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- LK,Total profits in dollars is not a good indicator - percentage of gross sales as profit means a lot more - They are like the government the numbers are huge but their profit is less than insurance companies [Buffet] - super markets - and a lot of other huge industries.business must make profits to pay dividends to retired people and investors and then to expand and create new jobs. Profit is good and it is the mothers milk of new industries and new advances in medicine and every other object in our lives.Look at the amount of money to be raised by doubling investment taxes on the super rich - 40 billion dollars a year in a 7 trillion dollar spending budget at the Federal level only - now try the states spending - peanuts - the government takes and spends to much to create new jobs or grow the economy except through INFLATION AND FORCING THE VALUE OF THE DOLLAR DOWN.
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- Indian dream chief.make your our history -
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- I want to know how a candidate who has CONSISTENTLY walked and talked T-party values, gets knocked out the 12' primary race, and AFTER ONLY 4 YEARS.The cock brothers (R)money really screwed the T-party over!!
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- Here is some more good old fashion MSM brainwashing:http://www.reuters.com/article/2012/02/07/us-usa-fbi-extremists-idU...From what I have seen of "Sovereign citizens", they hold themselves to a HIGHER standard of accountability than any federal agent I have heard of.Even the barber shop talk is anti-sovereign citizen, b/c apparently only gov employees know the legal system, citizens are to sit down shut up and do what they are told.
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- Patrick Henry on Americas' Constitution-
“The Constitution is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government - lest it come to dominate our lives and interests.”
Patrick Henry quotes (American Lawyer, patriot, and orator, symbol of the American struggle for liberty,1736-1799)
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- Check this out it is really neat - nano choppers
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"Let Mr. Madison tell me when did liberty ever exist when the sword and the purse were given up from the people? Unless a miracle shall interpose, no nation ever did, nor ever can retain its liberty after the loss of the sword and the purse."-- Patrick Henry(1736-1799) US Founding FatherSource: 3 J. Elliot, The Debates In The Several States Conventions On The Adoption Of The Federal Constitution 168-69 (1836 Reprinted 1941).
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The Daily Reckoning PresentsThe Federal Reserve and Other Crimes Against Capitalism
New York Times writer, Steven M. Davidoff, recently dubbed the Federal Reserve, “the most successful hedge fund around.”
Eric Fry
After reading the article, we concluded that Mr. Davidoff is the most creative financial writer around. As such, Mr. Davidoff may be the perfect apologist for today’s dysfunctional monetary “system.” Certainly, he possesses the cerebral alacrity to dodge whatever cold, hard facts may be standing in the way of a good story.
“I call the Fed a hedge fund,” Davidoff cheerily explains, “because it is operating like one, leveraging its balance sheet to earn huge profits.”
We might have been able to embrace Davidoff’s analysis were it not for one nettlesome fact: the Fed is absolutely nothing like a hedge fund. The Fed is, instead, more like a crime syndicate — a racketeer that relies on coercion, deception and outright larceny.
But before explaining The Daily Reckoning’s official metaphor for the Fed, let’s return to Davidoff’s metaphor and “analysis.” Says Davidoff:
Hmmm... where to begin our autopsy of this fatally flawed analysis?
Let’s begin at the end with those earnings that “blow away any other hedge fund profits.”
If Davidoff is referring only to the Fed’s $79.3 billion “earnings,” without any regard for the denominator that produced those earnings, he is absolutely correct. No other hedge fund in the world came close to earning $79.3 billion in 2011, primarily because no other hedge fund in the world runs a $3 trillion portfolio. But obviously, the absolute number tells us nothing about the genius — or lack thereof — behind the Fed’s investment activities.
To get a feel for that, let’s now insert a denominator and calculate a return. Based on the $3 trillion portfolio that Davidoff cites in his column, the Fed produced a 2.6% return. That kind of number would not pop any year-end champagne corks in any hedge fund office in the land. [Editor’s note: In reality, the Fed’s balance sheet averaged about $2.75 trillion during 2011, not $3 trillion. But since $3 trillion is the number Davidoff uses, we’ll use it also].
But maybe Davidoff had a different return calculation in mind when he dubbed the Fed “the most successful hedge fund around.” Maybe he was thinking the denominator ought to be zero instead of $3 trillion, since, as he observes, the Fed “effectively creates its own money.” In this scenario the Fed’s investment activities would have produced a mind-boggling return of “infinity percent.”
Davidoff is absolutely right; no hedge fund can do that.
Or maybe Davidoff was thinking of a denominator somewhere between zero and $3 trillion. Maybe he had $676 million in mind, which is the actual amount of money the Fed spent last year printing new dollar bills. In this scenario, the Fed’s result would have been a spectacular 117.3%. That’s not quite infinity percent, but it’s not bad.
Unfortunately, there’s another problem with Davidoff’s analysis; the numerator is as much a mystery as the denominator. In other words, the Fed’s theoretical $79.3 billion return is a bogus Beardstown Ladies kind of number since it does not account for marking all the Fed’s securities to market. Without marking its vast $3 trillion portfolio to market, the actual results of the Fed’s investment activities are unknowable.
Perhaps the Fed’s hodgepodge of Treasury bonds, mortgage-backed securities, currency swaps and other financial jetsam increased in value during 2011, in which case the total return would have been higher than 2.6%. Or perhaps these holdings decreased in value, in which case the total return would have been lower than 2.6% — maybe even negative.
No one knows. (Or if they know, they aren’t saying).
Net-net, Davidoff’s analysis, expressed as a mathematical equation, would be greater than or equal to idiotic. That said, as a fellow journalist, we sympathize with Mr. Davidoff. We, too, have written things that should never have survived the copy-editing process. But when we have, we have heard about it from readers...just as Mr. Davidoff heard about it from many of the bloggers on Yahoo! Finance who responded to his column:
Kaos from Plainfield, Connecticut wrote:
Greg from Indianapolis wrote:
RJ Wrote:
JR wrote:
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