Where is the US economy headed?

BTW, I don't need any 'credentials'

If you don't like to be challenged, don't post stupid shyt

You can't even provide any credible source for your own claims; they're bull shyt, and I've explained why!

Anthony R. Mirhaydari, our CEO and CIO, was born in 1982. He has a Bachelor of Arts in Business Administration degree (finance specialization) from the University of Washington Foster School Of Business, graduating magna cum laude with distinction.

What do you think about the recovery so far?

Like so much in life, it depends on your perspective. For well-to-do investors and spendthrift politicians, as well as the megabanks, it’s been a ball. The Federal Reserve stimulus that’s been driving this hot mess of an economy forward has overwhelmingly benefited them.

It’s a subject worth discussing as the Fed comes back to the idea of tapering its ongoing $85-billion-a-month bond-purchase program in favor of a “forward guidance” strategy just as current vice-chair Janet Yellen prepares to take the helm.

The S&P 500 has climbed 170% from its bear-market low. Too-big-to-fail bank balance sheets and profits have exploded. And the cost of the Treasury’s borrow-and-spend addiction as a share of GDP has fallen to a level not seen since the 1960s — despite the fact the national debt now totals $17.1 trillion.

Yet things aren’t so good for regular, wage-earning Americans.

The dichotomy was brought to life for me by a trip to the Las Vegas MoneyShow earlier this year where fellow speakers and panelists were practically foaming at the mouth at the unbroken rise of stocks like Johnson & Johnson JNJ -0.02% and Tesla Motors TSLA +0.19% ; while the gondolier at the Venetian, after learning I was there to speak about the economy, said the state of affairs could be easily summed up in two words: “It sucks.”

Sure, home prices are back to mid-2004 levels and are up 23% from the lows. But the homeownership rate is down, and we’re still off 21% from the 2006 peak. And while stocks are up, middle-income Americans, who only own $12,000 worth of stock at the median according to Fed data (vs. $268,000 for the top 10% of income earners), aren’t exactly getting a huge boost. Gallup polling shows only 52% of American adults are in stocks at all — down from 65% in 2007.

Yet the job/wages/spending overhang is still there. The fact that Fed’s monetary base has swelled from less than $800 billion pre-recession to $3.7 trillion now — with $1.9 trillion of that simply sitting in the vaults of major Wall Street banks as excess reserves receiving interest payments from the Fed — thanks to QE1, QE2 and QE3, hasn’t fixed the problem.

Where we stand

The structural issues plaguing the economy aren’t related to the price of money. In fact, according to Stanford economist John B. Taylor, the Fed’s ultra-low-interest-rate policy could actually be holding the economy back by diminishing the incentive for banks to make loans and assume credit risk.

We’re still down 5.6 million full-time jobs from where we were before the recession hit. At the pace we’ve been creating them, from 2010 it’ll take nearly four years to close the gap. After accounting for the growth in the working-age population, the gap is more like 14 million jobs.

Meanwhile, real median household income has fallen to mid-1990s levels around $51,000. That’s down from a peak of $56,000.

So it’s no surprise then that spending, represented by personal-consumption expenditures, is growing at such a pitiful rate that it’s been associated with the last three recessions and is at roughly half the level we saw during the go-go days of the housing bubble.

Any way you want to look at it, things suck.

It’s not for a lack of trying.

I don't care what kind of education anyone has. In economics, they are not able to predict future economic performance.

printing $3 trillion over 5 years and (we can ) expect to contain to reverberations.

At some point the ability to operate all broken systems ends, that happens here when the dollar crashes.

The West is the land of broken promises, broken ideas,and moutains of debt as far as the eye can see.

That is why you see the Fed on a Kamikaze path to certain doom....they are out of ideas and out of options.

Forbes: Question on our monetary base, which has grown more than 400% since 2008. Between 1970 and 1982, our base grew about 225%, and we have this wild rise in the consumer price index, huge surge in interest rates. Yet this time, in a shorter period of time we’ve ascended at almost twice the rate we did at the ’70s, yet very different outcomes. Is that because, what?

Prasad: Well, one reason of course is that aggregate demand remains very weak, and the standard monetary mechanism through which you would expect an increase in the money supply given a specific supply of goods and services to lead to inflation has not quite kicked in yet. It is still a bit of a mystery why inflationary expectations in the U.S. remain very, very dim.

The story Geithner goes on to tell blames everyone and no one. The crisis he describes might just as well have been an act of God. Basically no one noticed what was happening inside the financial system until after it happened. A few of the important people with a privileged view expressed concerns about the risks being taken, but most said nothing. Geithner counts himself in the minority. “I began asking questions about capital: Do our banks really have enough?” he writes, adding, “I was more worried than many of my colleagues, but I was not nearly worried enough.” His role in the run-up to the crisis was a bit like that of first mate on the Titanic, after the ship has been put on irreversible autopilot, and the captain has gone off to drink with the rich guys in first class.

Why can’t economists tell us what happens when government spending goes up or down, taxes change, or the Fed changes monetary policy? The stumbling block is that economics is fundamentally a non-experimental science, particularly in the realm of macroeconomics. Unlike disciplines such as physics, we can't go into the laboratory and rerun the economy again and again under different conditions to measure, say, the average effect of monetary and fiscal policy. We only have one realization of the macroeconomy to use to answer important policy questions, and that limits the precision of the answers we can give. In addition, because the data are historical rather than experimental, we cannot look at the relationships among a set of variables in isolation while holding all the other variables constant as you might do in a lab and this also reduces the precision of our estimates.

Because we only have a single realization of history rather than laboratory data to investigate economic issues, macroeconomic theorists have full knowledge of past data as they build their models. It would be a waste of time to build a model that doesn't fit this one realization of the macroeconomy, and fit it well, and that is precisely what has been done. Unfortunately, there are two models that fit the data, and the two models have vastly different implications for monetary and fiscal policy.

- See more at: http://www.thefiscaltimes.com/Columns/2011/04/12/Deficit-Dilemma-Why-Economists-Cant-Agree#sthash.SEEhqumn.dpuf

two highly esteemed economists presented papers that argue that the correct level should be 20%.

In the United States, depository institutions are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System (FRB).[5] These guidelines are used to evaluate capital adequacy based primarily on the perceived credit risk associated with balance sheet assets, as well as certain off-balance sheet exposures such as unfunded loan commitments, letters of credit, and derivatives and foreign exchange contracts. The risk-based capital guidelines are supplemented by a leverage ratio requirement. To be adequately capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 4%, a combined Tier 1 and Tier 2 capital ratio of at least 8%, and a leverage ratio of at least 4%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. To be well-capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a combined Tier 1 and Tier 2 capital ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. These capital ratios are reported quarterly on the Call Report or Thrift Financial Report. Although Tier 1 capital has traditionally been emphasized, in the Late-2000s recession regulators and investors began to focus on tangible common equity, which is different from Tier 1 capital in that it excludes preferred equity.[6]

The Justice Department has not often pursued such convictions of financial companies, especially large ones that could become destabilized following an indictment. But U.S. politicians have pushed for tougher punishment for big banks in response to the 2007-2009 financial crisis.

Credit Suisse will pay the penalties to the U.S. Department of Justice, the Internal Revenue Service, the Federal Reserve and New York's banking regulator, the New York State Department of Financial Services. It had already paid just under $200 million to the Securities and Exchange Commission.