Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ
09 April 2018 | Pago Pago, American Samoa
An Informed Atheist Re-Addresses Christianity
10 March 2018 | Pago Pago, American Samoa
A Progressive Reform Program for America
10 March 2018 | Pago Pago, American Samoa
Supply Side and Libertarians Are Wrong and Not Supported by the Data
10 March 2018 | Pago Pago, American Samoa
How Income Inequality Injures People and the Economy
22 August 2017 | Pago Pago, American Samoa
A Democratic Reform Program for America
22 August 2017 | Pago Pago, American Samoa
The Supply Side Libertarians Are Wrong and Not Supported by the Data
22 August 2017 | Pago Pago, American Samoa
The Rise of Economic Ignorance
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part VI)
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part V)
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part IV)
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part III)
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part II)
22 August 2017 | Pago Pago, American Samoa
The Rise of Corporate Dominance and the Rise of Income Inequality (Part I)
22 August 2017 | Pago Pago, American Samoa
Racial Hatred Is Confused
22 August 2017 | Pago Pago, American Samoa
What To Do About North Korea
22 August 2017 | Pago Pago, American Samoa
On Neoliberalism
22 August 2017 | Pago Pago, American Samoa
Ban Hate Marches and Assemblies
22 August 2017 | Pago Pago, American Samoa
On Miss Piggy and Mr. Pork
22 August 2017 | Pago Pago, American Samoa
The Demise of the Democratic Party
09 August 2017 | Pago Pago, American Samoa
On Elitism

A Note on Our Macro Economic Mess

27 June 2015 | Pago Pago, American Samoa
Kimball Corson
A Note on Our Macro Economic Mess

It is not well understood among economists, nor Fed officials and hardly at all by the general public that the Fed has caused systematic, persistent and massive falsification and distortion of financial and other asset prices at every risk and yield level and throughout all sectors of the financial and other markets.The single most important component in determining prices in all of capitalism is the money market rate of interest. It sets the cost of carry and the present valuing discount rate in all asset markets, and therefore indirectly and largely fixes or determines the bid prices for all debt, equity and derivative securities in the global financial system especially.

By its systematic policies targeting zero interest rates, the Fed has interfered massively and erroneously in all such markets and created huge distortions in and false asset pricing. As bad, the Fed's zero policy has markedly increased financialization of the economy. Lower interest and therefore discount rates and carrying costs cause the present values of the income streams from all assets to be inflated and with that the prices of those assets, resulting in bogus price increases and distortions. Readjustment back toward true market determined interest rates and attending asset prices with some definancialization will inevitably be horrific and disastrous. We don't know much how to deflate and disaggregate slowly in increments.

To fuel these distortions and false asset prices and do what it thought was necessary to promote private investment and consumption and reach its target inflation rate of 2%, the Fed has provided huge quantities of liquidity to the banking and financial system in the forms of reserves for the banks and open market purchases of non or marginally performing financial assets for the financial system, rendering the balance sheets of its eight private member banks insolvent and rich much wealthier.

The impacts of these misguided policies, beyond distorting and falsifying financial and other asset prices, has not been to increase private investment or consumption as hoped, but has been to hugely augment the wealth of the wealthy and derivatively income inequality in the US, with the result of much more hoarding of income by the wealthy, negating any real impact on investment or consumption. Even the very rich only have so much time to buy things and those they need are zip. The wealthy have too largely been the beneficiaries of the price distortions and increased liquidity provided by the Fed because they hold most the financial and other assets the prices of which have been bubbled up by the Fed. However, absent significantly increased aggregate demand, the asset price distortions and the attending economic changes and uncertainty, have actually undermined the investment climate and expenditure in the US.

The income inequality resulting has left the middle class slightly worse off and disadvantaged in regard to its capacity to consume. The Fed's sustained inability to reach its target rate of 2% inflation, because of threatening deflation, and our bubbled up financial markets show us how precarious our economic position is. Unwinding and readjusting slowly is not something anyone understands how to do well or wants do. Income inequality and hoarding directly relate to the Fed repeatedly missing its inflation target because both compromise on aggregate demand which creates deflationary pressures that cut against the Fed's targeting efforts.

On balance, we sit in a new "lower low" for aggregate demand and will stay there until we have a horrific unwinding of these distortions and bogus prices most likely by a financial crash accompanied as before with a recession or worse.
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Vessel Name: Altaira
Vessel Make/Model: A Fair Weather Mariner 39 is a fast (PHRF 132), heavily ballasted (43%), high-aspect (6:1), stiff, comfortable, offshore performance cruiser by Bob Perry that goes to wind well (30 deg w/ good headway) and is also good up and down the Beaufort scale.
Hailing Port: Lake Pleasant, AZ
Crew: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
About:
Kimball Corson: I am a 75 year old solo sailor, by choice. However, I did take on a personable, but high maintenance female kitten, now a full grown cat, named KiKiPoo when she is sweet, or KatKatPo after she has just killed something like a bird or bat. [...]
Extra:
Although I was a lawyer and practiced law with good success for thirty years, creating significant new law, I never really believed in the law, the politics of law or in the over reaching self-interest of most lawyers I met. Too much exposure to Nietzsche and other good and seriously thoughtful [...]
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Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ