Wednesday, May 10, 2006

It's a bird, it's a plane, it's the key interest rate!

Just posted at The New York Times online edition:

Fed Raises Key Rate to Highest Level in 5 Years

By VIKAS BAJAJ

Published: May 10, 2006

The Federal Reserve raised its benchmark interest rates to 5 percent today, from 4.75 percent, and said that it may need to raise borrowing costs further in the coming months to contain inflation.

[...]

The Fed, whose chairman Ben S. Bernanke recently told Congress that policy makers might take a break in an effort so it can gather and analyze more economic data, was more equivocal today about its inclinations but tried to leave its options open.
To understand exactly what that means, your blogstress suggests you check out this post from the Mogambo -- the favorite writer of your cybertrix's foxy friend, Glenn Kellis of Ob:Blog. Mogambo on today's move by the Fed:

The Federal Reserve is still increasing Total Fed Credit, which increases credit in the banks, which increases loans, which increases the money supply, which increases prices, which increases my wailing and crying about how we are all freaking doomed by inflation...

Probably because of the huge amounts of credit and money being created by the world's central banks, I seem to notice more and more people referring to this massive and irresponsible "printing" of money as the beginning of a new Weimar era, which is itself a reference to the massive printing of money by post-WWI Germany and the utter economic devastation that resulted.

But this not about whether the rulers of the old Weimar Germany were buttheads (they were) or whether the rulers of America's economy are buttheads (they are) but about the horrible economic price that a nation pays for such irresponsible stupidity. And don't look to me for a solution, as there isn't one, because if there was a painless solution to this insane system of a fiat currency created by debt, then at least one other person in all of history would have thought of it already.
Speaking of Mr. Kellis, you can find the backstory on how the economy got so crazy in his piece at Ob:Blog, What the Bling Said, or The Gold Whisperer. In this essay, Kellis makes a compelling argument for laying the madness of our credit-based economy at the feet of those who cut our currency loose from the gold standard. (Thank you, Mr. Nixon!) When our money was tied to the gold standard, a paper dollar was essentially a voucher for a dollar's worth of gold. All that money floating around in the economy was essentially backed up by the stuff stashed in Fort Knox (and elsewhere). Now when money gets tight, we just print more. And its value is no longer tied to a precious commodity (though the contrived scarcity of petroleum is effectively pushing down the dollar's value). Anyway, Kellis explains this in a much more elegant and decipherable manner than does your Webwench, probably because he actually understands it:
And gold can speak to you. Not in some mystical or magical way, nor literally, but gold tells its story. Quietly, subtly, and only if you are listening closely.

The shiny metal doesn't boast or talk about itself much, no, it's too modest, too humble; but it speaks in soft tones about many other things. Gold has confidence because it has always been the standard by which all other money or currencies have been measured. Gold is, er... the gold standard.

US dollars, Euros, and all the world's other currencies are poor excuses for storing value because they can just be printed up by the billions on fifty year old printing presses. Nothing special. Paper money and metal coins (not worth their face value) issued by the world's governments are a fantastic resource for these free spending, empire building governments because they can create all they want for practically no cost. That, is its strength, and also its weakness. Like Paris Hilton, they have no limits, no understanding of value and no morals. Gold just sits back and quietly watches from the back of the room, biding its time to be noticed again.

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Change trumps bigotry in Newark

In Newark, New Jersey, the largest city in your blogstress's home state -- and the nation's second poorest, according to The New York Times -- change has trumped prejudice with the election of Corey Booker as mayor, withstanding homophobic, anti-semitic and anti-intellectual goading from Newark's longtime mayor and godfather, Sharpe James. In an attempt to exploit against Baker, a Rhodes scholar, prejudices he presumed to be common among the city's denizens, Newark's 20-year leader had accused the Baptist, African-American and apparently heterosexual Baker of being Jewish, gay and not black enough.

Kudos to the good people of Newark for not buying into this basest of appeals.

The 37-year-old Booker, whose record of political accomplishment is thin, has quite a job ahead of him in a city blighted by poverty, corruption and a 40-percent high-school drop-out rate. But Newark is truly one of the nation's great cities -- full of beautiful buildings, active churches and a history rich in jazz. If Booker can do that legacy justice, he could be the Democratic Party's next big star.

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A reason to like the French

From the BBC we learn:

France is holding Europe's first national day of remembrance for the victims of slavery.

[...]

But the president [Jacques Chirac] says he is not just looking to the past. He has promised to fight modern forms of slavery, allowing companies that knowingly use forced labour anywhere in the world to be prosecuted in French courts.

Cities across France will hold ceremonies and activities to mark the day. The city of Nantes on the Atlantic coast, where many of France's slave ships originated, will hold a moment of silence.
The French, as demonstrated by recent unrest in immigrant neighborhoods, have yet to fulfill their self-proclaimed destiny as an egalitarian society. However, it's hard to imagine a measure such as France's day of remembrance making its way into the American culture, n'est-ce pas?

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