Economy | timiacono.com - Part 5

Why Warren Will Run

From this item at The Hill comes a pretty interesting take on the 2016 Presidential election cycle in general and a potential Elizabeth Warren (D-MA) run in particular…

Why Warren will run against Clinton in 2016

By John LeBoutillier, contributor

State of the 2016 Race
A weekly column for The Hill analyzing the current state of the 2016 presidential race.

The Democratic race: Why Sen. Elizabeth Warren (D-Mass.) will run in 2016 against former Secretary of State Hillary Clinton.

1. Warren is the only national politician today from either party who conveys a sense of outrage over our current — deteriorating — national situation. Her passion is her signature calling card in a time when all the other candidates for president seem to have passion only for themselves and their candidacies.

2. At a recent 12-person in-depth focus group in Denver conducted by Peter Hart and reported in The Washington Post by Dan Balz, the only national politician who was viewed favorably was Warren — even by some of the Republican voters in the focus group.

3. Why? Because she is the only politician who is even talking about the powerlessness of the average person — and the seemingly too powerful corporate and Wall Street entities.

4. This issue cuts across all political lines. It is the issue that catapulted President Teddy Roosevelt into the political hall of fame. His trust busting led to today’s anti-trust regulations and the belief that the federal government’s role is to act as a neutral referee to ensure a fair playing field. But no one today believes the feds are neutral — or fair. Instead, big government is seen as corrupt and as “rigged” as big business.

5. Indeed, there isn’t that much that separates Occupy Wall Street from the Tea Party. One blames big business while the other blames big government for our problems. But more and more, people see the two as in bed with each other in a cynical game to line their own pockets and to preserve their power — all at the expense of the average American.

6. This underlying fear is the hidden issue in the 2016 race — and so far, only Warren is even talking about it.

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Inflation Since 1510 (in the U.K.)

Super long-term charts like the one below, painstakingly created at Deutsche Bank and appearing in this item at Business Insider, are fascinating in that they tell a story that few seem interested in hearing, namely, that the world’s financial system and conventional thinking about economics has transformed radically in recent decades as the world switched to a pure paper money system administered by central bankers.

Obviously, you’d see a similar chart for the U.S. where, prior to the 20th century, high rates of inflation used to coincide with wars and was followed by periods of deflation to reverse those price increases almost invariably caused by supply shocks and temporarily abandoning a hard money standard to fund the war effort. Technological advances also fueled prior bouts of deflation, however, even a hint of deflation these days is considered taboo and must be countered by central bank money printing on a grand scale.

In what is part of a growing trend, economists at Deutsche Bank are asking whether deflation is really as bad a thing as most dismal thinkers think it is, as conventional wisdom toward deflation increasingly appears to be another case of The Emperor’s New Clothes.

“I Don’t See a Downside”

We filled up the tank the other day and were again amazed at the numbers we saw while doing so. Consumer confidence in the U.S. is skyrocketing as we ‘Mericans are getting a nice little bonus every time we gas up the family car and, for those of modest means, saving $20 at the gas station can be a pretty big deal.

But there’s a downside…

As noted above, oil exporting countries around the world (most of whom we ‘Mericans dislike) are feeling a good deal of pain and that pain is likely to persist for some time.

But, what is not stated in the video is that there will be pain here in the U.S. too as the shale oil industry slowly comes to grips with the idea that $50 oil might not be so transitory. As noted in this report at The Atlantic, shale oil has been responsible for a good deal of the jobs growth in recent years and there are already reports of layoffs by shale oil producers, a trend that is likely to accelerate as long as oil prices are low.

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Can You Spot the Trend?

From The Increasingly Unequal States of America(.pdf) at the Economic Policy Institute (via this item at The Nation) comes the graphic below that helps explain why so many Americans feel so strongly that the economic recovery hasn’t yet reached them, despite news that U.S. job creation in 2014 reached a 15-year high and that the unemployment rate has tumbled.

The report notes this is “not just a story of those in the financial sector in the greater New York City metropolitan area reaping outsized rewards from speculation in financial markets”. These are broad-based trends that have occurred nationwide since the 1970s following many decades when, for example, there “was a cultural and political environment in which it was unthinkable for executives to receive outsized bonuses while laying off workers”.

That’s progress, I suppose.

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