Obama Sets Economic Record–For Failure

So did President Obama save us from the financial crisis and rebuild America’s economic strength?

Most media would have us believe that’s the case. As we previously noted, CNBC’s John W. Schoen reported that, “Obama’s biggest parting gift to Trump may be the economy,” since the unemployment rate has dropped to a nine-year low of 4.6%. AP’s Josh Boak repeated the statistic in an article, “Obama leaving behind much stronger economy.” And there are many, many other examples.gdp

Washington Post columnist Catherine Rampell wrote recently that the president-elect will be taking office with “among the most favorable economic conditions … imaginable.” She clearly does not have a very vivid imagination.

Yet other statistics bear out that Obamanomics has been an economic bust, not a boom. Consider the lack of economic growth. In the 85 years for which the U.S. Bureau of Economic Analysis has calculated the annual change in real gross domestic product (GDP), the period from 2006 through 2015 is the only 10-year period during which annual growth never reached 3%. Before now, the longest period during which the economy failed to grow by at least 3% was the four-year period from 1930 to 1933. That is, during the Great Depression.

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The Apolitical Fed and the “Big, Fat, Ugly Bubble”

“ … nothing at the Fed is political.”                                                     Neil Kashkari, new head of the Minneapolis Fed

The Federal Reserve Board was designed to be a nonpartisan entity, existing solely for the benefit of the American economy. Apparently, there is a flaw in the design.

During the first debate between presidential candidates Hillary Clinton and Donald Trump, Mr. Trump accused the Federal Reserve Board of keeping interest rates near zero to help Democrats in November, while creating a “big, fat, ugly bubble” that will pop after the election when the central bank raises rates.

According to Ruchir Sharma, chief global strategist for Morgan Stanley, “This riff has some truth to it.”djia

“Since the Fed began aggressive monetary easing in 2008,” Sharma wrote on Zero Hedge, “my calculations show that nearly 60% of stock market gains have come on those days, once every six weeks, that the Federal Open Market Committee announces its policy decisions.

“Put another way, the S&P 500 index has gained 699 points since January 2008, and 422 of those points came on the 70 Fed announcement days. The average gain on announcement days was 0.49%, or roughly 50 times higher than the average gain of 0.01% on other days.”

It must be a coincidence that gains are 50 times higher on days when the FOMC announces policy decisions.

Sharma’s conclusions are further supported by this chart from Showrealhist.com, which shows an inflation-adjusted Dow Jones Industrial Average.  Note the upward surge that began when the Fed began QE in 2008.

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Fed, Not Capitalism, Responsible for Income Inequality

“Income inequality in the United States has been growing for decades, but the trend appears to have accelerated during the Obama administration.”                                                                                                 The New York Times

Today, America has the widest gap in income equality in history.

If capitalism is to blame, as French economist Thomas Piketty claimed in his bestseller, Capital in the Twenty First Century, how can that be?

During the past eight years, the federal government has virtually taken control of healthcare, the Internet (regs to come) and, to a great degree, the financial sector. The minimum wage has doubled in many markets and spending on entitlement programs such as the supplemental nutritional assistance program (SNAP) has skyrocketed.Gini Coefficient

In other words, America has moved much closer to socialism, with greater government control over our lives. Capitalism has ebbed, as fewer businesses are being formed and fewer still are going public.

President Obama made income inequality the main theme of his 2015 Economic Report of the President and his last two State of the Union speeches.  As Occupy Wall Street, MoveOn.org and other left-wing and left-leaning organizations have made income equality their rallying cry, the gap between rich and poor has widened.

How come?

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