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Great Recessions II - coming soon to an economy near you.

By       Message John F Scanlon       (Page 1 of 8 pages)     Permalink    (# of views)   7 comments

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Outline:   Intro 

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Economics theory 1A/1B

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History    - S&L crisis, Great Recessions GRs I, and Great Recessions GRs II

The Fed  - protecting us from deflation and affordable housing

- Fed accounting

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Predictions

Miscellaneous additional recommendations

Sources and Footnotes

Intro

The American economy is once again a bubble intentionally created by our plutocrats and their cronies.  Our plutocrats are the flesh and blood people who own and operate our large corporations including banks.  Corporate welfare is plutocrat welfare; corporatism is plutocracy.     Our plutocrats want the instability that comes with bubbles to create opportunities for extraordinary profits.  Normal profits from a job creating, sustainable, stable economy are simply insufficient.  The Fed was created by our plutocrats not to provide stability but to facilitate and manage instability.  The Fed now has 2.5 trillion in a money creation account hidden in excess reserve deposits.  This magic money was/is used to purchase long term LT securities to keep LT interest rates artificially low and thereby facilitate the creation of another bubble economy.   

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Lower LT interest rates increase the value of bonds, increase the price earnings PE ratios in the stock market, and increase the price of housing by lowering mortgage interest.  All these markets are now volatile bubbles.  Their volatility was evident in the quick 100 basis point rise in LT rates resulting from Fed Chairman Bernanke's May announcement on future tapering - in quantitative easing QE 3/4, the Fed's current LT bonds purchasing programs. 

Unnaturally low interest rates over extended periods negatively affect other areas not normally considered.  Lower returns have contributed to growing deficits in our pension funds.  Lower returns on insurance company investments have likely increased our insurance premiums.  Low interest rates have encouraged our excessive borrowing" 

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John F Scanlon is a mere Irish-American and a former Marine. He has a BA in Business Economics from UC Santa Barbara, 4 years experience as a bank loan officer, 13 years experience as a bank examiner, and 60+ years of life experience. He has (more...)
 

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