An Intellectual Revolution on Money

As the British Parliament debated the outbreak of the American Revolution one arrogant member of the House of Commons referred to the colonists as illiterate farmers. Edmond Burke, the father of conservatism, rose to state that he had been told by book sellers in London that the sales of books in the colonies topped all sales in Europe. He stated the Americans were enlightened to the meaning of liberty- they read and understood.

Today, Nathan Lewis writes in his Forbes.com column that it is high quality writing and the work of intellectual authors that is driving the newly emerging money revolution.

In 2014, we began to see a new stirring of intellectual capability, which will serve as the foundation of the epic task of global monetary reconstruction. Last year, the Cato Institute established the Center for Monetary and Financial Alternatives, headed by the excellent George Selgin. Over the past year, the discussions they have hosted at their website Alt-M.org have been of very high quality. This sort of thing didn’t really exist before.

In 2014 the Atlas Network established the Sound Money Project, headed by Judy Shelton. Again, the level of discussion at their website this year is exemplary. They recently released a book, Roads to Sound Money. More excellent material is found at the Lehrman Institute (thegoldstandardnow.org). Also in 2014, the American Principles Project, which I sometimes call the “Tea Party’s think tank,” started the Fix the Dollar Project, headed by Steve Lonegan.

But, it’s not just about quantity.

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Negative Interest Rates? Is the Fed Delusional?

The latest jobs report is lackluster — just 142,000 jobs were added to the economy in September. The labor force participation rate is now down to its lowest level since Jimmy Carter was in office. And the Federal Reserve? They refuse to change course and fix their mistakes.

In 2008, the Fed promised they could save us from economic collapse with a radical solution — by holding interest rates near zero — and then reverse policy after the crisis was averted. But seven years later, rates are still the same. The economy is still spinning its wheels, going nowhere fast. And workers are watching their real wages effectively decline as prices increase. The Fed promised that this would be a free lunch, but clearly this is not the case. They failed.

Now, the Fed wants to double down on seven years of failed policy by offering up negative interest rates as a solution.

Seriously. Via CNBC:

Last week, the Federal Reserve spooked markets by preserving the monetary policy status quo. Yet a few central bank watchers were more surprised by a new idea the central bank seemingly suggested: a negative interest rate.

The Fed’s closely watched “dot plot” revealed that at least one committee member floated the idea that a fed funds rate below zero might be an appropriate target for the remainder of this year and next.

The forecast is widely thought to be the work of Minneapolis Fed President Narayana Kocherlakota, a non-voting member of the committee who is known for his dovish views.

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The Missing Fed

Photo credit: Kurtis Garbutt via Flickr (CC BY 2.0)

The Federal Reserve is the most powerful unelected financial powerhouse in the world. Its impact on our economy and financial markets is staggering.

Yet this unaccountable institution and its role in our economy and government is missing from the presidential debate.

One has to wonder what the presidential candidates are afraid of. Perhaps pollsters are telling them to stay away from this issue. Perhaps pollsters are telling them that it is over the heads of voters.

Voters may hear about nuclear centrifuges in Iran or even the complex science of global warning, but in the minds of political consultants, people’s money is something they can’t understand. But how does one explain this issue missing from the scripts of debate commentators? With the Fed in the financial news every day, how do they miss this?

Perhaps this will change in the CNBC debate on October 28.

Meanwhile, check out this fantastic highlight video from APIA’s Jackson Hole Summit last month, the first time conservatives have challenged the Fed toe-to-toe. And learn how important the Fed is in our lives!

Steve Lonegan is the Director of Monetary Policy for American Principles in Action. Continue Reading

On Constitution Day, Congress Abdicates Constitutional Responsibilities to Fed

Two hundred and twenty eight years ago today, thirty nine delegates gathered in Philadelphia to sign the Constitution of the United States.

This profound document states clearly in Article I, Section 8:

The Congress shall have the Power To … coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Today, 228 years later to the day, an unelected bureaucrat named Janet Yellen will announce the Federal Reserve’s latest policy decisions that will impact the value of our money.

Americans need to remind elected officials that Congress, and only Congress, has the authority to coin our money and determine its value.

Congress has abdicated this responsibility.

Please post Article I, Section 8 to your Representative’s Facebook page!

Steve Lonegan is the Director of Monetary Policy for American Principles in Action. Continue Reading

Wake Up, Conservatives!

Several ThePulse2016 contributors, including Steve Lonegan, Ralph Benko, Frank Cannon, Terry Schilling, Shane Vander Hart, and others, have flown out to Jackson Hole, Wyoming, for a historic monetary policy conference organized by the American Principles Project.There are three major conferences taking place in Jackson Hole, Wyoming this week, and they all focus on the same issue: monetary policy.The Federal Reserve is having their annual symposium. Fed Up, a left-wing organization, is holding a counter-conference demanding that the Fed keep interest rates low, print more money, and bail out states and municipalities that are deep in debt.

And, of course, the American Principles Project is holding the Jackson Hole Summit this week, where leading economists and center-right leaders will analyze recent actions taken by the Federal Reserve, challenge prevailing economic wisdom, and discuss alternative options to discretionary monetary policy.

When I was at the beautiful Jackson Hole airport yesterday, I couldn’t help but be amazed by the number of left-wing activists pouring through the airport attending the Fed Up conference. They’re organized. They’re sophisticated. They’re engaged on monetary policy.

Where is the right? Our side is asleep at the wheel. If our Jackson Hole Summit wasn’t taking place, there would be no one to counter the far left’s extremely dangerous message.

The Jackson Hole Summit is bringing together some of the brightest minds in economics from around the world. All of us have the same determination — establishing sound monetary policy that serves people, not special interests.

Stay tuned to ThePulse2016 for more coverage from this historic conference.

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Fed Decision-Making Plagued by Paralysis and Inaction

Federal Reserve Chair Janet Yellen (photo credit: Day Donaldson via Flickr, CC BY 2.0)

Yesterday’s Fed statement is reminiscent of Goldilocks and the Three Bears. The first porridge was too hot, the second too cold. Where was the one that was just right?

The Federal Reserve has a similar quandary. It is trying to keep both inflation and unemployment low. But alas, inflation is too low and unemployment is too high. What should it do? Today the Fed answered by prolonging the paralysis and inaction.

This dilemma is called ‘discretionary policy.’ It has governed monetary policy for the last 40 years, yet it provides no clear direction to Fed policymakers. There must be a better system. It should be adopted soon. We must FIX THE DOLLAR.

For the first time next month, a team of leading economists and elected officials from around the world will gather in Jackson Hole, Wyoming, to analyze and challenge Fed policies. No porridge will be served.

Steve Lonegan is the Director of Monetary Policy for American Principles in Action. Continue Reading

More Bad News in June Jobs Report

In recent months, analysts have been pointing to a supposedly improved job situation for workers. Voluntary minimum wage increases at companies like Walmart allegedly pointed to an upward movement in wages due to increased competition. Workers purportedly were feeling more secure in their jobs and more willing to explore new possibilities. Despite a first quarter slide in economic growth, the economy was apparently poised to bounce back. The proverbial ‘rosy scenario’ was finally appearing on the horizon.

Much of this optimism, however, was surprising news to the middle class, and today’s jobs report showed why. The headline — 220,000 new jobs and the unemployment rate dropping to 5.3 percent — appeared to confirm the ‘rosy scenario.’ Yet the underlying data present a very different story. These numbers point to an enduring fact of this so-called ‘recovery’ — the middle class has been left behind.

For example, the 220,000 new jobs in June sound like a step towards real improvement. However, when combined with the downward revision of 60,000 over the previous two months, the net creation is only about 160,000. In fact, the average monthly job growth so far this year (208,000) is far below the average in 2014 (260,000). That is hardly anything to write home about and certainly doesn’t deserve glowing media headlines.

Unemployment appears to have fallen, but mostly for the wrong reasons. The underlying numbers reveal a large drop off in people employed or looking for work—more than 400,000 —accounting for much of the decline in the unemployment rate. Continue Reading

Yellen to Hillary: What’s the Problem?

Federal Reserve Chair Janet Yellen (photo credit: Day Donaldson via Flickr, CC BY 2.0)

Yesterday, the Federal Reserve announced that it is maintaining its existing policy of historically low interest rates, stating that the policy “remains appropriate.” When asked at the news conference about the renewal of this controversial policy and whether there is a role for congressional bills affecting Federal Reserve actions, Federal Reserve Chair Janet Yellen replied, “What’s the problem?”

The Fed Chair insisted that the institution is extremely transparent and questioned what else Congress and the public could possibly want.

With Hillary Clinton making income inequality a key campaign issue, one has to wonder—will she address Yellen’s stubborn insistence that the economy is just fine?

You would think she would. Clinton correctly insists that the current recovery has left behind the average American worker. Janet Yellen must disagree—how else could the current policy ‘remain appropriate’ when it has resulted in stagnant wages and rising prices that have negatively impacted millions of Americans?

If Clinton is serious about tackling income inequality, she should understand how critical it is for us to have a currency debate—a debate in which Janet Yellen has shown no interest. That starts with congressional oversight and complete transparency at the Federal Reserve.

Steve Lonegan is the Director of Monetary Policy for American Principles in Action. Continue Reading

There Is Less to the Employment Numbers Than Meets the Eye

Photo credit: Ken Teegardin via Flickr, CC BY-SA 2.0

Today’s headlines trumpet the gain of 280,000 jobs in May and the additional 32,000 jobs in the previous two months.  This good news, however, masks the disappointing numbers that come hand in hand. Even with today’s increases, the average monthly job creation in 2015 is only 217,000, which is far lower than the nearly 260,000 last year. That said, job creation remains sluggish at best.

Additionally, the labor force participation rate of 62.9 percent remains at the average it was last year. In fact, it is still over 3 percent lower than it was at the beginning of the financial crisis, and roughly where it was at the height of the Great Inflation of the late 1970s. Also, the unemployment rate rose to 5.5 percent. This increase was caused by May’s labor force rising by 85,000 more people than the combined May job increase plus March and April’s revision. That fact further illustrates that job creation is not even keeping up with the growth in the labor force. That said, despite the apparent jump in jobs, more people were unemployed. The average workweek remains stuck at 34.5 hours, as it has been for the past four years.

When all of these numbers are taken into account, it paints a much fuller picture of the serious crisis in the job market.  Despite pumping more than $3.5 trillion into the economy and keeping interest rates at historic lows, the Federal Reserve’s policy appears to have failed. Continue Reading

Another Jobs Report, Another Disappointment

Unemployed workers line up at a state office in California (public domain photo via FEMA)

The headlines today don’t tell the whole story. While 223,000 new jobs in April sound like a positive development for our economy, the cold, harsh reality is that millions of Americans are still struggling to find work—and those who are lucky enough to be working are facing stagnant wages amidst rising prices.

It is disingenuous to say that the unemployment rate is truly 5.4 percent. That number fails to account for those who have given up looking for work—a cohort that is now higher than it has ever been before. When you add those people to the equation, the unemployment number is much closer to 11 percent.

The workforce participation rate, just 62.8 percent, is hovering near its lowest level since the late 1970s. Even among the prime 25-54 age group, the number remains unfathomably low. That means that millions of Americans have simply given up trying to find a job—no wonder the unemployment rate has fallen.

Where’s the recovery for these unemployed workers?  Once again, the current discretionary monetary policy of the Federal Reserve System has failed to provide a sustained boost to our economy, creating only uncertainty. The Fed obviously doesn’t know what to do from here. The market is unsure what to expect.

There has to be a better way to conduct monetary policy. Congress must introduce and pass the Monetary Commission bill. Americans deserve equitable prosperity, not growing economic disparity. Let’s fix the dollar. Continue Reading