Federal Reserve Chairman Ben S. Bernanke testifies before the Senate Banking Committee. (Win McNamee / Getty Images/ July 18, 2013)
On July 26, 2013, Jim Puzzanghera writes in the Los Angeles Times:
“Effective communication and careful timing will be critical to avoid disruptions, for both the
United States and other countries,” the IMF said in its annual assessment of the U.S. economy.The U.S. recovery, though still modest, “is gaining ground,” the IMF said. The housing market rebound and the Fed’s easy-money policies are major factors, helping to offset tax increases and federal spending cuts this year.
The IMF reiterated its forecast this month that the U.S. economy would expand at a 1.7% rate this year, improving to 2.7% next year. Those projections were part of the organizaton’s updated worldwide growth forecast.
But on Friday, the IMF released a 63-page assessment of the U.S. economy. The report was more upbeat than one Thursday on prospects for the Eurozone, which is struggling to emerge from its longest-ever recession.
The IMF warned that the pace of fiscal cutbacks in the U.S., through tax increases that kicked in Jan. 1 and the sequestration budget cuts that began two months later, was too fast given the “fragile recovery.”
Although the tax hikes and reduced spending have lowered the U.S. budget deficit, “the main short-term priority is to replace the sequester with a back-loaded set of revenue-raising and targeted expenditure-saving policies,” the IMF said.
Longer-term, the biggest challenge was a successful exit by the Fed from the stimulus policies it began in 2008.
The IMF warned Thursday that the Fed pullback could reignite the European debt crisis by causing interest rates to shoot up.
Rates already have risen sharply in recent weeks as Fed Chairman Ben S. Bernanke and other officials began talking about reducing one key stimulus program, the $85 billion in monthly bond purchases.
A “faster-than-projected increase in interest rates” would hurt the U.S. recovery and pose a risk to global economic growth, the IMF said.
It noted the “increase in market turbulence” that began in late May after the Fed said it could start reducing the monthly bond purchases later this year if the economy and jobs market continued to improve as forecast.
Jim Puzzanghera has been writing on economic matters for years for the Los Angeles Times and both continue to be oblivious to the REAL issues regarding inadequate job dependency and income inequality. Instead the reporting is ALWAYS about marginal job gains or losses and stagnating GDP growth.
In Europe as in the United States, the reality is that the notion that JOBS ONLY is the solution to economic decline is mis-guided. Why, simply because the function of technology is to “save” labor ––eliminate unnecessary labor costs and employ people at the lowest possible cost. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
There is no solace in the statistics. Researchers at the American Enterprise Institute and the Center for Economic and Policy Research shows that a worker between the ages of 50 and 61 unemployed for over a year has only a 9 percent chance of finding a job in the next three months and only a 6 percent chance if he or she is 62 years or older. According to the Economic Policy Institute, there are approximately 3.3 unemployed workers for every job seeker.
Because for the vast majority of Europeans and Americans a JOB is their ONLY source of income, millions of families are one layoff or family emergency away from going into bankruptcy, and then what? Start over with nothing and extremely poor JOB prospects.
In the United States, the American Dream is fast disappearing as people experience fewer opportunities to earn an income, and as a consequence cannot act as “customers with money” necessary to support a vibrant economy. The result is a permanent national recession at the brink of a second Great Depression.
Unfortunately, our political leaders, academia, and the national media offer up ONLY the same old conventional won’t-work suggestions for the government to take the lead and arrange the marriage of private and public capital to regenerate real growth without the realization and requirement that the ownership of FUTURE wealth-creating productive capital must be broad. No longer can we be able to achieve growth the old-fashioned way, by investing in projects that enrich our productive capacity in the name of JOB CREATION, which is expected to have a multiplier effect, when in actual reality such investment continues to further CONCENTRATE OWNERSHIP of America’s future productive capital assets.
The ONLY viable solution to the economic decline of America and Europe is for our leaders, academia and the national media to recognize that all individuals to be adequately productive cannot do so when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total output of the economy’s products and services. The system must be reformed to create a world in which the most productive factor of the FUTURE—physical capital—now owned by a handful of people––is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners.
A balanced Just Third Way approach to building a FUTURE economy that supports affluence for EVERY American is presently not in the national discussion. It appears that the President of the United States, the elected Congressional representatives and Senators, academia, and the media are oblivious to this principled solution that has the ingredients to power economic growth at double-digit GNP rates.
This goal requires investment in FUTURE wealth-creating, income-producing productive capital assets while simultaneously broadening private, individual ownership of the resulting expansion of existing large corporations and future corporations. Not only is employee ownership the norm to be sought wherever there are workers but beyond employee ownership the norm should be to create an OWNERSHIP CULTURE whereby EVERY American can benefit financially by owning a SUPER IRA-TYPE Capital Homestead Account (CHA) portfolio of income-producing, full-voting, full-dividend payout securities in America’s expanding corporations and those newly created to produce the future products and services needed and wanted by society.
Those who read this and are in a position of influence should reach out to President Obama and the leadership of his Organizing for Action as well as to other political leaders, and call for them to convene a national discussion using the national media and social media, and our educational institutions, to open up a discussion on EVERY CITIZEN AN OWNER opportunity. We need fresh and inspired leaders who can educate on this issue at this time because academia, the media, and our so-called leaders are not addressing how people make money and the significance of OWNING income-producing productive capital assets. We need to get people to understand that as with today, in the FUTURE we will continue to experience tectonic shifts in the technologies of production, which will destroy and devalue the worth of jobs. This is a crucial understanding because at present for the 99 percent of the nation a JOB is the ONLY source of income to support themselves and their families. We need political leaders who will commit to a government policy focus on OWNERSHIP CREATION, not JOB CREATION, which will result and naturally follow as the economy revs up to double-digit GDP growth and fully applies technological innovation and invention to shift from unnecessary labor toil to human-intelligent machines, super-automation, robotics, and digital computerized operations. The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of “customers with money” to purchase the products and services that are needed and wanted.
Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income and issue and sell new stock to grow. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,
The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.
Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.
Essentially, the pressing need is for everyone in a position of influence to encourage President Obama to raise the consciousness of the America people by making his NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.
This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
As an alternative that would result in financing to create real productive capital asset formation and grow the American economy, see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624
