Daily Archives: August 2, 2017

Where Is That $29 Trillion From The Fed?

The Fed lent and purchased worthless assets to the tune of $29 trillion in their efforts to save the economy from collapse in 2008/2009 and beyond. Yet the economy does not act as if $29 Trillion of aditional liquidity has been added to the economy. It seems to me the obvious question is why didn’t the economy react as one would expect?

I went to the New Economic Perspectives web site to see if they had the answer. I found the article Bernanke’s 29 Trillion Dollar Fog of Deceit from December 13, 2011.

As I reported over at Great Leap Forward, a new study by two UMKC PhD students, Nicola Matthews and James Felkerson, provides the most comprehensive examination yet of the Fed’s bail-out of Wall Street. They found that the true total cumulative amount lent and spent on asset purchases was $29 trillion. That is $29,000,000,000,000.

This does no answer my question. The answer may be somewhere else on the web site, so perhaps I missed it.

I don’t really care so much about who got the money initially as I want to know where it now sits. Where can $29 Trillion dollars have gone that has little impact on the economy, wages, or employment? Why has nobody researched this question, and told us why the economy has not responded? Since most U.S. money ends up in some account that the Fed keeps data on, surely the Fed knows where this money is – categorized by major sectors. It would be very educational to economists and government decision makers to see where the money went. Why would policy makers and academics want to opine on policy without knowing this vital information?

I’ll Google this next to see if there is an answer out there. Maybe, one of my astute readers can beat me to the punch and supply the answer.

Health Care: U.S. vs. Canada

YouTube has the video Health Care: U.S. vs. Canada.

The above is a slightly more complete and less artfully edited than the version posted on Facebook.

Here’s what happened when a Republican Senator tried to challenge a Canadian doctor on their single-payer healthcare system. Let’s just say, it didn’t end well…

Thanks to Bernie Sanders.

I’d just as soon you hear more of what was said than I would in trying to convince you of something by manipulating the truth. It still comes out in favor of the Canadian system, but you are less likely to get tripped up by claims of careful editing.

Medicare for All: Leaving No One Behind

Bernie Sanders has posted an outline of his Medicare For All proposal. I’ll let you read the proposal to see the benefits. I will just make some comments here on a part that I take slight exception to.

The Plan Would Be Fully Paid For By:

  • A 6.2 percent income-based health care premium paid by employers.
  • A 2.2 percent income-based premium paid by households.
  • Progressive income tax rates.
  • Taxing capital gains and dividends the same as income from work.
  • Limit tax deductions for rich.
  • The Responsible Estate Tax.
  • Savings from health tax expenditures.

These taxes may or may not be good policy, but they have nothing to do with “paying” for the healthcare benefits.

The idea that the Federal Government has to collect taxes to “pay” for this program is a tired myth that became irrelevant 55 years ago when Richard Nixon took the country off the gold standard. How much in taxes we collect, and how much the government spends depend on a lot of factors, but a country like the USA can never “run out of money”. I don’t care what the corporate Democrats or the Republicans say, the federal government via the Federal Reserve Bank creates US money at will. Federal Reserve Bank Chairmen from Alan Greenspan to Ben Bernanke have been telling this to Congress for years. (I don’t have an official quote from Janet Yellen of her saying the same thing, but I am sure she understands this.) When Alan Greenspan told this to Representative Ryan, Ryan’s ears were closed from taking in this unexpected answer to the question Ryan asked. (See the previous post Greenspan: “There is nothing to prevent the government from creating as much money as it wants.”)

It is a sad commentary on the state of the myth building in this country that Bernie Sanders has to cater to the false notion of how our money works in order to make his proposal sound plausible.