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Daily Archives: October 19, 2013

Race riots: A wake-up call for Russia? – Inside Story – Al Jazeera English

Race riots: A wake-up call for Russia? – Inside Story – Al Jazeera English. (source)

The murder of three people in Moscow has brought to the surface the increasing hatred felt towards immigrants in Russia.

The tendency to blame the migrants is misguided. If you look at the detentions after the riots, the Russian government detained 1,200 migrants … on the outskirts of Moscow … and more than 1,000 of them were documented. They had proper visas, and they were fine. So the problem is more complex than the illegal migration.

Innokenty Grekov, a programme associate on Hate Crimes at Human Rights First

Chanting “Russia for Russians”, several thousand people began rioting in Moscow after an ethnic Russian was murdered in front of his girlfriend.

The killing, blamed on a man from Azerbaijan, caused some of the worst race riots in years.

Police arrested more than 1,000 people – mostly migrants. Since then, two men, one Azeri and one Uzbek, have also been murdered.

In a recent survey, almost nine out of ten Russians said they want to limit immigration.

“The influx of labour migrants is an economic necessity. Russia does not have enough workforce. The Russian government delivers to the people, their incomes have been growing over the years and Russian residents do not seem willing to take manual hard labour … In Moscow … unemployment is zero, which means indeed that this influx of migrants is a necessity,” Maria Lipman, a political analyst at the Carnegie Moscow Center, says.

But according to a Ukrainian polling institute, 86 percent of the Russians questioned feel their government should limit the influx of foreign workers. Nine percent felt there was no need; and five percent felt it was hard to say.

But when asked if the government should actively support integration, 43 percent said ‘yes’, 45 percent said ‘no’; and 12 percent said it was hard to say.

Immigration is seen by many as a threat to the stability of Russian society. The mayor of Moscow reportedly said that Moscow would be the world’s safest city if there was no immigration, which includes, he says, the arrival from internal immigrants from inside Russia.

Why are some Russian officials stoking xenophobia? What are the root causes of rising anti-immigration sentiment in Russia and what are Moscow’s plans to do something about it?

To discuss this, Inside Story, with presenter Jane Dutton, is joined by guests: Sergey Frolov, the deputy editor-in-chief of Trud newspaper; Maria Lipman, a political analyst at the Carnegie Moscow Center; and Innokenty Grekov, a programme associate on hate crimes at Human Rights First.

“This problem has three roots. First of all the illegal immigration, the second one is the high level of bribery among the russian and especially Moscow police. And the third one is [that] the people who came here to live and to work, they don’t like to be adapted, to communicate with local people … They didn’t even try to assimilate in Russia because normally these people live in legal flats and they live in very small circles together with their relatives and their friends and they try not to communicate with the people outside. That’s why there is no understanding between each other.”


Thousands protest austerity cuts in Portugal – Europe – Al Jazeera English

Thousands protest austerity cuts in Portugal – Europe – Al Jazeera English. (source)

Thousands of Portugese took the streets of Portugal’s two most populated cities to demonstrate against planned cuts of pensions and salaries.

Saturday’s demonstrations are a response to the government’s decision to extend austerity measures in the 2014 budget.

In Lisbon, hundreds of buses slowly crossed the April 25th bridge in a protest organised by Portugal’s main labor group, the General Confederation of Portuguese Workers. In the northern city of Porto, thousands gathered in the main square shouting anti-austerity slogans.

Portugal, currently engaged in an international aid programme, is focusing next year’s fiscal efforts on spending cuts, reducing state pensions and cutting public workers’ wages.

Unemployed teacher Sofia took part in the protest to ask for government resignation.

“I’m here to fight for more work and better wages and against this government’s austerity measures, so I want them to leave together with the Troika,” Sofia said referring to the trio of European Commission, International Monetary Fund and European Central Bank in charge of handling bailouts of distressed euro zone countries.

The budget includes wage cuts for public sector workers ranging from 2.5 percent to 12 percent on monthly salaries of over 600 euros. Pension cuts should bring savings of 728 million euros.

“I am a retired civil servant and I’m suffering from the cuts. I worked and studied to earn more than 2,500 euros without any government help and now they are cutting my pension,” pensioner Maria Barreto said.

The country’s 78-billion-euro bailout formally ends in mid-2014 when Portugal should return to financing itself normally in bond markets, which it stopped doing in 2011 when its debt crisis first hit.

Seeking a better future Ricardo Pereira travelled from Torres Novas to Lisbon: “I’m here to fight for a better future for me and for the next generation and against this government’s austerity measures.”

The budget aims to slash the budget deficit to 4 percent of GDP next year from 5.9 percent in 2013. It may still face challenges from the Constitutional Court that has previously rejected some government austerity measures.

‘Musing’: Local Growth Myth

Giant tailings waste "pond" produced by the Suncor Millenium and Steepbank operations.

Giant tailings waste “pond” produced by the Suncor Millenium and Steepbank operations, Alberta.

I have made use of our local community newspaper (Stouffville Sun-Tribune) to voice my opinion on a number of issues. From a guest editorial to letters to the editor (see this and this  as examples). And, when one of the columns writers threw out a challenge to  readers to share visions of all the positive changes that the Town should envision as we continue to grow at one of the highest rates in all of Canada (see this), I had to respond. The following is the text of that response:

Re your Off the Top column, More to the east, please.
I just want to challenge the implicit assumption in your column regarding input from citizens on future growth ideals. Your framing of the question, with only ‘positive’ attributes as examples of the consequences of growth, implies that growth is solely a positive force, something that always benefits us.
I would have to challenge that presumption. There is accumulating evidence that, in fact, growth is detrimental to the planet and society in general.
The ‘growth culture’ we have as an unstated assumption about how the world works is based on only a couple of centuries of quick sociopolitical and economic change on a global scale. More and more are arguing that this phenomenal growth has been due to the extraction and exploitation of cheap and easily-accessible fossil fuels. The rapid use of this resource has resulted in a number of consequences, some intended and some not. There have been amazing technological changes and healthcare ‘advances,’ but there has also been greater wealth disparity, environmental degradation, and violence on a global scale.
In any kind of discussion on growth, we need to not only be aware of these negative consequences (and these cannot be avoided, otherwise they would have been by now), but we also need to include them in our worldview and question the prevailing assumption that growth is good.
The late Donella Meadows, co-writer of a very respected study in 1972 entitled The Limits to Growth, wrote in a book on Complexity Theory, that humans often discount the negative aspects of growth, focusing instead in the immediate, short-term gains that can be made; and, that we often push growth in the wrong direction, making worse the social ‘issues’ we try to ‘fix’ through increased growth.

So, a question I’d like to pose to readers in this discussion is this: given the other side of the coin, do we really want the growth targets imposed by the ‘state?’ Or do we tell our leaders to stop now, while there is some ‘country’ left in the Town.

Dozens flee homes after train derails west of Edmonton – Edmonton – CBC News

Dozens flee homes after train derails west of Edmonton – Edmonton – CBC News. (source)

A CN Rail train carrying liquefied petroleum gas and crude oil has derailed about 80 kilometres west of Edmonton, prompting 49 people to evacuate homes in the area.

Parkland County Emergency Services says it received a call about the accident involving a westbound train around 1 a.m. MT Saturday.

The Transportation Safety Board says 13 cars — four carrying petroleum crude oil and nine carrying liquefied petroleum gas — left the tracks along Highway 16 and Range Road 61 in the hamlet of Gainford.

Carson Mills, spokesman for Parkland County, told CBC News that two of the cars containing liquefied petroleum gas are on fire.

Highway 16 traffic has been re-routed north along Secondary Highway 765, westbound along Secondary Highway 633 and returning southbound on Secondary Highway 757.

View Larger Map



Preserving the Harvest: Learn why and how to use the sun to dehydrate foods

Preserving the Harvest: Learn why and how to use the sun to dehydrate foods. (source)

I don’t know a gardener, myself included, who does not sometimes find himself or herself with more fresh food ripe and ready to eat than can be used even after striving for an extended harvest. We want to honor the food I grow and the efforts by many beings to make it available to us by eating all of it. I’ve already written about storing some crops indoors during the winter in this post. However, many crops cannot be stored without some processing. In this post I’ll discuss one of those methods, dehydration or drying, that we use to process some of the food we grow for storage and why and how we use a solar food dryer for this purpose.

I’ve arranged the post into sections. If you’ve not heard of preservation by dehydration before and want to know what it is and why and how to do it, read the whole post. If you know what dehydration is but wonder why anyone would use the sun as a dehydrator rather than buy one of the electrical appliances sold for the purpose, start at Solar Powered Food Dehydration. If you want to skip directly to the design we used and the modifications we made to it, start at Our Solar Food Dryer. And if you just want to know what foods we’ve dried and how we use them, skip to Foods We Dry.

One of the ways to preserve foods for a longer period of time than they normally last after harvest is dehydration or drying. Dehydration reduces the moisture content enough that spoilage organisms such as bacteria, yeasts, or molds cannot survive to attack the food during storage. Dehydration also concentrates the natural sugars in foods, making them as or in some cases more appealing to the palate as the fresh version. And dehydrated foods retain most of their nutrients, though if you choose to blanch them first vitamin C will be destroyed. Drying is well suited to fruits (including starchy fruits such as squash that we usually call vegetables), some green leafy vegetables, herbs, mushrooms, and seeds and grains. With care meats can be dried as well.

Seed and grain crops like beans and corn dry well enough in the range of temperatures and humidity found in a typical residence by spreading them in a thin layer on a screen and perhaps stirring them on occasion. They will dry sufficiently for long-term storage over a time span of a few days to a few weeks depending on their water content at harvest and the relative humidity in your residence. Sunflower seeds can be dried within the seedhead if the relative humidity of the surrounding air is low enough; otherwise remove them from the head and spread them on a screen as you would with beans or corn. I leave corn on its cob and beans in their shells while they are drying, removing the cob or shell after drying is complete. The dried seeds can be stored in glass or plastic containers (glass is preferable if you have a rodent problem).

Most herbs have a low enough water content that they can be dried successfully by the methods suggested in herb books: bundle the stems together and suspend the bundles in a location that does not receive direct sun, or put seedheads into a paper bag and remove the seeds when they and the seedheads are crispy dry. I suspend bundles of herb stems from a clothes drying rack located in a bedroom on the north end of the house, removing the leaves, the part generally used, when they are crispy dry and storing the leaves in a glass jar. I also use an apparatus called a Food PANtrie hanging from a homemade PVC pipe rack in our kitchen, as shown in the photo below, to dry herbs.

By cutting stems of herbs to a size that fits on the screens and piling the stems onto the screens, I can dry herbs successfully indoors through the summer and fall. As with the bundle method, I remove the leaves when they are crispy dry and store the dried leaves in a glass jar. Use your favorite search engine to locate a retail source for the Food PANtrie.

The problem with dehydrating wet foods like fruits and vegetables is that water is not easy to remove from the ripe food. You need to put a lot of heat into water to get it to evaporate out of the food that it’s in and into the air that surrounds the food, and you need to move that now water-laden air away from the food so that drier air can replace it, air that can now receive more water evaporated from the food. One way to do that is to use electricity to heat air and circulate the heated air around the food that you want to dry. The heated, moist air moves out of vents in the top or back of an electric dehydrator while drier, cooler air flows in at the front or bottom of the unit to continue the drying cycle. Countertop-sized and larger electric food dehydrators are available for purchase from brick-and-mortar stores and online. Used ones might be found cheap at a yard or estate sale or through Craigslist. While I don’t discourage anyone from using an electric dehydrator, especially if you don’t have a location suitable for a solar food dryer, I choose not to use an electric dehydrator because our electric usage is already higher than I’d like it to be. Plus during the summer when some of the fruits we dry are harvested it’s hot and humid in the house as it is. I don’t want to add any more heat and humidity to the inside atmosphere.

Solar Powered Food Dehydration

If you don’t want to use electricity to dry wet foods, what can you use? The sun is a source of heat that can be put to use to dry foods with the proper equipment, called a solar food dryer. If you live in an area that can count on several days in a row of hot, sunny, low humidity weather a solar food dryer could be as simple as a wooden frame with food-safe polypropylene screening tacked onto it and covered with finer food-safe screening to exclude insects. You’d place slices of the food you want to dry on the screen frame, cover it with the fine screening, and put it someplace where it will receive sunlight and air circulation for several days until the food is dry. The Food PANtrie I mentioned above was developed for this purpose. However, in the St. Louis region we don’t get this kind of weather during summer and fall, when we have fresh foods available for drying. In our humid climate, I cannot dry even thin-walled hot peppers properly in the Food PANtrie, much less any wetter foods.

To dry them I need a solar food dryer that can collect sufficient solar heat to heat air to at least 120F, preferably hotter, and move the air over the foods to be dried. John Michael Green in his book Green Wizardry points out that the 1970s proved to be a fertile time for the development of solar food dryer designs. The basic design is as follows. A collector (a large, thin box with a black metal bottom covered with a transparent material and provided with vents at the bottom and top) is placed so that sunlight falls on it to heat up the metal. Air that enters at the bottom passes over the heated metal and heats up, reducing its relative humidity. That heated air rises and the rising, dry air is channeled through the top vent and over foods arranged on screens, with the now moist air finally exiting above the screens. A number of individuals and groups developed successful designs. You can find plans in appropriate technology books from the 1970s and by using your favorite search engine to see what the web has on offer.

Our Solar Food Dryer

The solar food dryers designed during the 1970s have a high capacity but are large and difficult to move. They are meant to remain outside for months at a time, which subjects them to the forces of wind and rot. I wanted a smaller version that I can move at will by myself to keep it out of the heavy rains and severe storms that we are prone to receive. The design that Mike used to to make our solar food dryer is found in the book The Solar Food Dryer: How to Make and Use Your Own High-Performance, Sun-Powered Food Dehydrator by Eben Fodor. I recommend this book to anyone who wants to make a portable solar food dryer with a capacity of up to six pounds.

Our dryer is shown in action in the photo at the beginning of this post. Mike made ours to the dimensions specified in the book. You can purchase a kit containing the materials needed to construct this solar food dryer from SunWorks or buy or find materials locally as we did. SunWorks also sells the screen material separately in the size needed for making the dryer to the dimensions in the book. We purchased the screen material from SunWorks.

Mike’s basic carpentry skills and tool set were sufficient to the task, though he made some modifications to the plan to adjust to materials we had on hand and to make aspects of the project easier. He didn’t include the two small side vents in the plan, an oversight on his part. The dryer works fine without them, however. He didn’t include the friction lid support in the plan that holds the vent door open. In the photo below you’ll see that in its place I tied a piece of twine to one of the knobs on the vent door.


The twine can be positioned underneath the window or the brick weighing the window down so that the vent door is held open to the desired amount. That is determined by checking the temperature within the dryer with a probe-type thermometer. The photo above shows ours in action.

Mike didn’t include light bulbs for supplementary heating at night so we either leave the food in the dryer overnight or, when we are concerned that doing so will allow for contamination, take the food out of the dryer in late afternoon and refrigerate it until we put it back into the dryer for further drying. Nor did he include the foam weatherstripping along the top edge of the dryer; it did not prove to be necessary. After attempting three times to cut salvaged storm windows to size and succeeding only in breaking the windows, we gave up and simply laid a storm window on top of the finished dryer, as shown in the photo at the top of the post. I use a brick to weigh the glass down to prevent wind from blowing the glass off the dryer. That’s good enough for the usual breezes we have and I have added another half brick on windier days, but I don’t use the solar food dryer on very windy days to avoid the risk of the glass sheet blowing off. If you live in an area where sunny days are also consistently windy, you’ll need to use the attachment system in the book to keep the glazing on the dryer. If you prefer not to use glass for glazing, polycarbonate sheet is an excellent substitute. It’s easier to cut and lighter than glass, plus it’s unbreakable.

Until the dryer was finished I did not realize that our house doors are too narrow to carry the dryer through the door in its usual orientation. In order to move the dryer in and out of the house, I had to tip it on its side and ease first one pair of legs, then the body of the dryer, and then the other pair of legs through the door. Because of this added difficulty I did not use the dryer as much as I could have. Mike cut the legs shorter to ease this problem, but it was still awkward to get the dryer through the door opening. Once we got our garden shed with its four foot wide door opening, I could carry the dryer through the shed door in its normal orientation. The shed is also much closer to the sunny area where I put the dryer than the house is. Now that I store the dryer in the shed I use it more often. I recommend you measure your door first and modify the plan in the book if needed so your dryer will fit through the door you’ll carry it through.

Not only is the dryer too wide to fit through our house doors but the screens are also too wide to fit through them so I cannot load the screens in the kitchen. Instead I load the screens by placing them on a plastic table outside that is wide enough to hold the screens. I weigh the food before putting it on the screen to make sure I do not put more than 3 pounds of food on a screen, as recommended. Leave enough room between pieces of food for sunlight to strike the collector and for air to pass through the screens, as shown below. The back door is open in the bottom photo, showing two loaded screens in the dryer sitting on wood tracks.

You’ll need to put the dryer someplace where it gets several hours of morning and afternoon sun. If you’re putting the dryer on a lawn with an uneven surface, I suggest putting a sheet of wood on the ground first and placing the dryer on the sheet of wood for added stability.

We found that ants are able to get into the dryer and eat the food when the dryer is not hot enough to kill them, usually when I leave food in the dryer overnight. If you have light bulbs for supplementary heating you may not have problems with ants getting into the food overnight. I solved the ant problem by putting a reused metal can under each leg of the dryer and filling the metal can with water. Ants cannot cross the moat of water in the can. As long as no plant stems contact the solar dryer anywhere else and you refill the cans as the water dries, the dryer will remain ant-free. The other way to solve the ant problem is to remove the food in late afternoon and store in in the refrigerator overnight, returning the food to the dryer the next morning to finish drying.

Foods We Dry

Generally speaking, foods are left to dry until they are leathery or crisp. In July or August foods will dry enough in two to three days of clear to partly cloudy skies. By now the days are short enough and the sun is low enough that it takes four or five days to dry zucchini. If cloudy skies or rain occurs before the food is dry, I store the food in the fridge till sunny weather returns. Also by this time of year the air coming in the dryer is cooler, reducing the drying efficiency further, and we start to get a higher proportion of cloudy to clear days in our region. Solar drying is not practical here after the end of October. In late spring the weather warms enough to start using the dryer.

The foods we have dried so far in our solar food dryer are as follows. I wash and cut ripe food to size before loading it onto the screens. I don’t blanch foods; it doesn’t seem to be necessary.

Shiitake mushrooms: these dry quickly, in two days. We remove the stems and dry the caps gills up the first day, gills down the second. Other mushrooms would likely dry similarly.
Herbs: when we have more herbs than we can dry in the house, we dry them in the solar food dryer. Herbs should dry at lower temperatures, under 120F, so I cut down on sunlight entering the dryer by covering the window with a white dish towel and leaving the vent wide open. Herbs dry in a day or two.
Beef: Mike has dried thin strips of marinated beef into jerky. He only does this in summer, when the temperature inside the dryer goes to 150F and above for at least a few hours, and he removes the beef in late afternoon and keeps it in the fridge overnight if it is not yet dry. It takes two or three days to dry the beef to the jerky state.
Tomatoes: Any tomato will dry successfully if it is cut into 1/8-1/4” slices and the slices laid on the screens. Since they are watery they need three or more days to dry fully.
Hot peppers: I tried drying them whole but it took many days to dry them. It worked better to cut them in half and lay the halves on the screens. The time it takes depends on how thick the walls are. Sweet peppers should dry well but I expect they will take longer than hot peppers and would probably dry best if cut into strips.
Zucchini: I dry the variety ‘Costata Romanesca’ which remains tender even at 4 pounds in size, cutting them into 1/8” think rounds. It’s a great way to make use of the zucchinis you don’t find until they are huge. You don’t need to remove the seeds or skin. Dry the rounds till they are crisp and you have an excellent substitute for tortilla or potato chips!
Peaches: Halve and pit them, then slice them about 1/8 to 1/4” thick and dry the slices. The sweet concentrated peach flavor is delicious!
Strawberries: Depending on the size of the berries you can halve or quarter them. As with peaches and tomatoes, dry them thoroughly so they won’t mold in storage. Another concentrated flavor delight!


3 Academic Studies Show that Quantitative Easing Doesn’t Help the Economy | Washington’s Blog

3 Academic Studies Show that Quantitative Easing Doesn’t Help the Economy | Washington’s Blog. (source)

Fed Policy Hasn’t Worked

Quantitative easing doesn’t help Main Street or the average American. It only helps big banks, giant corporations, and big investors. (In reality, Federal Reserve policy works … just not for the average American. And a lot of the money goes abroad).

Lacy Hunt – former senior economist for the Federal Reserve in Dallas, chief economist for Fidelity Bank, chief U.S. economist for HSBC, and now Vice President of Hoisington Investment Management Company (with more than $5 billion under management) – writes today:

Academic studies indicate the Fed’s efforts are ineffectualAnother piece of evidence that points toward monetary ineffectiveness is the academic research indicating that LSAP [the Federal Reserve’s program of Large Scale Asset Purchases] is a losing proposition. The United States now has had five years to evaluate the efficacy of LSAP, during which time the Fed’s balance sheet has increased a record fourfold.

It is undeniable that the Fed has conducted an all-out effort to restore normal economic conditions. However, while monetary policy works with a lag, the LSAP has been in place since 2008 with no measurable benefit. This lapse of time is now far greater than even the longest of the lags measured in the extensive body of scholarly work regarding monetary policy.

Three different studies by respected academicians have independently concluded that indeed these efforts have failed. These studies, employing various approaches, have demonstrated that LSAP cannot shift the Aggregate Demand (AD) Curve. The AD curve intersects the Aggregate Supply Curve to determine the aggregate price level and real GDP and thus nominal GDP. The AD curve is not responding to monetary actions, therefore the price level and real GDP, and thus nominal GDP, are stuck—making the actions of the Fed irrelevant.

The papers I am talking about were presented at the Jackson Hole Monetary Conference in August 2013. The first is by Robert E. Hall, one of the world’s leading econometricians and a member of the prestigious NBER Cycle Dating Committee. He wrote, “The combination of low investment and low consumption resulted in an extraordinary decline in output demand, which called for a markedly negative real interest rate, one unattainable because the zero lower bound on the nominal interest rate coupled with low inflation put a lower bound on the real rate at only a slightly negative level.”

Dr. Hall also wrote the following about the large increase in reserves to finance quantitative easing: “An expansion of reserves contracts the economy.” In other words,not only have the Fed not improved matters, they have actually made economic conditions worse with their experiments. Additionally, Dr. Hall presented evidence that forward guidance and GDP targeting both have serious problems and that central bankers should focus on requiring more capital at banks and more rigorous stress testing.

The next paper is by Hyun Song Shin, another outstanding monetary theorist and econometrician and holder of an endowed chair at Princeton University. He looked at the weighted-average effective one-year rate for loans with moderate risk at all commercial banks, the effective Fed Funds rate, and the spread between the two in order to evaluate Dr. Hall’s study. He also evaluated comparable figures in Europe. In both the U.S. and Europe these spreads increased, supporting Hall’s analysis.

Dr. Shin also examined quantities such as total credit to U.S. non-financial businesses. He found that lending to non-corporate businesses, which rely on the banks, has been essentially stagnant. Dr. Shin states, “The trouble is that job creation is done most by new businesses, which tend to be small.” Thus, he found “disturbing implications for the effectiveness of central bank asset purchases” and supported Hall’s conclusions.

Dr. Shin argued that we should not forget how we got into this mess in the first place when he wrote, “Things were not right in the financial system before the crisis, leverage was too high [indeed], and the banking sector had become too large[exactly].” For us, this insight is highly relevant since aggregate debt levels relative to GDP are greater now than in 2007. Dr. Shin, like Dr. Hall, expressed extreme doubts that forward guidance was effective in bringing down longer-term interest rates.

The last paper is by Arvind Krishnamurthy of Northwestern University and Annette Vissing-Jorgensen of the University of California, Berkeley. They uncovered evidence that the Fed’s LSAP program had little “portfolio balance” impact on other interest rates and was not macro-stimulus. A limited benefit did result from mortgage-backed securities purchases due to the announcement effects, but even this small plus may be erased once the still unknown exit costs are included.

Drs. Krishnamurthy and Vissing-Jorgensen also criticized the Fed for not having a clear policy rule or strategy for asset purchases. They argued that the absence of concrete guidance as to the goal of asset purchases, which has been vaguely defined as aimed toward substantial improvement in the outlook for the labor market, neutralizes their impact and complicates an eventual exit. Further, they wrote, “Without such a framework, investors do not know the conditions under which (asset buys) will occur or be unwound.” For Krishnamurthy and Vissing-Jorgensen, this “undercuts the efficacy of policy targeted at long-term asset values.”


The Fed’s relentless buying of massive amounts of securities has produced no positive economic developments, but has had significant negative, unintended consequences.

For example, banks have a limited amount of capital with which to take risks with their portfolio. With this capital, they have two broad options: First, they can confine their portfolio to their historical lower-risk role of commercial banking operations—the making of loans and standard investments. With interest rates at extremely low levels, however, the profit potential from such endeavors is minimal.

Second, they can allocate resources to their proprietary trading desks to engage in leveraged financial or commodity market speculation. By their very nature, these activities are potentially far more profitable but also much riskier. Therefore, when money is allocated to the riskier alternative in the face of limited bank capital, less money is available for traditional lending. This deprives the economy of the funds needed for economic growth, even though the banks may be able to temporarily improve their earnings by aggressive risk taking.

Perversely, confirming the point made by Dr. Hall, a rise in stock prices generated by excess reserves may sap, rather than supply, funds needed for economic growth.


The money multiplier is 3.1. In 2008, prior to the Fed’s massive expansion of the monetary base, the money multiplier stood at 9.3, meaning that $1 of base supported $9.30 of M2.

If reserves created by LSAP were spreading throughout the economy in the traditional manner, the money multiplier should be more stable. However, if those reserves were essentially funding speculative activity, the money would remain with the large banks and the money multiplier would fall. This is the current condition.

The September 2013 level of 3.1 is the lowest in the entire 100-year history of the Federal Reserve. Until the last five years, the money multiplier never dropped below the old historical low of 4.5 reached in late 1940. Thus, LSAP may have produced the unintended consequence of actually reducing economic growth. [Indeed, 81.5% of money created through quantitative easing is sitting there gathering dust, due to a conscious decision by the Fed to tie up the money and prevent it from being loaned out to Main Street.]

Stock market investors benefited, but this did not carry through to the broader economy. The net result is that LSAP worsened the gap between high- and low-income households. [Indeed, it’s been known for some time that quantitative easingquantitative easing increases inequality (and see this and this.)]

No wonder even former and current Fed officials have slammed the Fed’s policies over the last 5 years.

And see this.


Economic woes challenge Venezuela’s president – Americas – Al Jazeera English

Economic woes challenge Venezuela’s president – Americas – Al Jazeera English.

Australia bushfires destroy scores of homes – Asia-Pacific – Al Jazeera English

Australia bushfires destroy scores of homes – Asia-Pacific – Al Jazeera English. (source)

Firefighters in Australia are continuing to fight some of the worst bushfires to hit the country in a decade, preparing for worsening conditions.

In the Blue Mountains west of Sydney, one of the worst-hit regions in fire-ravaged New South Wales state, 300 homes have been either destroyed or damaged by the fire storm that peaked on Thursday, the Rural Fire Service announced on Saturday.

The damage toll is more than double the last count announced on Friday and will continue to rise as assessment teams and police move deeper into the destruction zone in search of survivors and victims.

Homes have been reported destroyed in other regions, but numbers are not yet available.

A 63-year-old man died of a heart attack on Thursday while protecting his home from fire at Lake Munmorah, north of Sydney. At least five others – including three fire fighters – have been treated in hospitals for burns and smoke inhalation, officials said.

Arson investigations

Arson investigators are examining the origins of several of more than 100 fires that have threatened towns surrounding Sydney in recent days.

The Australian military also said it was investigating whether a major blaze was linked to an explosives training exercise.

The bushfires have been extraordinarily intense and extraordinarily early in an annual fire season which peaks during the forthcoming southern hemisphere summer which begins in December.

This year’s unusually dry winter and hotter-than-average spring have led to perfect fire conditions.

About 1,500 fire fighters have been back burning to contain blazes since winds and temperatures became milder on Friday. Several roads in fire-affected areas north, west and south of Sydney have been closed.

On Saturday, 83 fires were burning across the state including 19 uncontained blazes.

Rural Fire Service Deputy Commissioner Rob Rogers described Saturday’s conditions as a “pause” before higher temperatures and increasing winds were forecast for Sunday.

“It’s just calmed down a little bit and obviously we’re bracing ourselves for these worsening conditions,” Rogers told Australian Broadcasting Corp. radio.

“What we have is a time for the crews to anticipate the weather coming ahead and try and get as much containment as possible and prevent that fire threatening major population centres when we get worse weather,” he said.

In February 2009, bushfires killed 173 people and destroyed more than 2,000 homes in Victoria state.


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