the labor and capital used to produce them. This neoclassical model of economic growth was elaborated in the 1950s by Nobelist Robert Solow and his colleagues, and was later incorporated into The Limits to Growth computer model. Relying on it, MIT researchers predicted eventual collapse as the inevitable result of continued economic and population growth.

In the last two decades, economic forecasters, following the lead of economist Paul Romer, have made a conceptual breakthrough that has enabled them to describe more rigorously and accurately—and differently—how economic growth occurs and how, with the proper social institutions, it can continue for the foreseeable future. Romer explains this approach, which has come to be known as the New Growth Theory:

“New growth theorists now start by dividing the world into two fundamentally different types of productive inputs that can be called ‘ideas’ and ‘things. ’ Ideas are nonrival goods that could be stored in a bit string. Things are rival goods with mass (or energy). With ideas and things, one can explain how economic growth works. Nonrival ideas can be used to rearrange things, for example, when one follows a recipe and transforms noxious olives into tasty and healthful olive oil. Economic growth arises from the discovery of new recipes and the transformation of things from low to high value configurations.”

Decoding the clunky economic terminology, “rival” goods are simply things that cannot be used by two or more persons at once, e.g., cars, drill presses, computers, even human bodies and brains. “Nonrival” goods can be used by any number of people simultaneously, e.g., recipes for bread, blueprints for houses, techniques for growing corn, formulas for pharmaceuticals, scientific principles like the law of gravity, and computer programs.

To understand the potency of ideas, consider that a few decades ago silicon was used primarily to make glass. Today it is a crucial component in microchips and optical fibers. Again, until fairly recently petroleum was known mainly as a nuisance for people engaged in drilling water wells; its use as a cheap lighting replacement for increasingly scarce whale oil only began in the 1890s, and soon after came the internal combustion engine.

We make ourselves better off, then, not by increasing the amount of resources on planet earth—that is, of course, fixed—but by rearranging resources we already have available so that they provide us with more of what we want. This process of improvement has been going on ever since the first members of our species walked the earth. We have moved from heavy earthenware pots to ultrathin plastics and lightweight aluminum cans. To cook our food we have shifted from wood-intensive campfires to clean, efficient natural gas. By using constantly improving recipes, humanity has avoided the Malthusian trap while at the same time making the world safer and more comfortable for an ever larger portion of the world’s population.

In fact, increasing, rather than diminishing, returns characterize many economic activities. For example, it may cost $150 million to develop the first vial of a new vaccine to prevent Lyme disease. Yet every vial after that is essentially free. The same is true for computer programs: it may cost Microsoft $500 million for the first copy of Windows 98, but each subsequent copy is merely the cost of the disk on which it is stored. Or in the case of telecommunications, laying a fiber optic network may cost billions of dollars, but once operational it can transmit millions of messages at virtually no added cost. And the low costs of each of these inventions make it possible for the people who buy them to be even more productive in their own activities—by avoiding illness, expediting word processing, and drastically increasing the tempo of information exchanges.

What modern Malthusians who fret about the depletion of resources miss is that it is not oil that people want; they want to cool and heat their homes. It is not copper telephone lines that people want; they want to communicate quickly and easily with friends, family and businesses. They do not want paper; they want a convenient and cheap way to store written information. In short, what is important is not the physical resource but the function to be performed; and for that, ideas are the crucial input. Robert Kates notes that technological discoveries have “transformed the meaning of resources and increased the carrying capacity of the Earth”; economist Gale Johnson concludes that history has clearly confirmed that “no exhaustible resource is essential or irreplaceable”; and economist Dwight Lee asserts that “the relevant resource base is defined by knowledge, rather than by physical deposits of existing resources.”

Romer sums it up this way: “Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding. Possibilities do not add up. They multiply.”

This, it should be noted, is the mirror image of Malthus’ argument about exponential growth. Here, however, ideas grow much faster than population.

By using a number of simple calculations, Romer illustrates the point that the number of possible discoveries and inventions is incomprehensibly vast. Take, for example, the chemical combinations one can derive from the periodic table of elements. There are about 100 different elements and if one serially combined any four, one would get about 94 million combinations. Romer further assumes that these elements could be combined in differing proportions ranging from 1 to 10. This yields 3,500 proportions times 94 million combinations and provides 330 billion different recipes in total. At the rate of 1,000 recipes per day, it would take scientists nearly a million years to evaluate them all. What is more, this vastly underestimates the actual number of combinations available, since one could combine more than four elements, in different proportions, at different temperatures and pressures—and so on and on.

Again, consider the number of computer programs that could be installed on a single computer hard disk drive. Romer calculates that the number of distinct software programs that can be put on a one-gigabyte hard disk is roughly one followed by 2.7 billion zeros. By comparison, the total number of seconds that have elapsed since the beginning of the universe is only about 1 followed by 17 zeros, and the total number of atoms in the universe is equal to about 1 followed by 100 zeros.

In short, then, people possess a nearly infinite capacity to rearrange physical objects by creating new recipes for their use. Yet some committed Malthusians object that Romer and others who hold that economic growth is potentially limitless not only violate the law of diminishing returns but transgress an even more fundamental physical law: the second law of thermodynamics. According to the second law, in a closed system disorder tends to increase. Think of a droplet of ink as a highly ordered pigment that is diluted when it is dropped into a ten-gallon aquarium. When the pigment’s molecules spread evenly throughout the water, disorder is at a maximum—that is, it becomes virtually impossible to reconstitute the droplet. The idea, then, is that the maintenance of order in one part of the system (heating a house) requires an increase of disorder elsewhere (burning oil).

In fact, the solution to the puzzle of life and of a growing economy is that the earth is not a closed system—the energy that drives it comes principally from the sun. It is true that the sun’s energy is being dissipated. But it will not burn out for another four to five billion years. Hence, the recipes that humans could devise for obtaining and using energy are for all practical purposes limitless. Until medieval times, people inefficiently heated and cooked with open fires in their homes. Then someone in Europe invented the chimney, which dramatically increased the efficiency of heating and cooking. In the eighteenth century, Benjamin Franklin invented the cast iron stove, which again boosted efficiency—and so on, to today’s modern electric heat pumps and gas furnaces. And new ideas and designs continue to be developed all the time, among them passive solar homes, solar cells, fuel cells and nuclear power plants. It seems safe to conclude that so long as the sun shines, the second law of thermodynamics is not terribly relevant.

Indeed, trying to forecast today the energy mix for the next hundred years, especially given the current rate of technological innovation, is as fruitless as someone in 1900 trying to predict our current energy requirements. A person in 1900 would surely not have anticipated scores of millions of automobiles and trucks, thousands of jet planes, and millions of refrigerators. Because of this, the wisest course is for humanity to support institutions and incentive systems that will encourage future scientists, inventors and entrepreneurs to discover, finance and build the technologies that will supply human needs and protect the natural world in the coming century.

Reframing the Problems

Insights from New Growth Theory reframe many environmental problems and suggest some surprising solutions. For example, one of the global environmental problems most commonly attributed to population and economic growth is the loss of tropical forests. But is growth really to blame? According to the Consultative Group on International Agricultural Research, the chief factor that drives deforestation in developing countries is not commercial logging but “poor farmers who have no other option to feeding their families other than slashing and burning a patch of forest… . Slash-and-burn agriculture results in the loss or degradation of some 25 million acres of land per year.”

By contrast, the United States today farms less than half of the land that it did in the 1920s but produces far more food now than it did then. The key, of course, is technology. In fact, available farming technology from developed countries could prevent, and in many cases reverse, the loss of tropical forests and other wildlife habitat around the globe. Unfortunately, institutional barriers, the absence of secure property rights, corrupt governments and a lack of education prevent its widespread diffusion and, hence, environmental restoration.

Another environmental problem frequently attributed to population growth is pollution. In 1972 The Limits to Growth computer model projected that pollution would skyrocket as population increased: “Virtually every pollutant that has been measured as a function of time appears to be increasing exponentially.” But once again, the new Malthusians had things exactly backward. Since 1972, America’s population has risen 26 percent and its economy has more than doubled. Western Europe and Japan have experienced similar rates of growth. Yet, instead of increasing as predicted, air pollutants have dramatically declined.

In fact, a growing body of literature suggests that in most cases there are thresholds of wealth at which the amount of a pollutant begins to decline. Department of Interior analyst Indur Goklany calls these thresholds the “environmental transition.” What this means is that when people rise above mere subsistence, they begin demanding amenities such as clean air and water. The first environmental transition is clean drinking water. Goklany has found that the level of fecal coliform bacteria in rivers, which is a good measure of water pollution, peaks when average per capita incomes reach $1,400 per year. The next transition occurs when particulates like smoke and soot peak at $3,200. And again, levels of sulfur dioxide peak at about $3,700.

Not surprisingly, committed Malthusians reject such findings. Paul Ehrlich, for instance, stubbornly insists that, “Most people do not recognize that, at least in rich nations, economic growth is the disease, not the cure.” [emphasis in original] To counteract the “disease” of economic growth, Maurice King recommends that people in the “privileged North” should engage in “the deliberate quest of poverty” to curb their “luxurious resource consumption.”

The favored target of such critiques is the United States, whose citizens are supposedly consuming more than their fair share of the world’s goods and causing more than their fair share of its ills. The average American, however, is not only a consumer but a producer of both goods and ideas. Americans and Europeans get more done with relatively less because of their higher levels of education, greater access to productive tools, superior infrastructure, democratic governments and free markets. As a consequence, output per hour of labor in the United States today is ten times what it was a hundred years ago. Thus, the average Westerner creates far more resources, especially knowledge and technology, than she or he consumes. Thus, too, both Western economies and environments are improving simultaneously.

All that said, if the right social institutions are lacking—democratic governance, secure private property, free markets—it is possible for a nation to fall into the Malthusian trap of rising poverty and increasing environmental degradation. The economies of many countries in Africa are declining, not because of high population growth rates or lack of resources, but because they have failed to implement the basic policies for encouraging economic growth: namely, widespread education, secure property rights and democratic governance.

Democratic governance and open markets have in fact proved indispensable for the prevention of famine in modern times. Nobel Prize-winning economist Amartya Sen notes that “in the terrible history of famines in the world, there is hardly any case in which a famine has occurred in a country that is independent and democratic, with an uncensored press.” Why is this? Because, says Sen, “So long as famines are relatively costless for the government, with no threat to its survival or credibility, effective actions to prevent famines do not have the urgency to make them inescapable imperatives for the government.”6 Along with Romer and other theorists, Sen also argues that general economic growth, not just growth in food output, is crucial to ending the threat of famine in Africa. He calls “for measures to encourage and enhance technical change, skill formation and productivity—both in agriculture and in other fields.”

Contemporary Malthusians liken humanity to a car travelling one hundred miles per hour on a foggy road. And they warn of dire consequences if we do not slow down. But if we adopt institutions and regulations that slow the pace of innovation, we may find ourselves depleting our current energy supplies before they can be replaced by new ones. New Growth Theory suggests that a better analogy might be that human society is an airplane cloaked in clouds flying at a speed of six hundred miles per hour. If the plane slows down, it will lose air speed and may crash before arriving safely at its destination.

We cannot deplete the supply of ideas, designs and recipes. They are immaterial and limitless, and therefore not bound in any meaningful sense by the second law of thermodynamics. Surely no one believes that humanity has already devised all of the methods to conserve, locate and exploit new sources of energy, or that the flow of ideas to improve houses, transportation, communications, medicine and farming has suddenly dried up. Though far too many of our fellow human beings are caught in local versions of the Malthusian trap, we must not mistake the situation of that segment as representing the future of all of humanity and the earth itself; it is, instead, a dwindling remnant of an unhappy past. Misery is not the inevitable lot of humanity, nor is the ruin of the natural world a foregone conclusion.

http://www.cato.org/publications/commentary/law-increasing-returns

Returns to scale

From Wikipedia, the free encyclopedia

In economics, returns to scale and economies of scale are related but different terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capitalusage are variable (chosen by the firm). The term returns to scale arises in the context of a firm’s production function. It explains the behavior of the rate of increase in output (production) relative to the associated increase in the inputs (the factors of production) in the long run. In the long run all factors of production are variable and subject to change due to a given increase in size (scale). While economies of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities.

The laws of returns to scale are a set of three interrelated and sequential laws: Law of Increasing Returns to Scale, Law of Constant Returns to Scale, and Law of Diminishing returns to Scale. If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale(DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS). A firm’s production function could exhibit different types of returns to scale in different ranges of output. Typically, there could be increasing returns at relatively low output levels, decreasing returns at relatively high output levels, and constant returns at one output level between those ranges.[citation needed]

In mainstream microeconomics, the returns to scale faced by a firm are purely technologically imposed and are not influenced by economic decisions or by market conditions (i.e., conclusions about returns to scale are derived from the specific mathematical structure of the production function in isolation).

Example

When all inputs increase by a factor of 2, new values for output will be:

  • Twice the previous output if there are constant returns to scale (CRS)
  • Less than twice the previous output if there are decreasing returns to scale (DRS)
  • More than twice the previous output if there are increasing returns to scale (IRS)

Assuming that the factor costs are constant (that is, that the firm is a perfect competitor in all input markets), a firm experiencing constant returns will have constant long-run average costs, a firm experiencing decreasing returns will have increasing long-run average costs, and a firm experiencing increasing returns will have decreasing long-run average costs.[1][2][3] However, this relationship breaks down if the firm does not face perfectly competitive factor markets (i.e., in this context, the price one pays for a good does depend on the amount purchased). For example, if there are increasing returns to scale in some range of output levels, but the firm is so big in one or more input markets that increasing its purchases of an input drives up the input’s per-unit cost, then the firm could have diseconomies of scale in that range of output levels. Conversely, if the firm is able to get bulk discounts of an input, then it could have economies of scale in some range of output levels even if it has decreasing returns in production in that output range.

Formal definition

Formally, a production function {\displaystyle \ F(K,L)}\ F(K,L) is defined to have:

  • Constant returns to scale if (for any constant a greater than 0) {\displaystyle \ F(aK,aL)=aF(K,L)}\ F(aK,aL)=aF(K,L)
  • Increasing returns to scale if (for any constant a greater than 1) {\displaystyle \ F(aK,aL)>aF(K,L),}\ F(aK,aL)>aF(K,L),
  • Decreasing returns to scale if (for any constant a greater than 1) {\displaystyle \ F(aK,aL)<aF(K,L)}\ F(aK,aL)<aF(K,L)

where K and L are factors of production—capital and labor, respectively.

In a more general set-up, for a multi-input-multi-output production processes, one may assume technology can be represented via some technology set, call it {\displaystyle \ T}\ T, which must satisfy some regularity conditions of production theory.[4][5][6][7][8] In this case, the property of constant returns to scale is equivalent to saying that technology set {\displaystyle \ T}\ T is a cone, i.e., satisfies the property {\displaystyle \ aT=T,\forall a>0}\ aT=T,\forall a>0. In turn, if there is a production function that will describe the technology set {\displaystyle \ T}\ T it will have to be homogeneous of degree 1.

Formal example

The Cobb-Douglas functional form has constant returns to scale when the sum of the exponents adds up to one. The function is:

{\displaystyle \ F(K,L)=AK^{b}L^{1-b}}\ F(K,L)=AK^{{b}}L^{{1-b}}

where {\displaystyle A>0}A>0 and {\displaystyle 0<b<1}0<b<1. Thus

{\displaystyle \ F(aK,aL)=A(aK)^{b}(aL)^{1-b}=Aa^{b}a^{1-b}K^{b}L^{1-b}=aAK^{b}L^{1-b}=aF(K,L).}\ F(aK,aL)=A(aK)^{{b}}(aL)^{{1-b}}=Aa^{{b}}a^{{1-b}}K^{{b}}L^{{1-b}}=aAK^{{b}}L^{{1-b}}=aF(K,L).

But if the Cobb-Douglas production function has its general form

{\displaystyle \ F(K,L)=AK^{b}L^{c}}\ F(K,L)=AK^{{b}}L^{{c}}

with {\displaystyle 0<c<1,}0<c<1, then there are increasing returns if b + c > 1 but decreasing returns if b + c < 1, since

{\displaystyle \ F(aK,aL)=A(aK)^{b}(aL)^{c}=Aa^{b}a^{c}K^{b}L^{c}=a^{b+c}AK^{b}L^{c}=a^{b+c}F(K,L),}\ F(aK,aL)=A(aK)^{{b}}(aL)^{{c}}=Aa^{{b}}a^{{c}}K^{{b}}L^{{c}}=a^{{b+c}}AK^{{b}}L^{{c}}=a^{{b+c}}F(K,L),

which is greater than or less than {\displaystyle aF(K,L)}aF(K,L) as b+c is greater or less than one.

See also

References

  1. Jump up^ Gelles, Gregory M.; Mitchell, Douglas W. (1996). “Returns to scale and economies of scale: Further observations”. Journal of Economic Education. 27 (3): 259–261. JSTOR 1183297.
  2. Jump up^ Frisch, R. (1965). Theory of Production. Dordrecht: D. Reidel.
  3. Jump up^ Ferguson, C. E. (1969). The Neoclassical Theory of Production and Distribution. London: Cambridge University Press. ISBN 0-521-07453-3.
  4. Jump up^ • Shephard, R.W. (1953) Cost and production functions. Princeton, NJ: Princeton University Press.
  5. Jump up^ • Shephard, R.W. (1970) Theory of cost and production functions. Princeton, NJ: Princeton University Press.
  6. Jump up^ • Färe, R., and D. Primont (1995) Multi-Output Production and Duality: Theory and Applications. Kluwer Academic Publishers, Boston.
  7. Jump up^ Zelenyuk, V. (2013) “A scale elasticity measure for directional distance function and its dual: Theory and DEA estimation.” European Journal of Operational Research 228:3, pp 592–600
  8. Jump up^ Zelenyuk V. (2014) “Scale efficiency and homotheticity: equivalence of primal and dual measures” Journal of Productivity Analysis 42:1, pp 15-24.

Further reading

External links

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Thomas F. Madden — Empires of Trust: How Rome Built and Amerca Is Building A New World — Chalmers Johnson — Dismantling The Empire: America’s Last Best Hope — Videos

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“A nation can be one or the other, a democracy or an imperialist, but it can’t be both.

If it sticks to imperialism, it will, like the old Roman Republic, on which so much of our system was modeled, lose its democracy to a domestic dictatorship.”

~ Chalmers Johnson

(1931-2010)

empires of trustjpgmadden 2thomas f maddendismantling_the_empirenemisis_12the sorrows of empireblowbackchalmers_johnson

Remembering Chalmers Johnson and Frank W. Lewis

Chalmers Johnson, 1931-2010, on the Last Days of the American Republic

Chalmers Johnson – Speaking Freely

Domestic Democracy or Foreign Imperialism

DECLINE of EMPIRES: The Signs of Decay

TalkingStickTV – Chalmers Johnson – The Sorrows of Empire

The Bases Are Loaded: US Permanent Military Presence in Iraq

Chalmers Johnson: Militarism and the End of the Empire

What Does Blowback Mean in Politics?

Chalmers Johnson on the American Empire (2000)

The BLOWBACK SYNDROME: Oil Wars and Overreach

Conversations with History: Chalmers Johnson

Chalmers Johnson on American Hegemony

The Bully! Pulpit Show Classics: Mark Joseph Interviews Chalmers Johnson

Are We Rome? Ben Powell Compares the U.S. with the Roman Empire

Thomas Madden

From Wikipedia, the free encyclopedia
For other people named Thomas Madden, see Thomas Madden (disambiguation).
Thomas F. Madden
Madden2012.JPG

Madden, 2012
Born 1960
Residence St. Louis, Missouri
Nationality US
Alma mater University of New Mexico,University of Illinois
Occupation Historian
Employer Saint Louis University
Known for Crusades historian, Venicehistorian
Title Professor of History, Director of the Center for Medieval and Renaissance Studies, SLU
Website http://www.thomasmadden.org

Thomas F. Madden (born 1960) is an American historian, a former Chair of the History Department at Saint Louis University in St. Louis, Missouri, and Director of Saint Louis University’s Center for Medieval and Renaissance Studies.[1] A specialist on the Crusades, he has often commented in the popular media after the events of September 11, to discuss topics such as how Muslims have viewed the medieval Crusades and their parallels to today’s interventions in the Middle East.[2][3][4][5] He has frequently appeared in the media, as a consultant for various programs on the History Channel and National Public Radio.[6] In 2007, he was awarded the Haskins Medal from the Medieval Academy of America, for his book Enrico Dandolo and the Rise of Venice, also a “Book of the Month” selection by the BBC History magazine. In 2012, he was named a Fellow of theJohn Simon Guggenheim Memorial Foundation.

Biography

Madden received his bachelor’s degree from the University of New Mexico in 1986, and his Masters (1990) and PhD (1993) degrees in History from the University of Illinois.

Madden is active in the Society for the Study of the Crusades in the Latin East,[7] and organizes panels for the Annual Symposium on Medieval and Renaissance Studies in Saint Louis, Missouri.[8] He is the Director of the Crusades Studies Forum and the Medieval Italy Prosopographical Database Project, both housed at Saint Louis University.

Awards

Writing

Madden has written numerous books and journal articles, including the “Crusades” entry for the Encyclopædia Britannica. His research specialties are ancient and medieval history, including the Fourth Crusade, as well as ancient and medieval Italian history. His 1997 book The Fourth Crusade: The Conquest of Constantinople was a selection of the History Book Club. He is also known for speaking about the ways that the history of the Crusades is often used for manipulation of modern political agendas.[13] His book, The New Concise History of the Crusades has been translated into seven foreign languages.

His book Enrico Dandolo and the Rise of Venice won multiple awards, including the 2007 Haskins Medal from the Medieval Academy of America and the Otto Gründler Prize from the Medieval Institute.[9][10] According to the Medieval Review, with this book “Madden more than ever stakes out his place as one of the most important medievalists in America at present.”[14]

His 2008 book, Empires of Trust, was a comparative study that sought elements in historic republics that led to the development of empires. In the case of Rome, he argued that their citizens and leaders acquired a level of trust among allies and potential enemies that was based upon an unusual rejection of hegemonic power. His most recent book, Venice: A New History is the culmination of decades of work in the archives and libraries of Venice.

Books

  • Venice: A New History, 2012, Viking
  • Crusades: Medieval Worlds in Conflict, 2010 Ashgate
  • Empires of Trust, 2008, Dutton/Penguin
  • The Fourth Crusade: Event, Aftermath, and Perceptions, 2008, Ashgate
  • Crusades: The Illustrated History, 2005, University of Michigan Press
  • Enrico Dandolo and the Rise of Venice, 2003, Johns Hopkins University Press
  • The Crusades: The Essential Readings, 2002, Blackwell
  • The New Concise History of the Crusades, 1999, Rowman & Littlefield
  • Medieval and Renaissance Venice, 1999, University of Illinois Press
  • The Fourth Crusade: The Conquest of Constantinople, 1997, University of Pennsylvania Press

Select popular articles

Select scholarly articles

  • “The Venetian Version of the Fourth Crusade: Memory and the Conquest of Constantinople in Medieval Venice,” Speculum 87 (2012): 311-44.
  • “The Latin Empire of Constantinople’s Fractured Foundation: The Rift Between Boniface of Montferrat and Baldwin of Flanders,” in The Fourth Crusade: Event, Aftermath, and Perceptions (Brookfield: Ashgate Publishing, 2008): 45-52.
  • “Food and the Fourth Crusade: A New Approach to the ‘Diversion Question,'” in Logistics of Warfare in the Age of the Crusades, John H. Pryor, ed. (Brookfield: Ashgate Publishing, 2006): 209-28.
  • “Venice, the Papacy, and the Crusades before 1204,” in The Medieval Crusade, Susan J. Ridyard, ed. (Woodbridge: Boydell and Brewer, 2004): 85-95.
  • “The Enduring Myths of the Fourth Crusade,” World History Bulletin 20 (2004): 11-14.
  • “The Chrysobull of Alexius I Comnenus to the Venetians: The Date and the Debate,” Journal of Medieval History 28 (2002): 23-41.
  • “Venice’s Hostage Crisis: Diplomatic Efforts to Secure Peace with Byzantium between 1171 and 1184,” in Ellen E. Kittell and Thomas F. Madden, eds., Medieval and Renaissance Venice (Urbana: University of Illinois Press, 1999): 96-108.
  • “Outside and Inside the Fourth Crusade,” The International History Review 17 (1995): 726-43.
  • “Venice and Constantinople in 1171 and 1172: Enrico Dandolo’s Attitude towards Byzantium,” Mediterranean Historical Review 8 (1993): 166-85.
  • “Vows and Contracts in the Fourth Crusade: The Treaty of Zara and the Attack on Constantinople in 1204,” The International History Review 15 (1993): 441-68.
  • “Father of the Bride: Fathers, Daughters, and Dowries in Late Medieval and Early Renaissance Venice,” Renaissance Quarterly 46 (1993): 685-711. (with Donald E. Queller)
  • “The Fires of the Fourth Crusade in Constantinople, 1203-1204: A Damage Assessment,” Byzantinische Zeitschrift 84/85 (1992): 72-93.
  • “The Serpent Column of Delphi in Constantinople: Placement, Purposes, and Mutilations,” Byzantine and Modern Greek Studies 16 (1992): 111-45.

Recorded lectures

History Channel documentaries

Notes

  1. Jump up^ Townsend, Tim (December 1, 2007). “Louis IX’s spirit of charity lives on in work of a city church”. St. Louis Post-Dispatch.
  2. Jump up^ Thompson, Bob (May 9, 2005). “How Muslims View the Crusades”. Washington Post.
  3. Jump up^ Mahoney, Dennis M. (May 6, 2005). “New view of Crusades abandons simple stereotypes”. Columbus Dispatch.
  4. Jump up^ Derbyshire, John (November 25, 2001). “For all their crimes, medieval Crusaders were our spiritual kin”. Star-Tribune (Minneapolis).
  5. Jump up^ Davis, Bob (September 23, 2001). “A war that began 1,000 years ago”. Fort Worth Star-Telegram.
  6. Jump up^ Media | Thomas F. Madden
  7. Jump up^ http://sscle.slu.edu/
  8. Jump up^ Annual Symposium on Medieval and Renaissance Studies
  9. ^ Jump up to:a b WMU News – Grundler Prize awarded for book on Venetian leader
  10. ^ Jump up to:a b MAA Haskins Medal Winner
  11. Jump up^ Fellow of the Medieval Academy of America
  12. Jump up^ [1]
  13. Jump up^ Madden, Thomas F. (November 2, 2001). “Crusade Propaganda”. National Review. Retrieved 2007-12-03.
  14. Jump up^ Johns Hopkins University Press | Books | Enrico Dandolo and the Rise of Venice

References

https://en.wikipedia.org/wiki/Thomas_Madden

Chalmers Johnson

From Wikipedia, the free encyclopedia
Chalmers Johnson
Born August 6, 1931
Phoenix, Arizona
Died November 20, 2010 (aged 79)
Cardiff-by-the-Sea, California
Occupation President, Japan Policy Research Institute, University of San Francisco; Professor emeritus of the University of California, San Diego
Genre Political Science
Literary movement Japan revisionists
Notable works Peasant Nationalism and Communist Power
MITI and the Japanese Miracle
Blowback
The Sorrows of Empire
Nemesis: The Last Days of the American Republic
Notable awards Before Columbus Foundation(2001)
Website
www.americanempireproject.com/johnson/index.asp

Chalmers Ashby Johnson (August 6, 1931 – November 20, 2010)[1] was an American author and professor emeritus of the University of California, San Diego. He served in the Korean War, was a consultant for the CIAfrom 1967 to 1973, and chaired the Center for Chinese Studies at the University of California, Berkeley from 1967 to 1972.[2] He was also president and co-founder with Steven Clemons of the Japan Policy Research Institute (now based at the University of San Francisco), an organization promoting public education about Japan and Asia.[3]

He wrote numerous books including, most recently, three examinations of the consequences of American Empire: Blowback, The Sorrows of Empire, and Nemesis: The Last Days of the American Republic. A former cold warrior, his fears for the US changed:

“A nation can be one or the other, a democracy or an imperialist, but it can’t be both. If it sticks to imperialism, it will, like the old Roman Republic, on which so much of our system was modeled, lose its democracy to a domestic dictatorship.”[4]

Biography

Johnson was born in 1931 in Phoenix, Arizona. He earned a BA in economics in 1953 and an M.A. and a Ph.D. in political science in 1957 and 1961 respectively. Both of his advanced degrees were from the University of California, Berkeley. Johnson met his wife Sheila, a junior at Berkeley, in 1956, and they were married in Reno, Nevada in May 1957.[5]

During the Korean War, Johnson served as a naval officer in Japan.[6] He was the communications officer on a ship (the LST 883) “tasked with ferrying Chinese prisoners of war from South Korea back to North Koreanports.”[5] He taught political science at the University of California from 1962 until he retired from teaching in 1992. He was best known early in his career for his scholarship on the subjects of China and Japan.[7]

Johnson set the agenda for 10 or 15 years in social science scholarship on China with his book on peasant nationalism. His book MITI and the Japanese Miracle, on the Japanese Ministry of International Trade and Industry was the preëminent study of the country’s development and it created the subfield of what could be called, the political economy of development. He coined the term “developmental state“. As a public intellectual, he first led the “Japan revisionists” who critiqued American neoliberal economics with Japan as a model; their arguments faded from view as the Japanese economy stagnated in the mid-90s and beyond. During this period, Johnson acted as a consultant for the Office of National Estimates, part of the CIA, contributing to analysis of China and Maoism.[8]

Johnson was elected a Fellow of the American Academy of Arts and Sciences in 1976. He served as Director of the Center for Chinese Studies (1967–72[2]) and Chair of the Political Science Department at Berkeley, and held a number of important academic posts in area studies. He was a strong believer in the importance of language and historical training for conducting serious research. Late in his career he became well known as a critic of “rational choice” approaches, particularly in the study of Japanese politics and political economy.

Johnson is, perhaps, best known today as a sharp critic of American imperialism. His book Blowback (2000) won a prize in 2001 from the Before Columbus Foundation, and was re-issued in an updated version in 2004. Sorrows of Empire, published in 2004, updated the evidence and argument from Blowback for the post-9/11 environment, and Nemesis concludes the trilogy. Johnson was featured as an expert talking head in the Eugene Jarecki-directed film Why We Fight,[3] which won the 2005 Grand Jury Prize at theSundance Film Festival. In the past, Johnson has also written for the Los Angeles Times, the London Review of Books, Harper’s Magazine, and The Nation.

The Blowback series

Johnson believed that the enforcement of American hegemony over the world constitutes a new form of global empire. Whereas traditional empires maintained control over subject peoples via colonies, since World War II the US has developed a vast system of hundreds of military bases around the world where it has strategic interests. A long-time Cold Warrior, he applauded the dissolution of the Soviet Union: “I was a cold warrior. There’s no doubt about that. I believed the Soviet Union was a genuine menace. I still think so.”[9] At the same time, however, he experienced a political awakening after the dissolution of the Soviet Union, noting that instead of demobilizing its armed forces, the US accelerated its reliance on military solutions to problems both economic and political. The result of this militarism (as distinct from actual domestic defense) is more terrorism against the U.S. and its allies, the loss of core democratic values at home, and an eventual disaster for the American economy. Of four books he wrote on this topic, the first three are referred to as The Blowback Trilogy:

  • Blowback: The Costs and Consequences of American Empire

Chalmers Johnson summarized the intent of Blowback in the final chapter of Nemesis.

“In Blowback, I set out to explain why we are hated around the world. The concept “blowback” does not just mean retaliation for things our government has done to and in foreign countries. It refers to retaliation for the numerous illegal operations we have carried out abroad that were kept totally secret from the American public. This means that when the retaliation comes – as it did so spectacularly on September 11, 2001 – the American public is unable to put the events in context. So they tend to support acts intended to lash out against the perpetrators, thereby most commonly preparing the ground for yet another cycle of blowback. In the first book in this trilogy, I tried to provide some of the historical background for understanding the dilemmas we as a nation confront today, although I focused more on Asia – the area of my academic training – than on the Middle East.”[10]
  • The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic

Chalmers Johnson summarizes the intent of The Sorrows of Empire in the final chapter of Nemesis.

The Sorrows of Empire was written during the American preparations for and launching of the invasions and occupations of Afghanistan and Iraq. I began to study our continuous military buildup since World War II and the 737 military bases we currently maintain in other people’s countries. This empire of bases is the concrete manifestation of our global hegemony, and many of the blowback-inducing wars we have conducted had as their true purpose the sustaining and expanding of this network. We do not think of these overseas deployments as a form of empire; in fact, most Americans do not give them any thought at all until something truly shocking, such as the treatment of prisoners at Guantanamo Bay, brings them to our attention. But the people living next door to these bases and dealing with the swaggering soldiers who brawl and sometimes rape their women certainly think of them as imperial enclaves, just as the people of ancient Iberia or nineteenth-century India knew that they were victims of foreign colonization.”[10]
  • Nemesis: The Last Days of the American Republic

Chalmers Johnson summarizes the intent of the book Nemesis.

“In Nemesis, I have tried to present historical, political, economic, and philosophical evidence of where our current behavior is likely to lead. Specifically, I believe that to maintain our empire abroad requires resources and commitments that will inevitably undercut our domestic democracy and in the end produce a military dictatorship or its civilian equivalent. The founders of our nation understood this well and tried to create a form of government – a republic – that would prevent this from occurring. But the combination of huge standing armies, almost continuous wars, military Keynesianism, and ruinous military expenses have destroyed our republican structure in favor of an imperial presidency. We are on the cusp of losing our democracy for the sake of keeping our empire. Once a nation is started down that path, the dynamics that apply to all empires come into play – isolation, overstretch, the uniting of forces opposed to imperialism, and bankruptcy. Nemesis stalks our life as a free nation.”[10]
  • Dismantling the Empire: America’s Last Best Hope

Johnson outlines how the United States can reverse American hegemony and preserve the American state. Dismantling the Empire was listed by the CIA in “The Intelligence Officer’s Bookshelf: Intelligence in Recent Public Literature”,[11] compiled and reviewed by Hayden B. Peake.[12]

Audio and video

Bibliography

Death

On November 20, 2010, Chalmers Johnson died after a long illness from complications of rheumatoid arthritis at his home in Cardiff-by-the-Sea. [14]

Notes

  1. Jump up^http://www.theatlantic.com/international/archive/2010/11/chalmers-johnson/66853/
  2. ^ Jump up to:a b “CCS History”, Center for Chinese Studies, Institute of East Asian Studies, University of California, Berkeley
  3. ^ Jump up to:a b AMY GOODMAN (February 27, 2007). “Chalmers Johnson: Nemesis: The Last Days of the American Republic”.Democracy Now!. Retrieved 2009-04-04.
  4. Jump up^ Chalmers Johnson, 1931–2010, on the Last Days of the American Republic
  5. ^ Jump up to:a b Sheila K. Johnson (2011-04-11) Chalmers Johnson vs. the Empire, Antiwar.com
  6. Jump up^ Chalmers Ashby Johnson. Blowback, Second Edition: The Costs and Consequences of American Empire (January 4, 2004 ed.). Holt Paperbacks. p. 288. ISBN 0-8050-7559-3.
  7. Jump up^ Johnston, Eric, “Japan hand Chalmers Johnson dead at 79“,Japan Times, 23 November 2010, p. 2.
  8. Jump up^ Nic Paget-Clarke (2004). “Interview with Chalmers Johnson Part 2. From CIA Analyst to Best-Selling Scholar”. In Motion Magazine. Retrieved 2009-04-04.
  9. Jump up^ Tom Engelhardt (March 22, 2006). “Cold Warrior in a Strange Land – Tom Engelhardt interviews Chalmers Johnson”. antiwar.com. Retrieved 2009-04-04.
  10. ^ Jump up to:a b c Nemesis: The Last Days of the American Republic By Chalmers Johnson, 2006, Page 278, ISBN 978-0-8050-7911-1
  11. Jump up^ https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol.-55-no.-1/the-intelligence-officers-bookshelf.html
  12. Jump up^ https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/contributors.html
  13. Jump up^ Listing on Allrovi.com
  14. Jump up^ Shapiro, T. Rees (November 25, 2010). “Renowned Asia scholar Chalmers Johnson dies at 79”. The Washington Post.

External links

https://en.wikipedia.org/wiki/Chalmers_Johnson

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Pronk Pops Show 674: May 6, 2016

Pronk Pops Show 673: May 5, 2016

Pronk Pops Show 672: May 4, 2016

Pronk Pops Show 671: May 3, 2016

Pronk Pops Show 670: May 2, 2016

Pronk Pops Show 669: April 29, 2016

Pronk Pops Show 668: April 28, 2016

Pronk Pops Show 667: April 27, 2016

Pronk Pops Show 666: April 26, 2016

Pronk Pops Show 665: April 25, 2016

Pronk Pops Show 664: April 24, 2016

Pronk Pops Show 663: April 21, 2016

Pronk Pops Show 662: April 20, 2016

Pronk Pops Show 661: April 19, 2016

Pronk Pops Show 660: April 18, 2016

Pronk Pops Show 659: April 15, 2016

Pronk Pops Show 658: April 14, 2016

Pronk Pops Show 657: April 13, 2016

Pronk Pops Show 656: April 12, 2016

Pronk Pops Show 655: April 11, 2016

Pronk Pops Show 654: April 8, 2016

Pronk Pops Show 653: April 7, 2016

Pronk Pops Show 652: April 6, 2016

Pronk Pops Show 651: April 4, 2016

Pronk Pops Show 650: April 1, 2016

Story 1: 12 Dallas Police Officers Shot In Ambush Assassination  with 5 Killed  –Shooter Killed By Robot With Explosive Device — Black Lives Matters Provoking Black Racism — Lying Lunatic Left — Dallas Police Chief Brown, Former President George W. Bush and President Barack Obama Speech at Dallas Memorial Service Honoring Police Officers — Videos

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DALLAS, TX - JULY 12: Police officers arrive at an interfaith memorial service, honoring five slain police officers, at the Morton H. Meyerson Symphony Center on July 12, 2016 in Dallas, Texas. A sniper opend fire following a Black Lives Matter march in Dallas killing five police officers and injuring 12 others. (Photo by Tom Pennington/Getty Images)

DALLAS, TX – JULY 12: Police officers arrive at an interfaith memorial service, honoring five slain police officers, at the Morton H. Meyerson Symphony Center on July 12, 2016 in Dallas, Texas. A sniper opend fire following a Black Lives Matter march in Dallas killing five police officers and injuring 12 others. (Photo by Tom Pennington/Getty Images)

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