The rally in U.S. Treasuries this year is due in large part to China’s continued appetite for longer-term U.S. government debt. In the first five months of this year, China bought $107 billion of Treasury debt maturing in more than one year, up from $81 billion for all of 2013. That pace is the fastest on record and has put downward pressure on yields even in the face of the Federal Reserve’s decision to end quantitative easing by October.
The U.S. has experienced 11 recessions since the end of WWII and the most recent one has been the most severe. The Great Recession started in December 2007 and ended in June 2009 as determined by the National Bureau of Economic Research, an independent group of economists that has officially defined business cycles since the 1920s. So June 2014 marks the fifth anniversary of the end of the Great Recession.
The U.S. Federal Reserve Bank’s three rounds of quantitative easing and near-zero target for the federal funds rate have not provided the promised stimulus. The idea that dramatically expanding the Fed’s balance sheet and rapidly increasing the monetary base would revitalize the real economy is a fantasy. Printing fiat money does not lead to economic growth.
Today’s new innovations and technologies are having a tremendous positive — and disruptive — impact on the United States and the world. These new drivers of growth, which likely will create trillions of dollars in new economic output, are transforming industries, labor markets, and the global economy at warp speed. But they also are forcing companies to redesign business models and workers to adapt or face harsh consequences.
We're all familiar with the book, The Grapes of Wrath, the depression tale of millions of desperate families during the 1930s that headed to California for promised jobs. I'm not suggesting we're at this stage yet, but for millions of unemployed Americans, they are finding that the local job market has dried up and they may need to relocate to more prosperous areas.
Broad immigration reform may have stalled but Rep. Goodlatte (R-VA), Chairman of the House Judiciary Committee, is considering reforming the asylum system. He recently said, “Our immigration system should be generous to those persecuted around the globe, but we must also ensure our compassion isn’t being abused by those seeking to game the system.” Goodlatte and others are on a fact-finding mission that will shortly lead to legislation.
When President Obama announced his Climate Action Plan, he essentially aimed the big guns of government at the Coal Industry. By directing the EPA to draft carbon emission standards for coal fired power plants, that is unattainable with current technology, many believe the President has set the table to legislate or flat out mandate the end of coal generated electricity.
What is the quickest way to increase the wealth of a nation? Increase the immigration of knowledgeable people. The current value of all of America’s physical capital, like factories and buildings, is about $45 trillion. But the value of all human capital is 16 times that — about $740 trillion. Immigration adds human capital to the United States in the cheapest way.
On December 19th, Federal Reserve Chairman Ben Bernanke announced the decision to begin tapering monthly bond purchases indicating that “downside risks to growth have diminished.” However, as the United States appears to slowly recover from its worst recession since the Great Depression, many are questioning their level of confidence in American Capitalism. In fact, some emerging markets are beginning to view a Chinese-like model of state capitalism as favorable.
Many immigration opponents are focusing their ire on Republicans who support expanding legal immigration — an important part of immigration reform — to dissuade them from restarting the reform effort. Radio host Laura Ingraham recently wrote that Congressman Ted Poe, R-Humble, who supports an expanded guest worker visa program, “does not see what (immigration) does to U.S. wages.”
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