As outlined by the Federal Reserve on their Web Site

Overall Functions of the Federal Reserve:
Monetary Policy
            Goals and Guides
            Implementation
Foreign Currency Operations
Supervision, Regulation and Consumer Protection
U.S. Government Payments

FRB – The Federal Reserve System Purposes and Functions

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To define rights and put them in the context of our history and government, the second section of the Declaration of Independence reads, “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

These are the three unalienable rights which this country and its government have been founded and built upon.  An individual should be guaranteed the freedom to act however they choose as long as it does not infringe on another’s freedom. This is the fundamental concept of rights.

At the heart of the Healthcare issue appears to be confusion around the rights of individuals and the extend of government protection regarding these rights.

Health care is a service provided by doctors, nurses, etc. to any individual for a price.

On the most fundamental level, guaranteeing any individual a right to receive a service infringes on the right of another person who provides the service.

Declaring every individual has a right to access and receive health care, universal coverage, also declares every individual in the healthcare industry, doctors, nurses, etc are required and forced to provide their service.  To assert health care rights for the individual seeking the service, asserts individuals providing the health care service have no rights. Another approach is to subjugate individual rights, doctors, nurses, etc., for the “greater good” of society.  For idea, the “greater good” of society, leads down the road to communism where the individual exists for the sole purpose of the community.

In all cases, claiming the right to receive healthcare service violates the right of the healthcare service provider. To take away the rights of health care providers, doctors, nurses, etc. enslaves them to the party removing their rights, in this case, the government.

To access and receive health care is not a right, but a desire, want, need or demand.  It is a form of enslavement to remove the rights of a group of people.  A right to health care is not just or morally right and is inconsistent with the principles this country was founded upon.

 

Quotes:

In the House of Representatives on Sept 23rd 2009, Ron Paul states, “1.)  No one has a right to medical care.  If one assumes such a right, it endorses the notion that some individuals have a right to someone else’s life and property.  This totally contradicts the principles of liberty.”

Ron Paul states in an NPR interview, “I do not believe peoples’ needs or desires or wants or demands are rights. ”

 

Source Links:

Declaration of Independence

 Mises – Involuntary Medical Servitude

NPR – Ron Paul: Leave Government Out of Insurnace Plan

House.gov – Ron Paul – More Government Won’t Help

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Most will agree housing prices were inflated by an artificial bubble.  There were multiple causes for this, one of them being interest rates were very low making mortgages easier than normal to obtain.  Housing prices must be allowed to readjust downwards eliminating the previous inflation in price.

Keynesian economic policy is to replace the lack of private sector demand during a recession with government “public” sector demand.  The underlying assumption is the original private sector demand was correct.

The response of providing tax credit to home buyers seems to make sense on the surface as it provides them assistance and encourages more people to purchase homes.  On further analysis, the tax credit really only helps the seller by allowing them to charge that much more for the price of the home.  This keeps housing prices from falling further and reaching their true market equilibrium price.

The original private sector demand in the housing market was incorrect and fueled by a artificial bubble.  The market will force a correction.  We can either allow the correction to quickly occur and move on, or we can prolong it with the risk of making it worse through intervention and market manipulation.

Cato – Republicans Just as Guilty of Flawed Keynesian Thinking

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When WordPress has multiple categories example, Finance and Technology, the site by default will open and display both categories. If only Finance is to be displayed by default, a line of code has to be added to the index.php file.  The index.php file’s location can change depending on the theme being used.

Near the top of the index.php file, before the line of code,  which will look similar to:

<?php if (have_posts()) : while (have_posts()) : the_post(); ?>

 insert the following line:

<?php if (is_front_page()) { query_posts(“cat=3”); } ?>

The number 3 will need to be changed to the categories ID. This can be found under the admin->posts->categories page. Hover the cursor over the category link and in the status bar it will display cat_ID=x. X will be the category ID to substitute into the line of code above.

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Many times after a post is published, comments are received, or new events occur and the original post needs to be updated. WordPress should have a setting allowing it to show the last modified date and/or time for each post.

I wasn’t able to find a setting, but I was able to find some code, link to original code below, to insert into the index.php and single.php files for the theme.  I put the code after the content is displayed. The code shows a small dynamic line at the end of each post with the original posting date and then the last updated date if is greater than 24 hours from the original posting date. 

It displays as follows:  This entry was posted on August 13th, 2009 at 4:23 pm and last updated on August 18th, 2009 at 12:57 pm

The code which needs to be added to the relative files, index.php and single.php for the theme I’m using, is as follows:

<p><small>
This entry was posted on <?php the_time(‘F jS, Y’) ?> at <?php the_time() ?>      
<?php $u_time = get_the_time(‘U’);
$u_modified_time = get_the_modified_time(‘U’);
if ($u_modified_time >= $u_time + 86400) {
echo “and last updated on “;
the_modified_time(‘F jS, Y’);
echo ” at “;
the_modified_time(); } ?>
</small></p>

Showing a WordPress post’s ‘last modified’ date

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As central banks around the globe attempt to implement monetary policy and manage their respective fiat currencies, speculation is being made that they will become net buyers of gold rather than net sellers.  Since the significant breakdown of the Bretton Woods exchange agreement in 1971, which removed gold backing from the US dollar, central banks have only been net sellers of gold for seven years. Many of those seven years have taken place over the past decade as central banks have been reducing their holdings of gold.

North America’s biggest gold conference, Denver Gold Forum, is being held from September 13-16 in Denver Colorado.

In the keynote speech at the conference, Jeffrey Christian, managing director of CPM group says central banks are expected to buy 6 to 10 million ounces of gold annually due to currency uncertainties.  He goes on to say this project is extremely conservative.  According to a metals consultancy, GFMS, central banks are set to become net buyers of gold this year.  Net official sales are forecast to drop to less than 20 tones, the lowest level since 1988. 

Emerging countries which have been building up foreign reserves in currencies are now diversifying into gold due to volatility in the dollar and other major currencies.  China has signaled growing interest in gold and other commodity based assets rather than stockpiling their currency reserves in more US dollars and dollar-denominated assets.

Reuters – Central banks seen becoming net gold buyers

FT – Central banks set to be net gold buyers

Denver Gold Group 2009 Forum

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Environmental Working Group releases the first hard data on the radiation emitted by over 1,200 of the most common cell phones.

Scientists and researches have been divided on how much radiation the body can tolerate being emitted from a cell phone.

The FCC limits Specific Absorption Rate (SAR) measured in watts per kilogram (W/kg) for partial-body exposure including the head to 1.6 W/kg. Generally the lower the SAR the lower the health risk posed by the cell phone.

Environment Working Group’s database with many tested cell phone radiation levels has been suspended: http://www.ewg.org/cellphone-radiation

Old article quoting some of the EWG’s numbers: http://www.computerworld.com/s/article/9217287/What_s_your_cell_phone_s_maximum_radiation_level_Interactive_database?pageNumber=2

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On January 16th 2009, Bank of America (BofA) disclosed with its first ever quarterly loss of $1.79 billion, a US government loan backstop for $118 billion on assets mostly from its government encouraged Merrill Lynch acquisition1. The loan backstop is designed to cover a pool of financial instruments, assets, for up to $118 billion with maturities up to 10 years through the Treasury and FDIC with the Federal Reserve providing the actual non-recourse loan2. The non-recourse loans means in the event BofA cannot repay the loan, the government is entitled to seize the risky assets being pledged by BofA as collateral, but if the loan value exceeds the value of the risky assets, it cannot go after BofA for the remaining loan amount.

There are a few strict limits imposed on BofA when using this loan facility: executive compensation must be submitted and approved by the government, dividends on common shares cannot exceed $.01 per share per quarter for three years without government approval, $4 billion of preferred stock with an 8% dividend rate along with other fees are to be paid to the government, and any material disposal of the risky assets in the pool by BofA has to be approved by the government2

As of July 2009, the overall confidence of the economy has picked up and BofA has never used the funding provided by the government loan backstop. Both sides, the government and BofA, agree the accord was never signed, but the government wants BofA to pay fees in the range of $2-4 billion for having the implicit government guarantee and potential access to the loan facility3.

 

1. Bloomberg – Bank of America Posts Quarterly Loss After Bailout

2. Treasury – Summary of Terms

3. Bloomberg – Bank of America Said to Balk at Paying Backstop Fee

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Investors applied for a total of $6.5 billion in loans from the Federal Reserve through their Term Asset-Backed Securities Loan Facility (TALF) emergency lending program. The TALF program provides low interest loans to investors for purchasing securities backed by auto, credit card and other types of consumer loans. This round, purchases include $4.4 billion in credit-card backed loans and $1.16 billion in auto loans.

Around $14.7 billion in eligible asset-backed securities were sold by American Express, Bank of America, General Electric, Nissan, Ford, and GMAC Inc.’s Ally Bank this round.

In August, $6.9 billion was borrowed and $5.4 billion was borrowed in July by Investors through the TALF program.

The TALF program essential subsidizes investor’s purchases of these assets through artificially low interest rates and non-resource structure, Fed takes bulk of the loss if loan goes bad.

CNNMoney.com – Investors Apply for $6.5 Billion in Loans

Reuters – Investors Requested $6.4 bln under Fed

Financial Times – Fed lends $6.5bn for securities buys

AP – Banks borrow more from emergency Fed loan program

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Bloomberg News unit sued the Federal Reserve under the Freedom of Information Act for a list of companies in their emergency lending programs .  The emergency lending programs created last year by the Federal Reserve contains near $2 trillion in loans.

 The Manhattan Chief U.S. District Judge ruled against the central bank saying the central bank “improperly withheld agency records” by “conducting an inadequate search” after Bloomberg News reporters filed a request under the information act.  The Judge gave the Fed 5 days to locate the documents and turn them over.

All the Federal Reserve’s actions have been taken, in their opinion, in the public’s interest.  If the Fed’s actions are the public’s interest and the public’s money is being used, the public is entitled to know.  Perhaps, if the Fed had known last year, using the public’s money in the public’s “best interest” would compromise their secracy, they might have been more stingent with their lending standards or more transparent about their process.

Bloomberg Article

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The Federal Reserve announced on Aug 17th it would extend the emergency rescue loan program, Term Asset-Backed Securities Loan Facility (TALF) with capacity of up to $1 trillion, by another 3 to 6 months.  The Fed and Treasury justify this extension of the program deadlines by saying the ABS and CMBS markets “are still impaired and seem likely to remain so for some time.”  There is a definition and breakdown of the purpose and effects this TALF program has on the markets in an earlier article

There are two parts to TALF.  One provides loans for market participants to purchase newly issued commercial mortgage-backed securities (CMBS) and the other provides loans for other asset-backed securities (ABS) and CMBS issued before Jan 1st 2009.  The portion of the program covering newly issued CMBS was extended from Dec 31st to June 30th while the portion covering other ABS and older CMBS was extended from Dec 31st to March 31st.

The Fed originally started TALF with a capacity of $200 billion and was backed by $20 billion from Treasury’s Troubled Asset Relief Program (TARP).  They later announced it could expand to a capacity of $1 trillion.  The commercial real-estate industry and 41 House members including Barney Frank have requested the Fed extends the program deadline until December 2010.

Even though the capital markets are improving and recovery is slowly bur surely taking place, the Federal Reserve is going to continue helping consumer lenders with tax and printed money.  The Federal Reserve has now extended the TALF program which will continue providing cheap government financing to investors until the Fed decides otherwise.

Bloomberg – Fed Extends TALF Program for Commercial Real Estate

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Federal Reserve Liquidity Swap Lines

 There are two types of Liquidity Swaps the Federal Reserve by way of the Federal Open Market Committee has established: Dollar Liquidity Swap Lines and Foreign-Currency Liquidity Swap Lines.

 

Dollar Liquidity Swap Lines

A few months after the credit crunch first began, December 12th 2007, the Federal Reserve established agreements with 14 other central banks to provide them with US dollars in exchange for the equivalent amount of their currency for a period of time ranging from overnight to 3 months.  The equivalent amount of their currency is determined by the Foreign Exchange (FX) rate at that point in time and when the swap reaches maturity (overnight to 3 months), the currencies are exchanged at the original FX rate.  Another words, if any of the markets regulated by the other 14 central banks needed US dollars, their central banks would be able to obtain them directly from the Federal Reserve at a fixed rate and for a fixed period.  The Federal Reserve charges a “market-based rate” to the foreign central bank in exchange for this product.  The goal is to assist the other 14 central banks in providing US dollar liquidity to their respective markets.  The 14 other central banks with access to US dollars through this program are: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank.  The FOMC has set this program to expire on February 1st 2010.  The current amounts of dollars drawn by other banks from the Federal Reserve are reported on their weekly Thursday 4:30pm EST published balance sheet.

 

Foreign-Currency Liquidity Swap Lines

A year and 5 months after the Dollar Liquidity Swap program, April 6th 2009, the Federal Reserve announced foreign currency liquidity swaps with 4 other central banks.  Essentially, this allows the Federal Reserve to exchange US dollars for foreign currency at a fixed amount for a fixed period.  In a way, this is exactly opposite the original dollar liquidity swap program.  The goal is to provide the Federal Reserve with sufficient liquidity in the foreign currency for U.S. institutions and markets.  The 4 central banks in this program are: the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank.  These swap lines will extend until February 1 2010.

 

Federal Reserve Liquidity Program Detials: http://www.federalreserve.gov/monetarypolicy/bst.htm

Federal Reserve US Dollary Liquidity Swap FAQ: http://www.federalreserve.gov/newsevents/reform_swaplines.htm

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On Tuesday, August 11th, the Federal Reserve purchased an additional $2.7 billion of US Department of Treasury bonds maturing from August 2026 through May 2039, essentially 17-30 year bond maturity dates. In March, the Federal Reserve stated it would purchase up to $300 billion in US Treasuries through September.

Yesterday, Aug 12th, it announced it will extend the Treasury purchase program until October and keep the current limit of $300 billion.  By extending the deadline for the Treasury purchase program, the Federal Reserve keeps the possibility open it might want to expand the program, if it determines necessary.  As of Tuesday, Aug 11th, it has aquired a total of $252.7 billion out of its $300 billion goal in US Treasury debt according to its balance sheet.

Bloomberg article on $2.7 billion purchase
Bloomberg Fed Treasury Purchase Ticker
Federal Reserve August 11th Purchase Announcement

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The two day Federal Reserve Open Market Committee meeting ended today.  Fed official press release linked below.

The majority of monetary policy programs stayed the same.  Fed Funds rate will continue to be held at a record low of 0 – 1/4% for an “extended period.”  The programs to purchase up to $1.25 trillion of agency, GSE (Freddie, Fannie, etc), mortgage-backed securities and up to $200 billion of agency, GSE, debt will continue until the end of 2009 as originally stated in the March 18th announcement.

There has been a change in the program regarding the $300 billion of US Department of Treasury Debt to be purchased, essentially debt monetization.  “…the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.” 

The purchase of $300 billion Treasuries was originally planned to end by September, but now will be extended an extra month.  They word the addition of one month to the Treasury purchase program as follows, “the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.”

The statement then ends with the usual reassurance the Committee will continue to monitor and evaluate its actions based on the changes occurring in the markets and will adjust accordingly.

 

Federal Reserve Open Market Committee Monetary Policy Announcement Aug 12 2009

Bloomberg Article

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CNN Money is maintaining a great resource tracking all the bailout money.

For an overall comprehensive list of all the bailout programs by Congress, Treasury and the Fed

List of 650 banks, so far, which have received bailout money

List of 94 failed banks, so far, which the FDIC has taken over

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Term Asset-Backed Securities Loan Facility – Definition and Explanation

“The Federal Reserve created the Term Asset-Backed Securities Loan Facility (TALF), to help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by auto loans, student loans, credit card loans, equipment loans, floorplan loans, insurance premium finance loans, loans guaranteed by the Small Business Administration, residential mortgage servicing advances or commercial mortgage loans,” – The Federal Reserve

Essentially, the Fed is stating, market participants, without this government program, would not be able to meet the credit needs of households and small businesses. In simple economic terms, the demand for credit from households and small businesses would not be met with a sufficient supply of credit from market participants.

There are many different ways to approach this situation. This should be the most straight forward and simple explanation. Market participants, who are businesses that are required to turn a profit or they will go bankrupt, will supply credit to these households and small businesses until it becomes too risky resulting in unprofitable loans. If there is not a sufficient supply of credit in the market, it most likely means supplying credit is not profitable or the risk outweighs the return. The main risk facing the market participants is that the households and small businesses will default on their credit and the market participants will not make a profit, potentially going bankrupt.

Through this Loan Facility, the Federal Reserve has taken on the role of subsidizing market participants, banks and large investors, thus eliminating some of the downside risk that households and small businesses will default. Since some of the downside risk has been mitigated by the Fed, the market participants are now in turn willing to supply more credit, make more loans. The downside risk of potential default by households and small businesses has been transferred from the balance sheet of banks and investors to the Federal Reserve’s balance sheet which is funded through our tax dollars and the Fed’s ability to print dollars.

CNN Money – Breakdown of TALF Program: To TALF or not to TALF

Federal Reserve Definition TALF

Federal Reserve TALF F.A.Q. (34 pgs)

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Unconventional monetary policy announced by the Federal Reserve Open Market Committee on March 18 2009:

“To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion.  Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.”

Essentially the Federal Reserve has announced its forcasted purchases for 2009 which will expand its balance sheet.  It has forecasted for 2009, purchases of up to $1.25 trillion in agency mortgage-backed securities and $200 billion in agengy debt.  It has forecasted from March to September of 2009, purchases of up to $300 billion of longer-term US Department of Treasury securities.  All these forecasted purchases for 2009 will result in a total $1.75 trillion increase of the Federal Reserve’s balance sheet over 2008.

The Fed will need to fund itself in order to purchase all of these securities and debt from the markets.  The Federal Reserve has three methods of funding: the Fed can borrow the funds, the Fed can ask the Treasury to borrow funds, or it can print money/credit commercial banks’ reserve balances at the Fed.


Federal Reserve Press Release on March 18 2009

US Budget Watch Summary of Press Release

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Current accounting of the Federal Reserve’s Balance Sheet as of July 30th 2009

  • $695.758 billion – U.S. Treasury Securities
  • $105.915 billion – Federal Agency Debt Securities
  • $542.888 billion – Mortgage-backed Securities
  • $274.085 billion – Direct Bank Lending (Loans through Discount Window and similiar programs, plus lending through term auction credit)
  • $104.347 billion – Bailout Funds for Bear Stearns and AIG
  • $87.783 billion – Central Bank Liquidity Swaps
  • $68.106 billion – Commerial Paper/Money Market Facilities
  • $30.422 billion – Term Asset-Backed Securities Loan Facility (TALF)

Grand Total – $1.9 trillion

 

WSJ – Federal Reserve Balance Sheet, graph and breakdown

Federal Reserve’s Latest Data, released every Thursday

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When the government wants to spend money it does not have, there are basically three options, raise taxes, print money or borrow money.  The Monetization of Debt involves the issuance of debt or simply known as borrowing money done by the Dept of Treasury and the printing of money done by the Federal Reserve.

Monetizing Debt is essentially the Federal Reserve buying government debt, bonds, issued by the Treasury with money the Fed has printed.

The overall picture: One branch of the government, the Treasury, is borrowing money from the public and then the public is being paid back with printed money by another branch of the government, the Fed.  The net result of buying government debt with government issued money is an increase of the money supply which can cause inflation. 

General concepts and Step by Step breakdown of the debt monetization process

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Twitter Tools – Allows tweets to be published as blogs and allows blogs to be published as tweets, great integration – http://wordpress.org/extend/plugins/twitter-tools/

Google Analyticator – adds the google analytics code automatically to every blog page – http://wordpress.org/extend/plugins/google-analyticator/

Google Authenticator – Adds 2-factor login authentication – http://wordpress.org/extend/plugins/google-authenticator/

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