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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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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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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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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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

long shotdallas-memorial-071226group picturefive slain victims

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)

flags on seats160712131731-slain-dallas-officers-large-169Obama_Police_Shootings.barack obamaObama-Bush-Dallas-police-chief-others-salute-fallen-officers-at-memorial-servicebush-obama-dallas-memorial-2016 candles dallas police officer with candledart and dallas police cars.jpg1224972-woman-places-flowers-at-memorialAPTOPIX-Police-Shootings-Protests-Dallas-5DPD-memorial-signdallas car headquarters police are flowerspolice officers car flowersflowers support of police police and child

city of dallas map cops bank of americacar

A Police officer stands guard at a baracade following the sniper shooting in Dallas on July 7, 2016. A fourth police officer was killed and two suspected snipers were in custody after a protest late Thursday against police brutality in Dallas, authorities said. One suspect had turned himself in and another who was in a shootout with SWAT officers was also in custody, the Dallas Police Department tweeted. / AFP / Laura Buckman (Photo credit should read LAURA BUCKMAN/AFP/Getty Images)

A Police officer stands guard at a baracade following the sniper shooting in Dallas on July 7, 2016.

police cars in dallas

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545521786-dallas-mayor-mike-rawlings-looks-on-during-a-press.jpg.CROP.promovar-mediumlargeKNXV Dallas Police Department Generic

DALLAS, TX - JULY 8: Flags fly at half mast at Dallas City Hall following the fatal shootings of five police officers on July 8, 2016 in Dallas, Texas. Micah Xavier Johnson has been identified as the suspected sniper in the fatal shooting of five police officers, and injuring seven more at a Black Lives Matter demonstration held on July 7, 2016 in Dallas, Texas. Stewart F. House/Getty Images/AFP

DALLAS, TX – JULY 8: Flags fly at half mast at Dallas City Hall following the fatal shootings of five police officers on July 8, 2016 in Dallas, Texas. Micah Xavier Johnson has been identified as the suspected sniper in the fatal shooting of five police officers, and injuring seven more at a Black Lives Matter demonstration held on July 7, 2016 in Dallas, Texas. Stewart F. House/Getty Images/AFP

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Dallas Shooting: 5 Police Officers Dead, More Injured

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Lester Holt’s interview with Hillary Clinton on Dallas police shooting and emails

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Lone Gunman Laughed, Sang During Standoff: Sources

Micah Xavier Johnson was killed by an explosive device attached to a robot after talks broke down. He was laughing and singing and not at all anxious during the standoff, a source said.

A North Texas Army veteran has been identified as the lone gunman responsible for the sniper attacks that killed five police officers and injured seven others in Dallas, authorities say.

Micah Xavier Johnson, of Mesquite, ambushed officers at a peaceful protest against nationwide police-involved shootings in Dallas on Thursday, police said.

The investigation into Johnson’s attack is still ongoing, and much remains is still unknown. But a picture is beginning to emerge of what went on inside the standoff — a source tells NBC Investigates that the 25-year-old was wounded by gunfire before being killed by a robot outfitted with a bomb — and how he prepared for the deadly assault.

LONE GUNMAN
Dallas Mayor Mike Rawlings confirmed Friday what multiple senior U.S. law enforcement officials had told NBC News Friday afternoon: Micah Xavier Johnson was the lone gunman in the rampage.

Police Search Micah Xavier Johnson’s Home

[DFW] Police Search Micah Xavier Johnson's Home

Dallas police searched the home Friday where shooting suspect Micah Xavier Johnson lived in North Texas. (Published Friday, July 8, 2016)

“This was a mobile shooter that had written manifestos on how to shoot and move, shoot and move, and he did that. He did his damage,” Rawlings said.

Officials told NBC News the investigation so far has yielded no additional suspects that may have played a role in the shooting. Texas Gov. Greg Abbott said Friday that there is no information about additional co-conspirators, but if any are found, they will be brought to justice.

Sources tell NBC News they have found no ties between Johnson and any extremist groups so far.

“We believe now, that the city is safe,” Rawlings said. “The suspect is dead, and we can move on to healing.”

We believe now, that the city is safe. The suspect is dead and we can move on to healing.

Dallas Mayor Mike Rawlings

INSIDE THE STANDOFF
Johnson was laughing and singing and not at all anxious during the standoff at the El Centro College building, a law enforcement source with knowledge of the incident told NBC 5 Investigates senior reporter Scott Friedman.

Johnson told police he had specifically been training for this event and working out in preparation for Thursday night. NBC 5 Investigates has also learned Johnson was wearing a military-style bulletproof vest.

Johnson told police he spent time in the military and was carrying a military-style rifle.

Johnson was hit by gunfire before going into the El Centro college building and that officers followed Johnson’s blood trail into the building, according to a law enforcement source.

Officers found him on the second floor, and then fired more rounds through a wall, apparently hitting Johnson again and wounding him.

After that, the negotiations began and spanned several hours. Johnson threatened many times to charge the officers, according to the source.

Johnson at first said that he only wanted to talk to black police officers – he said he didn’t want to have anything to do with white people. He shared police conspiracies and his dislike for police officers, a law enforcement source said.

Officers cornered Johnson and negotiated with him for hours before talks broke down, police said.

Army Veteran Identified As a Gunman in Dallas Protest Shootings

[DFW] Army Veteran Identified As a Gunman in Dallas Protest Shootings

A law enforcement source describes Micah Xavier Johnson’s behavior Thursday as cold and unafraid, saying he was laughing and singing during the hours-long standoff with police. (Published Friday, July 8, 2016)

Dallas Police Chief David Brown said Johnson told officers he was upset about recent shootings involving police and “wanted to kill white people, especially white officers.”

After an exchange of gunfire, officers attached an explosive device to a bomb robot and detonated it near Johnson, killing him, Brown said.

A police source tells NBC 5 Investigates that the robot carried 3/4 of a pound of C-4, a plastic explosive. The robot reportedly suffered some damage but may not be a total loss.

The decision on how much to use was made by Dallas SWAT officers trained in explosives along with ATF experts on the scene.

Reporter Recounts Experience After Shots Were Fired

[DFW] Reporter Recounts Experience After Shots Were Fired

(Published Friday, July 8, 2016)

A law enforcement source told Friedman on a scale of 1 to 10 this situation was a 30.

MILITARY HISTORY

The Army said Johnson served in the Army Reserve and did one tour of duty in Afghanistan, from November 2013 to July 2014.

Johnson was a private first class and his military occupational specialty was carpentry and masonry.

His service dates, as provided by the Army, were March 2009 to April 2015.

Dallas police said Johnson has no criminal history.

During a search of his home Friday, detectives found bomb making materials, ballistic vests, rifles, ammunition and a personal journal of combat tactics, police said.

Lone Gunman Laughed, Sang During Standoff: Sources | NBC 5 Dallas-Fort Worth

http://www.nbcdfw.com/news/local/Dallas-Police-Identify-Gunman-in-Dallas-Protest-Shootings-386015971.html#ixzz4DvwXgqSv

 

Dallas shooting victims: three police officers identified as colleagues mourn

Tributes pour in for transit officer Brent Thompson, who was recently married, and Dallas police officers Patrick Zamarripa and Michael Krol

victoms
From left to right: Michael Krol, Patrick Zamarripa and Brent Thompson.

The identities of three of the five officers who died in the mass shooting that targeted police in Dallas emerged on Friday morning, as family, friends and the public paid tribute.

They include a newlywed transit officer, a Dallas police department officer who had expressed love for his job and his country, and a Detroit-area native whose family said it was his life’s dream to become an officer. Seven other officers were injured as sniper fire broke out while police were patrolling a peaceful protest in Dallas on Thursday evening organized to demonstrate against the police shooting deaths of Philando Castile in Minnesota and Alton Sterling in Louisiana earlier this week.
Dallas police shootings: what we know so far

Brent Thompson

Brent Thompson, 43, was killed in the gunfire and was the first officer of the Dallas area rapid transit (Dart) division to be killed in the line of duty since the department was established in 1989. The force provides law enforcement on the city’s bus, light rail, commuter rail and high-occupancy road lanes in a transit system serving Dallas and 12 suburbs in the greater metropolis.

Thompson joined the division in 2009. The Dart chief, James Spiller, said: “He was an outstanding patrol officer as well as a rail officer.”

Thompson married a fellow Dart officer just last month, said Spiller on NBC Today.

“He was recently married in the last two weeks, so this is very heartbreaking. We will definitely miss him, and we are also making sure his family is taken care of,” he said.

A statement from Dart said: “Our hearts are broken.”

A picture was posted on Twitter of Thompson with his grandson.

Before joining the mass transit police, Thompson worked with US police officers in Iraq and Afghanistan for the military contractor Dyncorp, according to his LinkedIn page.

Patrick Zamarripa
Tributes were posted on social media for the Dallas police department officer Patrick Zamarripa, 32, on Friday morning, with a family member sharing a picture of the officer with his father.

One post from his stepbrother, Dylan Martinez, read: “No father should have to bury his son. You are a hero, Patrick. Love you man.…”

Patrick Zamarripa

Patrick Zamarripa. Photograph: @KDylanMartinez/Twitter
He was described as a family man and a military veteran who had survived three tours in Iraq, according to the Washington Post.

On Zamarripa’s Twitter page, he had written: “Addicted to the thrill of this job. I own the night. I love my Country, Texas, Family, God, Friends, and Sports! Don’t Tread on Me! ’Merica.”

On the Fourth of July, Zamarripa posted a patriotic tweet, saying: “Happy Birthday to the greatest country on the face of this planet. My beloved America!”

He had also tweeted about getting ready to police a recent rally for Donald Trump in Dallas and posted in support of the victims of the mass shooting at the gay nightclub Pulse, in Orlando.

He has been hailed as a hero on social media.

 

Michael Krol

Michael Krol, 40, became an officer in the Dallas police department in 2007 after previously working in his local county jail system in Michigan.

Krol worked for the Wayne County sheriff’s office in the county jail system from 2003-2007, according to a statement.

His uncle, Jim Ehlke, told WDVI his nephew had a passion for helping people and that being an officer was his life dream.

“He got into law enforcement and worked really hard to be a police officer. He spent some time at the correctional facility. It wasn’t quite what he was looking for, so he worked pretty hard to find a job and got one in Dallas,” Ehlke said. “He was all in, he was all in.”
“He knew the danger of the job but he never shied away from his duty as a police officer,” Krol’s mother, Susan Ehlke, told WXYZ. “He was a great, caring person and wanted to help people. A wonderful son, brother, uncle, nephew and friend.”

He lived in the Dallas-Fort Worth area with his girlfriend, ABC also reported.

The Wayne County sheriff’s office issued a statement on Friday morning.

“We are saddened by the loss of the dedicated officers in Dallas – one of whom was a former member of this agency – and also the wounding of the other officers,” said sheriff Benny Napoleon . “Those officers made the ultimate sacrifice and died honoring their oaths to protect and serve. Our thoughts and prayers go out to their families and also the Dallas police department,” he added.

The other victims are believed to be Dallas police officers, but they have not yet been identified.

https://www.theguardian.com/us-news/2016/jul/08/dallas-protest-shooting-police-victims-named-brent-thompson-patrick-zamarripa

Army Veteran Identified As a Gunman in Dallas Protest Shootings

Micah Xavier Johnson was killed by an explosive device attached to a robot after talks broke down. He was laughing and singing and not at all anxious during the standoff, a source said.

A North Texas Army veteran has been identified as the lone gunman responsible for the sniper attacks that killed five police officers and injured seven others in Dallas, authorities say.

Micah Xavier Johnson, of Mesquite, ambushed officers at a peaceful protest against nationwide police-involved shootings in Dallas on Thursday, police said.

The investigation into Johnson’s attack is still ongoing, and much remains is still unknown. But a picture is beginning to emerge of what went on inside the standoff — a source tells NBC Investigates that the 25-year-old was wounded by gunfire before being killed by a robot outfitted with a bomb — and how he prepared for the deadly assault.

LONE GUNMAN
Dallas Mayor Mike Rawlings confirmed Friday what multiple senior U.S. law enforcement officials had told NBC News Friday afternoon: Micah Xavier Johnson was the lone gunman in the rampage.

We believe now, that the city is safe. The suspect is dead and we can move on to healing.

Dallas Mayor Mike Rawlings

“This was a mobile shooter that had written manifestos on how to shoot and move, shoot and move, and he did that. He did his damage,” Rawlings said.

Officials told NBC News the investigation so far has yielded no additional suspects that may have played a role in the shooting. Texas Gov. Greg Abbott said Friday that there is no information about additional co-conspirators, but if any are found, they will be brought to justice.

Sources tell NBC News they have found no ties between Johnson and any extremist groups so far.

“We believe now, that the city is safe,” Rawlings said. “The suspect is dead, and we can move on to healing.”

Dallas Shooter Laughed, Sang During Standoff: Source

[DFW]Dallas Shooter Laughed, Sang During Standoff: Source

A North Texas Army veteran has been identified as a gunman responsible for the sniper attacks that killed five police officers and injured seven others in Dallas, according to authorities. According to a law enforcement source, Micah Xavier Johnson laughed and sang during an hours-long standoff with police. (Published 3 hours ago)

INSIDE THE STANDOFF
Johnson was laughing and singing and not at all anxious during the standoff at the El Centro College building, a law enforcement source with knowledge of the incident told NBC 5 Investigates senior reporter Scott Friedman.

Johnson told police he had specifically been training for this event and working out in preparation for Thursday night. NBC 5 Investigates has also learned Johnson was wearing a military-style bulletproof vest.

Johnson told police he spent time in the military and was carrying a military-style rifle.

Johnson was hit by gunfire before going into the El Centro college building and that officers followed Johnson’s blood trail into the building, according to a law enforcement source.

Officers found him on the second floor, and then fired more rounds through a wall, apparently hitting Johnson again and wounding him.

After that, the negotiations began and spanned several hours. Johnson threatened many times to charge the officers, according to the source.

Johnson at first said that he only wanted to talk to black police officers – he said he didn’t want to have anything to do with white people. He shared police conspiracies and his dislike for police officers, a law enforcement source said.

Officers cornered Johnson and negotiated with him for hours before talks broke down, police said.

Dallas Police Chief, Mayor 7:30 A.M. Update (Raw Video)

[DFW] Dallas Police Chief, Mayor 7:30 A.M. Update (Raw Video)

Dallas Police Chief David Brown and Mayor Mike Rawlings provided a 7:30 a.m. update on the shootings in downtown Dallas. “It has been a long, long morning,” said Mike Rawlings, mayor of Dallas. Here is the full 17-minutes of remarks with what was known at the time, including the use of a robot bomb used to kill the suspect. (Published Friday, July 8, 2016)

Dallas Police Chief David Brown said Johnson told officers he was upset about recent shootings involving police and “wanted to kill white people, especially white officers.”

After an exchange of gunfire, officers attached an explosive device to a bomb robot and detonated it near Johnson, killing him, Brown said.

A law enforcement source told Friedman on a scale of 1 to 10 this situation was a 30.

MILITARY HISTORY

AG Lynch: ‘The Answer Is Never Violence’

[NATL] Attorney General: 'The Answer Is Never Violence'

Attorney General Loretta Lynch denounced the sniper attack that killed five police officers in Dallas on Thursday, urging people to reflect on “the country that we want to build and the kind of society that we are choosing to pass on to our children.” (Published 3 hours ago)

The Army said Johnson served in the Army Reserve and did one tour of duty in Afghanistan, from November 2013 to July 2014.

Johnson was a private first class and his military occupational specialty was carpentry and masonry.

His service dates, as provided by the Army, were March 2009 to April 2015.

Dallas police said Johnson has no criminal history.

During a search of his home Friday, detectives found bomb making materials, ballistic vests, rifles, ammunition and a personal journal of combat tactics, police said.


 

http://www.nbcdfw.com/news/local/Dallas-Police-Identify-Gunman-in-Dallas-Protest-Shootings-386015971.html

What we know – and what we don’t know – about the Dallas protest shooting

What we know

  • Five police officers have been killed and at least seven more injured after shots were fired during an anti-violence protest in Dallas, Texas, on Thursday evening.
  • Three officers have been identified. One of the dead officers has been named as Brent Thompson, 43 – the first Dart (transit) officer to be killed in the line of duty. Another was identified by his family as officer Patrick Zamarripa. Michael Krol, a native of Detroit who joined the Dallas police department in 2007, was named on Friday.
https://interactive.guim.co.uk/uploader/embed/2016/07/dallas_aerial/giv-12515klE9qBu6X4vR/
  • Barack Obama condemned the killings as “a vicious, calculated and despicable attack on law enforcement”. Speaking in Warsaw, where he is attending a two-day Nato summit, Obama again called for gun control. “When people are armed with powerful weapons unfortunately it makes attacks like these more deadly and more tragic,” he said.
  • Three people have been detained by police: a woman who was stopped close to the garage, plus two people who were stopped in a dark Mercedes.
  • A fourth suspect was identified as Micah Johnson, 25, a Texas law enforcement official told the AP. Johnson died after an armed standoff with police on a second floor parking lot close to El Centro College. The mayor of Dallas, Mike Rawlings, said he did not know how the man died or what weapons had been found on him, but that police had used explosives to “blast him out”. Johnson said he wanted to “kill white people, especially white officers”, according to Dallas police chief David Brown. During hours of negotiations with police, Johnson said he was unaffiliated with any groups and “did this alone”. Brown said the suspect was upset about Black Lives Matter, the recent shootings and white people.
  • Johnson was a US army reservist and veteran of the Afghanistan war, the US army has confirmed. He had no known criminal record or ties to terrorism, a law enforcement official told CNN.
  • A police robot was used to kill Johnson. Dallas police used a bomb-disposal robot with an explosive device on its manipulator arm. Experts believe it was the first time a lethally armed robot has been used by police.
  • No bombs were found after two police searches. Major Max Geron of Dallaspolice tweeted: “Primary and secondary sweeps for explosives are complete and no explosives found.”
  • One civilian was also wounded: Shetamia Taylor, who was attending the protest with her sons, was shot in the leg but her injuries are not thought to be life-threatening.
  • Mark Hughes, who mistakenly became a suspect after being pictured holding a long rifle in a photo circulated by the police department, has been released after turning himself in. “I could easily have been shot,” he told CBS, adding that he was not satisfied with a police apology after getting death threats on social media.

What we don’t know

  • The motive for the killing. The shootings came at the end of a peaceful Black Lives Matter protest sparked by the killing of two black men by police officers in separate incidents earlier this week. Obama said: “We will learn more about their twisted motivations, but let’s be clear; there is no possible justification for these kinds of attacks or any violence against law enforcement.”
  • How many shooters were involved? At least one shooter opened fire from an elevated position. It is unclear whether more than one opened fire.
  • Whether the suspects worked together to launch the attack. Johnson told police that he “did this alone”. Brown later told a crowd at an interfaith vigil that the attack, “was a well planned, well thought out, evil tragedy by these suspects, and we won’t rest until we bring everyone involved to justice.”
  • The names of two victims. Three officers have been identified.

https://www.theguardian.com/us-news/2016/jul/08/dallas-shootings-what-we-know-so-far

Lynch to Dallas protesters: ‘Do not be discouraged’

Attorney General Loretta Lynch on Friday encouraged protesters not to allow the “heinous violence” that occurred in Dallas to silence their “important” voices.
Five police officers died and seven more were wounded in an ambush during a peaceful rally in Dallas on Thursday to protest the deaths of black men in Louisiana and Minnesota who were shot dead by police this week. Two civilians were also injured Thursday.
Story Continued Below

Lynch stressed that she is “deeply grateful” to law enforcement’s commitment to difficult and dangerous work to keep America safe but vowed that the Justice Department would do all it can to help. And she urged peaceful protesters not to give up.

“I want you to know that your voice is important,” Lynch said Friday during a news conference at the Justice Department. “Do not be discouraged by those who would use your lawful actions as cover for their heinous violence. We will continue to safeguard your constitutional rights and to work with you in the difficult mission of building a better nation and a brighter future.”
Lynch announced that the Justice Department will offer assistance to local law enforcement in Dallas, a city she described as a community “severely shaken and deeply scarred by an unfathomable tragedy.” She said DOJ and the agencies within it, including the FBI and U.S. Attorney’s Office, will work alongside state and local officials there.
“We intend to provide any assistance we can to investigate this attack and also to help heal a community that has been severely shaken and deeply scarred by an unfathomable tragedy,” she said. “This is an unfolding situation. We will be providing additional information when it is available and appropriate. But more so, this has been a week of profound grief and heartbreaking loss.”
Thursday’s protest was held in the wake of the fatal shootings of Alton Sterling, a 37-year-old whose death outside a Baton Rouge convenience store was captured on video, and Philando Castile, a 32-year-old whose fiancée filmed the aftermath of his death via Facebook live in Falcon Heights.
The Justice Department has opened a civil rights investigation into the Louisiana encounter, and Lynch said DOJ will offer assistance to local officials leading the investigation in Minnesota.

Lynch mourned the “devastating loss” of the slain officers and empathized with the sentiments of much of the country, as Americans try to cope with the back-to-back police-involved killings this week that each gained national attention.
“Americans across our county are feeling a sense of helplessness, of uncertainty and of fear,” Lynch said. “And these feelings are understandable, and they are justified. But the answer must not be violence. The answer is never violence.”
The answer, Lynch maintained, is action — “calm, peaceful, collaborative and determined action,” she said. “We must continue working to build trust between communities and law enforcement. We must continue working to guarantee every person in this country equal justice under the law. And we must take a hard look at the ease with which wrongdoers can get their hands on deadly weapons and the frequency with which they use them.”
The DOJ chief called on Americans to consider what kind of country they want to pass on to future generations and to shun divisive impulses.
“We must reflect on the kind of country that we want to build and the kind of society that we are choosing to pass on to our children,” Lynch said. “And above all, we must reject the easy impulses of bitterness and rancor and embrace the difficult work — but the important work, the vital work — of finding a path forward together. And above everything, we must remind ourselves that we are all Americans, and that as Americans, we share not just a common land but a common life.”
And those lives lost this week, Lynch said, came from different neighborhoods and backgrounds but will be grieved by all.
“Today, they’re mourned by officers, by residents, by family and friends, by men and women and children who loved them, who needed them and who will miss them always,” she said. “They are mourned by all of us. To the families of all who lost their lives in this series of tragedies, we share your pain and your loss.”

http://www.politico.com/story/2016/07/loretta-lynch-dallas-shooting-225296#ixzz4Ds2Xz5Y1

 

SICK: ‘BLACK LIVES MATTER’ SUPPORTERS CELEBRATE MURDER OF DALLAS COPS

BLM agitators joyful about slaughter of “pigs”

‘Black Lives Matter’ supporters responded to the sniper attack in Dallas by celebrating the murder of the five police officers who were gunned down in cold blood.

BLM sympathizers took to Twitter to express their joy at the carnage, with one commenting, “Y’all pigs got what was coming for y’all.”

“Next time a group wants to organize a police shoot, do like Dallas tonight, but have extra men/women to flank the Pigs!,” added another.

“Dude hell yeah someone is shooting pigs in dallas. Solidarity,” commented another user.

“DALLAS keep smoking dem pigs keep up the work,” remarked another.

Last night’s events in Dallas were as painfully predictable as they were tragic.

As I wrote almost a year ago after BLM supporters had plotted to bomb a police station in Ferguson, “Black Lives Matter cannot be described as anything other than a domestic terrorist organization.”

This is what I wrote nearly a year ago about , but the media kept giving the group a free pass.

One had to look no further than the fact that the ideological guru behind ‘Black Lives Matter’ – the individual whom its founders cite as their inspiration – Assata Shakur – is a convicted cop killer who is on the FBI’s ‘Most Wanted Terrorists’ list.

BLM protesters have also repeatedly invoked violent rhetoric. During a march in New York, demonstrators chanted, “What do we want? Dead cops. When do we want it? Now!”

BLM agitators have also used the refrain “pigs in a blanket, fry ’em like bacon!” on numerous occasions to promote violence against police officers.

A selection of tweets illustrating how ‘Black Lives Matter’ supporters are celebrating last night’s sniper attack appears below.

dude hell yeah someone is shooting pigs in dallas. solidarity

THE ROOTS OF BLACK LIVES MATTER UNVEILED

Special report reveals stunner: Except for website, there is no actual organization

Published: 01/16/2016
Read more at http://www.wnd.com/2016/01/the-roots-of-black-lives-matter-unveiled/#D1DZi6TVEDpfQLRh.99

Editor’s Note: This is a special report from the AIM Center for Investigative Journalism.

By James Simpson

image: http://www.wnd.com/files/2016/01/BLM1.jpg

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The Black Lives Matter movement (BLM) casts itself as a spontaneous uprising born of inner city frustration, but is, in fact, the latest and most dangerous face of a web of well-funded communist/socialist organizations that have been agitating against America for decades. Its agitation has provoked police killings and other violence, lawlessness and unrest in minority communities throughout the U.S. If allowed to continue, that agitation could devolve into anarchy and civil war. The BLM crowd appears to be spoiling for just such an outcome.

Nevertheless, BLM appears to be exercising considerable leverage over the Democratic Party, in part by pressuring and intimidating Democratic candidates such as Hillary Clinton and Bernie Sanders (VT) into embracing their cause. The movement could also assist President Obama’s exploitation of racial divisions in society beyond his final term in office.

This report examines in detail, for the first time, how communist groups have manipulated the cause of Black Lives Matter, and how money from liberal foundations has made it all possible.

Leftist origins

Exploiting blacks to promote Marxist revolution is an old tactic. The late Larry Grathwohl, former FBI informant in the Weather Underground, understood from personal experience how white communists exploited blacks and other minority groups. He said that Weather Underground terrorists Bill Ayers and Bernardine Dohrn regarded Barack Obama, whose political career they sponsored, as a tool – a puppet – to use against white America. Obama’s legacy at home will certainly include more racial division.

BLM launched in 2013 with a Twitter hashtag, #BlackLivesMatter, after neighborhood watchman George Zimmerman was acquitted in the Trayvon Martin killing. Radical Left activists Alicia Garza, Patrisse Cullors and Opal Tometi claim credit for the slogan and hashtag. Following the Michael Brown shooting in August 2014, Dream Defenders, an organization led by Working Families Party (ACORN) activist and Occupy Wall Street anarchist Nelini Stamp, popularized the phrase “Hands Up–Don’t Shoot!” which has since become BLM’s widely recognized slogan.

Garza, Cullors and Tometi all work for front groups of the Freedom Road Socialist Organization (FRSO), one of the four largest radical Left organizations in the country. The others are the Communist Party USA (CPUSA), Democratic Socialists of America (DSA), and the Committees of Correspondence for Democracy and Socialism (CCDS). Nelini Stamp’s ACORN – now rebranded under a variety of different names – works with all four organizations, and Dream Defenders is backed by the Service Employees International Union (SEIU), the ACLU, the Southern Poverty Law Center and others.

FRSO is a hereditary descendant of the New Communist Movement, which was inspired by Mao and the many communist revolutions throughout the world in the 1960s and 1970s. FRSO split into two separate groups in 1999, FRSO/Fight Back and FRSO/OSCL (Freedom Road Socialist Organization/Organizaciόn Socialista del Camino para la Libertad). Black Lives Matter and its founders are allied with the latter group. Future references to FRSO in this article refer to FRSO/OSCL.

FRSO is comprised of dozens of groups. The radical Left model is based on alliances of many organizations that are working on separate issues but dedicated ultimately to the same thing: overthrowing our society in order to replace it with a hardcore socialist (read communist) one.

The goal is to present the appearance of a formidable mass of organizations. Some are large, but many are little more than a website or Facebook page. When necessary, they can all come together to promote the cause du jour. The deaths of Trayvon Martin, Michael Brown and others were mere pretexts for socialist agitation. The real enemy is “the system.” This is why the BLM crowd denies the facts of those cases. As Stamp has said, “we are actually trying to change the capitalist system we have today because it’s not working for any of us.”

BLM is one of many projects undertaken by the FRSO. Except for the website, blacklivesmatter.com, there is no actual organization. The website implicitly acknowledges this, describing #BlackLivesMatter as “an online forum intended to build connections between Black people and our allies to fight anti-Black racism, to spark dialogue among Black people, and to facilitate the types of connections necessary to encourage social action and engagement.”

FRSO membership is disproportionately represented by blacks, gays and women, and self-consciously emphasizes those issues. Garza, who penned a “Herstory” of BLM, is a ” queer,” black veteran activist involved in numerous FRSO organizations. Her resumé includes:

Cullors describes herself as a “working class, queer, black woman.” She claims the country killed her father, a drug addict. At a 2015 Netroots Nation conference, Cullors led chants shouting, “If I die in police custody, burn everything down… rise the f— up! That is the only way mother—–s like you will listen!” Cullors founded and directs Dignity and Power Now (DPN), which claims to seek “dignity and power of incarcerated people, their families, and communities.”

Cullors was trained by Eric Mann, a former Weather Underground leader who exhorts followers to become “anti-racist, anti-imperialist” activists. Mann runs another FRSO front, the Labor/Community Strategy Center. Like most professional leftists, he makes good money – over $225,000 annually – living in “the system” he advocates destroying.

Tometi is the daughter of illegal aliens from Nigeria. While in college, she worked for the ACLU defending illegal aliens against “vigilantes” opposed to illegal immigration. She is currently the executive director of Black Alliance for Just Immigration (BAJI).

The funding

FRSO/BLM organizations are generously supported by a universe of wealthy foundations. Some, like those employing BLM founders Garza and Tometi, receive money directly. Others, like Cullors’ DPN, are financed by organizations designed specifically to underwrite the activities of others. Amounts reflect donations received over approximately the past decade.

NDWA (Garza) – 2013 revenues were $5.5 million. The NDWA board includes two members of CASA de Maryland, the Illegals’ version of ACORN. CASA also received a grant from NDWA in 2013, as did the radical Left Institute for Policy Studies. NDWA receives funding from the following foundations:

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POWER (Garza) – 2013 revenues were $456,676, including $92,173 in government grants. POWER evolved from the now defunct communist group STORM (Standing Together to Organize a Revolutionary Movement). Obama’s former “Green Jobs Czar” the self-described communist, Van Jones, served on STORM’s board.

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RTTC (Garza) – 2013 revenues were $248,190. RTTC is a nationwide network of activist organizations that resists the gentrification of inner cities because it displaces “low-income people, people of color, marginalized LGBTQ communities, and youths of color…”

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SOUL (Garza) – Despite its small size (2013 revenues at $110,304), SOUL claims to have trained 679 organizers in 2013.

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BAJI (Tometi) – 2013 revenues were $321,570. This modest organization only lists two full-time staff, yet receives support from many recognizable foundations.

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Cullors’ DPN is underwritten by Community Partners, a Los Angeles based non-profit with a $24 million budget (including $4 million in government grants) that fiscally sponsors non-profits. It is not an FRSO organization.

Advancement Project (AP) – an FRSO group that funds a variety of radical causes. AP sees America as a racist, oppressive nation and, according to Discover the Networks, “works to organize ‘communities of color’ into politically cohesive units while disseminating its leftist worldviews and values as broadly as possible by way of a sophisticated communications department.” Its 2013 revenues were $11.3 million.

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Movement Strategy Center (MSC) – also facilitates funding, development and advancement of FRSO organizations. Its 2013 revenues were $7.5 million, including $156,032 in government grants.

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The return of Van Jones

Mainstream funders have helped fund BLM as well. For example, United Way has partnered with A&E and iHeartMedia to create Shining the Light Advisors, a committee of “nationally known experts and leaders in racial and social justice,” to oversee grant disbursements. These “advisors” include such radicals as Van Jones, Advancement Project co-director Judith Browne Dianis, and Rinku Sen, president of the Applied Research Center (ARC).

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BLM’s mission includes a kitchen sink of favored radical Left causes, including support of poverty elimination programs, prison deinstitutionalization, illegal immigration and gay rights. Highlighting FRSO’s orientation toward gay blacks, it describes how “Black, queer and trans folks bear a unique burden from a hetero-patriarchal society that disposes of us like garbage and simultaneously fetishizes us and profits off of us, and that is state violence.”

Its wide network of affiliates and partner organizations like CPUSA and ACORN allows BLM to turn out large crowds. Many participate simply to protest, commit violence, loot or all three.

FRSO was prominent at the Ferguson protests and videoed the event. It has even created a Black Lives Matter button. Following are more FRSO organizations involved with BLM. (Funding estimates provided when known).

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  • Showing Up for Racial Justice (SURJ) is a “national network of groups and individuals organizing White people for racial justice.” SURJ quotes Garza saying that “We need you defecting from White supremacy and changing the narrative of White supremacy by breaking White silence.”
  • Strategic Concepts in Organizing and Policy Education (SCOPE) – Its 2013 revenues were $2.8 million. Led by Anthony Thigpenn, a former Black Panther and board member of the Apollo Alliance. Apollo is the secretive alliance of labor, environment and other Left activists that formulated Obama’s trillion dollar “stimulus” plan. Board member Van Jones described Apollo “as sort of a grand unified field theory for progressive Left causes.” It is now a project of the Blue Green Alliance.

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BLM groups have also joined with CPUSA, CCDS, DSA, SEIU, Color of Change and many others. Anarchist and top OWS organizer Lisa Fithian, who orchestrated the 1999 Seattle World Trade Organization riots, trained Ferguson protesters. Fithian says “Create crisis, because crisis is that edge where change is possible.”

Fithian echoes Richard Cloward and Frances Fox Piven – creators of the infamous Cloward/Piven Crisis Strategy – who spent decades attempting to provoke ghetto blacks to riot, because “Poor people can advance only when ‘the rest of society is afraid of them.’” Rasheen Aldridge, seen above meeting President Obama, was a leader of the Ferguson protests. He has participated in numerous CPUSA events in 2013, 2014 and 2015. Another prominent CPUSA member active in BLM protests is Michael McPhearson, who leads the Don’t Shoot Coalition.

Carl Davidson and Pat Fry, co-chairs of CCDS, exploited the revolutionary atmosphere of the Ferguson riots to create an eight-point plan for “Left Unity” demanding “a common aspiration for socialism.”

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Missourians Organizing for Reform and Empowerment (MORE) is Missouri’s rebranded ACORN group. It created an illustrative chart offering a snapshot of the Left’s grievance agenda. Capitalism is always the problem. Socialism is always the solution.

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Interestingly, MORE doesn’t believe in socialism when it is footing the bill. MORE promised to pay Ferguson protesters $5,000/month to hang out and cause trouble. But just as ACORN stiffed its employees while preaching socialist generosity, MORE stiffed the protesters.

Islamist organizations have also jumped on the BLM bandwagon, reminding us of the unholy alliance that exists between them and the radical Left. In September 2015, the Muslim Brotherhood front-group Council on American Islamic Relations (CAIR) joined BLM activists in storming California Governor Jerry Brown’s office. CAIR also participated in the Ferguson protests. Meanwhile ISIS is recruiting American blacks for its cause.

Intellectual genealogy of Black Lives Matter

“We must be ready to employ trickery, deceit, law-breaking, withholding and concealing truth… We can and must write in a language which sows among the masses hate, revulsion, and scorn toward those who disagree with us.” – Vladimir Lenin

That quote from the Soviet Union’s first leader captures the entire essence of the Left’s strategy. No matter what the issue, no matter what the facts, the Left advances a relentless, hate-filled narrative that America is irredeemably evil and must be destroyed as soon as possible. The BLM movement is only the latest but perhaps most dangerous variant on this divisive theme.

Communists use language and psychology as weapons. Their constant vilification is a form of psychological terror. It puts America and Americans on trial. The verdict is always guilty. Facts don’t matter because the Left does not want to resolve the problems they complain about. They use those problems to agitate and provoke, hoping conflict becomes unavoidable – thereby creating a self-fulfilling prophecy. Their hatred is tactical.

Obama’s favorite Harvard professor Derrick Bell devised Critical Race Theory, which exemplifies Lenin’s strategy as applied to race. According to Discover the Networks:

“Critical race theory contends that America is permanently racist to its core, and that consequently the nation’s legal structures are, by definition, racist and invalid … members of ‘oppressed’ racial groups are entitled – in fact obligated – to determine for themselves which laws and traditions have merit and are worth observing…”

Bell’s theory is in turn an innovation of Critical Theory – developed by philosophers of the communist Frankfurt School. The school was founded in Frankfurt, Germany in 1923. Its Jewish communist scholars fled Hitler’s Germany in the 1930s, relocating to Columbia Teachers College in New York. Critical Theory – which discredits all aspects of Western society – rapidly infected the minds of newly-minted college professors, who then spread its poison throughout the university system. We know it today as political correctness.

White privilege

The “racist” narrative was turbocharged with the concept of “White Privilege,” the notion that whites – the dominant group in capitalist America – are irretrievably racist, sexist, homophobic, xenophobic, fill-in-the-blank-ophobic, imperialistic oppressors who exploit everyone. Whites are the only true evil in the world and should be exterminated.

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The “White Skin Privilege” idea was created in 1967 by Noel Ignatiev, an acolyte of Bell and professor at Harvard’s W.E.B. Du Bois Institute (Du Bois was a Communist black leader who helped found the NAACP). Ignatiev was a member of CPUSA’s most radical wing, the Maoist/Stalinist Provisional Organizing Committee to Reconstitute the Marxist-Leninist Communist Party (POC). POC was the intellectual forerunner to FRSO.

Writing under the alias Noel Ignatin, Ignatiev co-authored an SDS pamphlet with fellow radical Ted Allen, titled “White Blindspot.” In 1992 he co-founded “Race Traitor: Journal of the New Abolitionism.” Its first issue coined the slogan, “Treason to whiteness is loyalty to humanity.” Its stated objective was to “abolish the white race.” More specifically, the New Abolitionist newsletter stated:

“The way to abolish the white race is to challenge, disrupt and eventually overturn the institutions and behavior patterns that reproduce the privileges of whiteness, including the schools, job and housing markets, and the criminal justice system. The abolitionists do not limit themselves to socially acceptable means of protest, but reject in advance no means of attaining their goal (emphasis added).”

But do not be confused; “White” does not mean white. “White” in radical construction means anyone of any race, creed, nationality, color, sex, or sexual preference who embraces capitalism, free markets, limited government and American traditional culture and values. By definition, these beliefs are irredeemably evil and anyone who aligns with them is “white” in spirit and thus equally guilty of “white crimes.” Ignatiev still teaches, now at the Massachusetts College of Art.

The Black Lives Matter movement carries this narrative to unprecedented heights, claiming that only whites can be racists. And while justifying violence to achieve “social justice,” the movement’s goal is to overthrow our society to replace it with a Marxist one. Many members of the black community would be shocked to learn that the intellectual godfathers of this movement are mostly white Communists, “queers” and leftist Democrats, intent on making blacks into cannon fodder for the revolution.

James Simpson is an economist, former White House budget analyst, businessman and investigative journalist. Follow Jim on Twitter & Facebook. Veteran researcher Trevor Loudon and Matthew Vadum (Senior Editor, Capital Research Center) contributed materially to this report.
 http://www.wnd.com/2016/01/the-roots-of-black-lives-matter-unveiled/#D1DZi6TVEDpfQLRh.99

 

Black Lives Matter

From Wikipedia, the free encyclopedia
Black Lives Matter
BLM Letterhead.png
Formation July 13, 2013; 2 years ago
Founders
Type Social movement
Location
  • United States
Key people
Shaun King
Website BlackLivesMatter.com

Black Lives Matter die-in protest atMetro Green Line against allegations of police brutality in Saint Paul, Minnesota.

Black Lives Matter (BLM) is an international activist movement, originating in the African-American community, that campaigns against violence toward black people. BLM regularly organizes protests around the deaths of black people in killings by law enforcement officers, and broader issues of racial profiling, police brutality, andracial inequality in the United States criminal justice system.

In 2013, the movement began with the use of the hashtag#BlackLivesMatter on social media, after the acquittal of George Zimmerman in the shooting death of African-American teen Trayvon Martin. Black Lives Matter became nationally recognized for its street demonstrations following the 2014 deaths of two African Americans: Michael Brown, resulting in protests and unrest in Ferguson, and Eric Garner in New York City.[1][2]

Since the Ferguson protests, participants in the movement have demonstrated against the deaths of numerous other African Americans by police actions or while in police custody, including those of Tamir Rice, Eric Harris, Walter Scott, Jonathan Ferrell, Sandra Bland, Samuel DuBose, and Freddie Gray, which led to protests and rioting in Baltimore. In the summer of 2015, Black Lives Matter began to publicly challenge politicians—including politicians in the 2016 United States presidential election—to state their positions on BLM issues. The overall Black Lives Matter movement, however, is a decentralized network and has no formal hierarchy or structure.[3]

Founding

Nekima Levy-Pounds speaks during a Black Lives Matter demonstration inMinneapolis.

In the summer of 2013, after George Zimmerman‘s acquittal for the shooting death of Trayvon Martin, the movement began with the hashtag #BlackLivesMatter.[4] The movement was co-founded by three black community organizers: Alicia Garza, Patrisse Cullors, and Opal Tometi.[5][6]

BLM claims inspiration from the African-American Civil Rights Movement, the Black Power movement, the 1980s Black feminist movement, Pan-Africanism, Anti-Apartheid Movement, Hip hop, LGBTQ social movements and Occupy Wall Street.[7]

Garza, Cullors and Tometi met through “Black Organizing for Leadership & Dignity” (BOLD), a national organization that trains community organizers.[7] They began to question how they were going to respond to the devaluation of black lives after Zimmerman’s acquittal. Garza wrote a Facebook post titled “A Love Note to Black People” in which she wrote: “Our Lives Matter, Black Lives Matter”. Cullors replied: “#BlackLivesMatter”. Tometi then added her support, and Black Lives Matter was born as an online campaign.[7]

In August 2014, BLM members organized their first in-person national protest in the form of a “Black Lives Matter Freedom Ride” to Ferguson, Missouri after the shooting of Michael Brown.[7] More than five hundred members descended upon Ferguson to participate in non-violent demonstrations. Of the many groups that descended on Ferguson, Black Lives Matter emerged from Ferguson as one of the best organized and most visible groups, becoming nationally recognized as symbolic of the emerging movement.[7]Since August 2014, Black Lives Matter has organized more than one thousand protest demonstrations. On Black Friday in November, Black Lives Matter staged demonstrations at stores and malls across the United States.[7]

In 2015, after the death of Freddie Gray in Baltimore, Maryland, black activists around the world modeled efforts for reform on Black Lives Matter and the Arab Spring.[7] This international movement has been referred to as the “Black Spring”.[8][9] Connections have also been forged with parallel international efforts such as the Dalit rights movement.[10] Expanding beyond street protests, BLM has expanded to activism, such as the 2015 University of Missouri protests, on American college campuses.[11]

Currently, there are at least twenty-three Black Lives Matter chapters in the U.S., Canada, and Ghana.[12] Other Black Lives Matter leaders include: DeRay Mckesson, Shaun King, Marissa Johnson, Nekima Levy-Pounds, and Johnetta Elzie.

Tactics

Black Lives Matter protest against police brutality in St. Paul, Minnesota

Black Lives Matter originally used social media—including hashtag activism—to reach thousands of people rapidly.[7] Since then, Black Lives Matters has embraced a diversity of tactics.[13] BLM generally engages in direct action tactics that make people uncomfortable enough that they must address the issue.[14]

BLM has been known to build power through protest.[15] BLM has held rallies and marches, including one for the death of Corey Jones in Palm Beach, Florida.[16] BLM has also staged die-ins and held one during the 2015 Twin Cities Marathon.[17]

Political slogans used during demonstrations include the eponymous “Black Lives Matter”, “Hands up, don’t shoot” (a later discredited reference attributed to Michael Brown[18]), “I can’t breathe”[19][20] (referring to Eric Garner), “White silence is violence”,[21] “No justice, no peace”,[22][23] and “Is my son next?”,[citation needed] among others.

Most of the protesters actively distinguish themselves from the older generation of black leadership, such as Al Sharpton, by their aversion to middle-class traditions such aschurch involvement, Democratic Party loyalty, and respectability politics.[24][25]

It is important to note that music is an important repertoire of contention for the black lives matter movement. Rappers such as Kendrick Lamar have used music to promote structural conduciveness necessary for a social movement to maintain momentum according to value added theory.[26] Songs such as “Alright” have been used as a rallying call.[27]Beyoncé‘s most recent production lemonade featured Mike Brown and Trayvon Martin’s mothers crying while holding the last images they have of their sons, in effect propelling the issue of police brutality to a national stage.[28] The video for her single “Formation” (2016) celebrates southern black culture and features a line of policemen holding up their hands while a hooded black boy dances in front of them. The video also features a shot of graffiti on a wall reading “stop shooting us”.[29]

Memes are also important in garnering support for and against the Black Lives Matter new social movement. Information communication technologies such as Facebook and Twitter spread memes and are important tools for garnering web support in hopes of producing a spillover effect into the offline world.[30] The use of ICTs facilitate the spread of the message “All Lives Matter” as a response to the Black Lives Matter hashtag as well as the “Blue Lives Matter” hashtag as a response to Beyonce’s halftime performance speaking out against police brutality.[31][32]

Philosophy

Black Lives Matter protest at Union Square, Manhattan

Black Lives Matter incorporates those traditionally on the margins of black freedom movements.[7] The organization’s website, for instance, states that Black Lives Matter is “a unique contribution that goes beyond extrajudicial killings of black people by police and vigilantes” and, embracing intersectionality, that “Black Lives Matter affirms the lives ofblack queer and trans folks, disabled folks, black undocumented folks, folks with records, women and all black lives along the gender spectrum.”[33]

Founder Alicia Garza summed up the philosophy behind Black Lives Matter as follows: “When we say Black Lives Matter, we are talking about the ways in which Black people are deprived of our basic human rights and dignity. It is an acknowledgement Black poverty and genocide is state violence. It is an acknowledgment that 1 million Black people are locked in cages in this country–one half of all people in prisons or jails–is an act of state violence. It is an acknowledgment that Black women continue to bear the burden of a relentless assault on our children and our families and that assault is an act of state violence.”

Garza went on: “Black queer and trans folks bearing a unique burden in a hetero-patriarchal society that disposes of us like garbage and simultaneously fetishizes us and profits off of us is state violence; the fact that 500,000 Black people in the US are undocumented immigrants and relegated to the shadows is state violence; the fact that Black girls are used as negotiating chips during times of conflict and war is state violence; Black folks living with disabilities and different abilities bear the burden of state-sponsored Darwinian experiments that attempt to squeeze us into boxes of normality defined by White supremacy is state violence. And the fact is that the lives of Black people—not ALL people—exist within these conditions is consequence of state violence.”[34]

Influence

Black Lives Matter protest at Herald Square, Manhattan

In 2014, the American Dialect Society chose #BlackLivesMatter as their word of the year.[35][36] Over eleven hundred black professors expressed support for BLM.[37] Several media organizations have referred to BLM as “a new civil rights movement”.[1][38][39] #BlackLivesMatter was voted as one of the twelve hashtags that changed the world in 2014.[40]

In 2015, Serena Williams expressed her support for Black Lives Matter, writing to BLM: “Keep it up. Don’t let those trolls stop you. We’ve been through so much for so many centuries, and we shall overcome this too.”[41]

As a part of a general assembly, the Unitarian Universalist Church passed a resolution in support of BLM and staged a die-in in Portland, Oregon.[42]Patrisse Cullors, Opal Tometi, and Alicia Garza—as “The Women of #BlackLivesMatter” — were listed as one of the nine runners-up for The Advocates Person of the Year.[43]

The February 2015 issue of Essence Magazine and the cover was devoted to Black Lives Matter.[44] In December 2015, BLM was a contender for the Time MagazinePerson of the Year award. Angela Merkel won the award while BLM came in fourth of the eight candidates.[45]

On May 9, 2016 Delrish Moss was sworn in as the first permanent African-American police chief in Ferguson, where he acknowledges he faces such challenges as diversifying the police force, creating dramatic improvements in community relations, and addressing issues that catalyzed the Black Lives Matter movement.[46]

Notable protests and demonstrations

2014

Black Lives Matter protester atMacy’s Herald Square.

In August 2014, during Labor Day weekend, Black Lives Matter organized a “Freedom Ride”, that brought more than 500 African-Americans from across the United States intoFerguson, Missouri, to support the work being done on the ground by local organizations.[47]

Black Lives Matter members and supporters rode in from New York City, Newark, Boston, Chicago, Columbus, Miami, Detroit, Houston, Oakland, San Francisco, Los Angeles, Nashville, Portland, Tucson, Washington, D.C., and more, in a similar way to that of the Freedom Riders in the 1960s.[48] The movement has been generally involved in theFerguson unrest, following the death of Michael Brown.[49]

In November in Oakland, California, fourteen Black Lives Matter activists were arrested after they stopped a Bay Area Rapid Transit (BART) train for more than an hour onBlack Friday, one of the biggest shopping days of the year. The protest, which was led by Black Lives Matter co-founder Alicia Garza, was organized in response to the grand jury decision not to indict Darren Wilson for the death of Mike Brown. [50][51]

A Black Lives Matter protest of police brutality in the rotunda of the Mall of America in Bloomington, Minnesota

In December, 2,000–3,000 people gathered at the Mall of America in