Thursday, April 17, 2014
YOLO COUNTY NEWS
99 CENTS

The Fed chickens out

The talk for the previous month or so has centered around how much the Fed was going to taper its securities purchases, i.e., decrease its money printing from the current level of nearly $3 billion per day. After all, we have heard through the media how great the economy is doing (regular folks tell a different story) and two of the three major indexes hit an all-time high Wednesday.

But, Ben Bernanke and the Fed decided that the economy was too fragile to handle any loss of support. What’s wrong with this picture? Markets at all-time highs and the economy is weak? So, who’s right, Wall Street cheerleaders or Bernanke?

Bernanke is right. Although many, myself included, believe his policies are all wrong, he does see through the hype and realizes that the economy is still in very poor shape. The questions are: 1) How long can he continue with extreme measures without doing more harm than good, and 2) Why is he convinced that this is the correct policy when it seems that the problems he is trying to solve — weak employment and GDP growth — are not responding.

Recent data show that 95 percent of the wealth created since the financial crisis has gone to the wealthiest 1 percent. The top 400 billionaires in the country have accumulated nearly $1 billion each. At the same time, labor force participation is at a 35-year low, and GDP “growth” stinks. Thanks, Uncle Ben. The wealth doesn’t seem to be trickling down.

The question remains as to whether the wealth is real. If everyone sells their stocks, prices can plummet fast. That is what economists call a bubble, and many, including myself, think we are deep in bubble territory.

So, while the Fed has been able to put lipstick on a pig, the pig (the U.S. economy) may be uglier than ever when it is eventually forced to remove this artificial support. In the meantime, the wealthy will enjoy some fine Champagne while the middle class claws out a living.

Greg Johnson

Davis

Letters to the Editor

LEAVE A COMMENT

Discussion | No comments

The Davis Enterprise does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Recent Posts

  • Enter your email address to subscribe to this newspaper and receive notifications of new articles by email.

  • .

    News

    Davis wins USA Today Best Cycling Town honor

    By Dave Ryan | From Page: A1

     
    Benefit set to help local bike legend

    By Adrian Glass-Moore | From Page: A1 | Gallery

     
    Jury deliberates murder, elder-abuse charges

    By Lauren Keene | From Page: A1

     
    State’s health care sign-ups beat projections

    By The Associated Press | From Page: A2, 1 Comment

    For the record

    By Enterprise staff | From Page: A2

     
    California residents divided on drought solution

    By San Francisco Chronicle | From Page: A2

     
    For the record

    By Dave Ryan | From Page: A2

    Three killed in attack on Ukrainian base

    By The Associated Press | From Page: A2 | Gallery

     
    Downtown post office set to reopen

    By Thomas Oide | From Page: B3

    Run or walk to prevent child abuse in Yolo County

    By Enterprise staff | From Page: B3 | Gallery

     
    Nominations sought for charity paint giveaway

    By Enterprise staff | From Page: B3

     
    Scholar will discuss human trafficking in Friday talk

    By Enterprise staff | From Page: A3

    Per Capita Davis: Now, for some good news

    By John Mott-Smith | From Page: A4

     
    Birch Lane hosts 50th anniversary party

    By Enterprise staff | From Page: A4

    Hannah Stein reads poetry at gallery

    By Enterprise staff | From Page: A4

     
    Davis Food Co-op to offer free bags on Earth Day

    By Enterprise staff | From Page: A4

    Get in the picture with school board candidate

    By Special to The Enterprise | From Page: A4

     
    KDVS hosts on-air fundraiser April 21-27

    By Enterprise staff | From Page: A4

    Tickets on sale for Pence Garden Tour

    By Enterprise staff | From Page: A4

     
    Fundraiser planned for Allen’s campaign

    By Enterprise staff | From Page: A4, 2 Comments

    Food Co-op board plans open house

    By Enterprise staff | From Page: A4

     
    Davis Downtown hosts candidate forum

    By Dave Ryan | From Page: A4

    Learn more about Google Glass at talk

    By Enterprise staff | From Page: A4

     
    Barbecue celebrates winter shelter program

    By Special to The Enterprise | From Page: A5

    Sign of things to come

    By Fred Gladdis | From Page: A8

     
    Davis Soroptimists celebrate 60 years

    By Special to The Enterprise | From Page: A8

    .

    Forum

    Fancy meeting you here …

    By Special to The Enterprise | From Page: B5

     
    Don’t miss a Trokanski dance

    By Letters to the Editor | From Page: A6

    Frank Bruni: The oldest hatred, forever young

    By New York Times News Service | From Page: A6, 4 Comments

     
    Expert: Free parking is a myth

    By Special to The Enterprise | From Page: A6, 1 Comment

    Have they really learned?

    By Letters to the Editor | From Page: A6

     
    A great community effort

    By Letters to the Editor | From Page: A6, 2 Comments

    Public Health Heroes honored

    By Letters to the Editor | From Page: A6

     
    Tom Meyer cartoon

    By Debbie Davis | From Page: A6

    .

    Sports

    Huge inning propels Pleasant Grove past DHS

    By Enterprise staff | From Page: B1

     
    Giants edge Dodgers

    By The Associated Press | From Page: B1 | Gallery

    Foster steps down as Lady Blue Devil basketball coach

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    River Cats’ streak reaches six wins

    By Enterprise staff | From Page: B1

    Landry evolves into UCD women’s lacrosse leader

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    Youth roundup: Martinez, Chan come up big at gymnastics regional

    By Enterprise staff | From Page: B2 | Gallery

    Kings drop season finale to Suns

    By The Associated Press | From Page: B2

     
    Angels get past A’s in extras

    By The Associated Press | From Page: B8 | Gallery

    .

    Features

    .

    Arts

    Wineaux: Good deals off the beaten path

    By Susan Leonardi | From Page: A7

     
    Rockabilly phenom to play at The Palms

    By Enterprise staff | From Page: A7

    HellaCappella showcases a cappella singing

    By Enterprise staff | From Page: A7

     
    ‘One’ singular sensation to open at DMTC

    By Enterprise staff | From Page: A7

    25th annual state clay competition exhibit at The Artery

    By Enterprise staff | From Page: A7

     
    .

    Business

    .

    Obituaries

    Tapan Munroe

    By Special to The Enterprise | From Page: A4

     
    .

    Comics

    Comics: Thursday, April 17, 2014

    By Creator | From Page: B6