Where is this economic boom that Former President Obama and his administration
had taken so much credit for?
The Obama Administration, with the assistance of the Federal Reserve and Company,
deliberately kept the U.S. economy from creating any growth at all. The money
that flowed from the Federal Reserve, over the last 8 years, had a direct pipeline that
flowed only into Wall Street Investment Banks. The American people were sold
this false bill of sale that
"Quantitative Easing" was going to make lending money to "Main Street America"
easier to access. They promised that there would be a boost in hiring which
would, in turn, increase aggregate demand and thereby reflect a newly stimulated
economic growth!
This QE effectively down-sized the middle class into minority status.
The largest growth has occurred within the low-income category. Despite
the stock market reaching near all-time highs and real estate bubbling over
once again, there are now 45 million Americans on food stamps. This
number is at an all-time high. People are feeling poorer today than ever, and
with sky rocketing real-estate prices those who do not own a home cannot afford
to buy anymore!
This massive disconnect is expanding exponentially. The velocity of money
is the number of times that currency is turned over to purchase domestically-
produced goods and services. One can see, as in the chart below, that the velocity
of money has been steadily decreasing. There are less transactions occurring
by individuals in our economy. One can see that the money never reached "Main
Street America" which is why there has not been any demand for goods and services.
The average American is now barley scraping by and many do a lot of their
shopping at dollar stores. Most the growth in the job market is in low wage
jobs which have zero benefits! The clear majority of Americans have bought
into the propaganda promoted by the controlled media outlets.
The masses bought into this propaganda as Wall Streets’ big banks kept artificially
inflating the equity markets with free and cheap money, which
was at the expense of U.S. taxpayers.
The Obama Machinery put on a stellar performance for the American people,
however, this was a fictitious story. In fact, the real number, as of January
2017, of unemployed Americans currently stands at 22.9%: (http://www.shadowstats.com/alternate_data/une...ployment-charts).
The big gains have been largely allocated to the well-connected financial sector.
Corporations took advantage of low interest rates to buy back stock in their
own companies. Since 2008, corporate stock buybacks have surpassed $2.2 trillion.
These buy backs have only increased the price of corporate stocks and made
their companies appear more valuable than they are. This means that stock prices
are far above what they would be if it were not for extremely low interest
rates. The politicians believed that it was more important to create a false
front and to continue the illusion so that they would remain in
power.
The Tax Foundation reports that 60% of the population now receives more in
government benefits than what they pay in taxes. What does this say about a
society in which more than half of the population are living at the expense
of the other half? Currently, what is even worse is that the dependent class is
steadily growing. The 60% will soon become 70%.
Representative Paul Ryan of Wisconsin, recently stated that "more people have
a stake in the welfare state than in free enterprise. This is a road that Hayek
perfectly described as the road to serfdom": target="_blank"(https://en.wikipedia.org/wiki/The_Road_to_Serfdom).
target="_blank"(http://www.economist.com/blogs/freeexchang...eynes-and-hayek). target="_blank"
(https://mises.org/library/road-serfdom-0).
Mr. Hayek stated that "Capitalism is the only system of economics compatible
with human dignity, prosperity, and liberty. To the extent, we move away from
that system, we empower the worst people in society to manage what they do
not understand".
On March 23rd, 2009, the then Treasury Secretary, Tim Geithner sent the stock
markets soaring. He announced a plan to help banks unload illiquid securities
of uncertain worth from its’ balance sheets. The Wall Street headlines read "Toxic-Asset
Plan Sends Stocks Soaring". Federal Reserve Chairman Ben Bernanke implemented "financial
engineering&quo target="_blank"t; (https://en.wikipedia.org/wiki/Financial_engineering)
as the sole solution to all our financial problems.
He was publicly opposed to the nationalizati target="_blank"on (https://en.wikipedia.org/wiki/Nationalization)
of banks and said "the bookkeeping problems of many banks are largely an artifact
of foolish federal regulations. Capital standards, accounting rules and other
regulations have made the financial sector excessively procyclical." As we
are presently realizing, government control over the financial markets and
the economy have failed us. What we needed was the Federal Government to focus
on job creation and to restructure our economy for new and future growth.
They were laser focused on merely bailing out Wall Streets’ big banks. In
my view, the Federal Government should only be focused on its’ constitutional
responsibilities. Keeping the free markets out of their control and protection
and serving the American people should be their primary goal.
They needed to allow deflation to play out its’ cyclical role. However,
it turned out worse as they attempted to control it. Federal Government bailouts resulted
in financial enslavement. There was further unequal distribution
of wealth in our society. Today, in 2017, I clearly see the implosion of America,
as we once lived and knew it to be.
The economy was being run on non-to low growth policies intentionally. President
Obama deliberately took the path of doing absolutely nothing. He did not want
to be accountable for any economic growth most likely because a stock market
crash would ensue. That would have placed pressure on wages that would cause
inflation at which time the Federal Reserve would be forced to raise interest
rates. If this had occurred, all the free money which Wall Street investment
banks received would not have been invested in the equity markets.
The GDP Annual Growth Rate in the United States merely expanded by 1.90% in
the fourth quarter of 2016, over the same quarter of the previous year. A record
low of -4.10% was reported in the second quarter of 2009.
target="_blank"
They purchased their own shares back which sent stocks higher into unchartered
territory. The way that they played the game was to keep inflation
at bay and allow us to wallow in a deflationary contracting economy. As stock
prices rallied upwards, the corporate executives continued to receive heavy
compensation on cheap cash being provided to them. In the term that Chairwoman
Yellen resides over, she has only increased interest rates twice by a mere
marginal 25 basis points. This was an immaterial rate hike so as the Federal
Reserve could maintain their credibility. Increasing interest rates would
have killed this game of "cheap money" which kept the wealth flowing into
the top 1 percent. The Federal Reserves’ decision to not raise interest rates
during their last meeti target="_blank"ng (http://money.cnn.com/2017/02/01/news/ec...ting/index.html)
sends a clear and powerful message that they do not want to go down the path
of normaliz target="_blank"ation (http://www.discovery.org/a/23721)
. They want to continue to artificially suppress interest rates. If they
had attempted to "normalize", it would create massive assets and derivative
bubbles bursting domestically and globally. Either the bubble will burst
or we will return to inflation.
President Trump wants to create the growth which former President Obama never
accomplished. He is proposing tax cuts, introducing fiscal stimulus and removing
all the red tape that has been so costly for small businesses to implement.
He has also promised to lift GDP to 4% by spending $1 trillion to rebuild America’s
infrastructure. This will overheat the economy! Trying to implement
his plans will call for deep cutbacks in Medicare and Social Security. It will
take years to forge ahead with legislative approval.
Conclusion:
Where is this economic recovery that supposedly happened? It exists in the
stock market at present as the masses are enduring a poorer quality of life!