POLITICS: PennAve

Big Ideas: On quantitative easing, credit cards and ivory

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PennAve,Joseph Lawler,Economy,Federal Reserve,Credit Cards,Quantitative Easing,Magazine

Allan Meltzer for Economic Policies for the 21st Century: With $2.5 trillion sitting idle on bank balance sheets and more than $2 trillion additional sitting on corporate balance sheets, we should expect the Federal Reserve to ask: What can more quantitative easing -- QE -- do that banks and corporations cannot do without it? The right answer is NOTHING.

Continuing QE is a big mistake. Not only is it likely to roil world financial markets when it eventually unwinds, but it finances the massive federal budget deficit at low interest rates. Holders of bonds cannot all be nimble as rates rise. The sooner QE ends, the better off we will be, but ending QE quickly or slowly will not avoid international market disturbances.

The Fed tells a different story. The official line is that QE2 and 3 were in place to reduce the unemployment rate and increase the economy's sluggish growth rate. In his Nov. 19 speech, then-Fed Chairman Bernanke expressed proper and overdue concerns about the effectiveness of QE. He concluded, however, that economic conditions favor continuation. Chairman Janet Yellen said much the same in her confirmation hearing and her February testimony.

Neither Fed chairman recognizes publicly that continuing QE just expands the huge future problem of withdrawing trillions of idle reserves.

 

THE WOLF AT THE DOOR IS YOUR BANK

Catherine Reutschlin for Demos' policy shop: Since the days of Diner's Club, credit cards have evolved to become a key element of American household finances. When emergency strikes we may not have cash in hand, but with access to credit cards a broken arm, a busted furnace or a last-minute plane ticket doesn't have to leave our families vulnerable to insolvency, abusive lending or the knock of a loan shark on the front door. Moreover, the improvements in credit card contracts since 2008's CARD Act have offered consumers even greater security from the most predatory and perfidious practices of lenders.

Despite the ubiquity and regulation of credit card contracts, there is still plenty of room left for consumers to feel anxiety about their relationship with their credit card provider.

One account of Capital One's new “menacing and creepy” terms of contract in the LA Times identifies a renewed level of vulnerability for debtors who thought the market had moved beyond a loan shark making a house call. While they stop short of threatening to break anyone's knees, the company is not above sending a couple of guys over to your house for some more aggressive debt-reconciliation. According to the LA Times: The update specifies that "we may contact you in any manner we choose" and that such contacts can include calls, emails, texts, faxes or a "personal visit." As if that weren't creepy enough, Cap One says these visits can be "at your home and at your place of employment."

That’s a greater invasion of your personal space than is legally permitted to police officers without a warrant, but it’s not illegal for a corporation like Capital One. And don’t bother turning off the lights, because the terms include other wily strategies for ensuring you pay up.

 

OBAMA VS. ANTIQUERS

Doug Bandow for Cato at Liberty: The Obama administration is preparing to treat virtually every antique collector, dealer and auctioneer in America as a criminal. In the name of saving elephants, the administration is effectively banning the sale of all ivory objects, even if acquired legally decades ago. Doing so will weaken conservation efforts and enrich those engaged in the illegal ivory trade.

Under the Convention on the International Trade in Endangered Species of Wild Fauna and Flora (CITES) only ivory from before 1989 can be sold. Unfortunately, ivory prohibition has not stopped the slaughter of elephants.

The greatest demand for new ivory comes from Asia. Most ivory in America arrived legally, many years ago.

Until now the rules were simple and sensible. Ivory imported legally can be sold. Moreover, the burden of proof fell on the government to convict you of violating the law. That’s the way America normally handles both criminal and civil offenses.

However, in mid-February the administration issued what amounted to a ban on ivory sales. ...

If the administration does not withdraw its rules, Congress should overturn this unfair attack on the law-abiding. Washington should penalize poachers and their seller allies -- not collectors and dealers who have followed the rules. Especially since the administration's new regulations will divert enforcement resources and push owners of legal ivory into the illegal trade, meaning more elephants are likely to die.

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