California Free Press

Off the Top of My Head

The Only Way to Create Affordable Housing Is For Government to Set the Price of Rent

by John Lawrence

As long as the market sets the price of rent, rents will become increasingly unaffordable especially in highly desirable areas like San Diego. Remember public housing? Some version of this is necessary or homeless will be relegated to shelters and/or time limited stays in subsidized housing for eternity. Why isn't public housing feasible? It's NIMBYism (not in my back yard) and NMTMFTism (not my tax money for this). What most people don't realize is that the Federal government can build public housing with no tax implications because unlike state governments, the Federal government has a sovereign fiat currency, the US dollar. The only non-artificial restraint on Federal expenditures is inflation so right now is probably not a good time to allocate dollars for public housing. Of course we expect that lessons have been learned so that public housing does not degenerate into the kind of situation like the notorious Cabrini-Green development.

Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. In 1995, the Chicago Housing Authority (CHA) began tearing down dilapidated mid- and high-rise buildings, with the last demolished in 2011. Today, only the original two-story rowhouses remain. The area has seen major redevelopment due to its proximity to downtown, resulting in a combination of upscale high-rises and townhouses, with some units being CHA-owned, creating a mixed-income neighborhood. Dispersal of affordable units throughout an area is necessary in my opinion to prevent concentration of crime and gangs in certain areas. There is no need for public housing to be concentrated like the Cabrini-Green development. It can be dispersed so that an area is mixed income, and less likely to attract gang activity which seems to happen in pockets of poverty.

Of course the US Federal government, based on the two party system can hardly rationalize spending money on public housing as long as Republicans have any say about it or as long as they can filibuster it to death. Progressives have been lucky to get a modicum of progressive legislation passed during the Biden administration. Biden has had to tone down much of the progressive legislation he attempted to pass at first. Nevertheless he has accomplished much. Public housing is not even on the table as a solution to the homeless and housing affordability problem. Rents just continue to increase way beyond a family's ability to pay them. State and local governments are throwing millions of dollar at the homeless problem without even putting a dent in it. It will take some radical ideas to solve it of which disbursed public housing is one. It totally goes against prevailing notions of a capitalist based, profit oriented society, not the least of which is that an ample supply of public, affordable housing units would undermine landlord profits by keeping the cost of housing in the for profit market under control. It would put a base line under housing costs.

What Does the Fed’s Jerome Powell Have Up His Sleeve?

by Ellen Brown

Posted on December 10, 2022

The Real Goal of Fed Policy: Breaking Inflation, the Middle Class or the Bubble Economy?

“There is no sense that inflation is coming down,” said Federal Reserve Chairman Jerome Powell at a November 2 press conference, — this despite eight months of aggressive interest rate hikes and “quantitative tightening.” On November 30, the stock market rallied when he said smaller interest rate increases are likely ahead and could start in December. But rates will still be increased, not cut. “By any standard, inflation remains much too high,” Powell said. “We will stay the course until the job is done.”

The Fed is doubling down on what appears to be a failed policy, driving the economy to the brink of recession without bringing prices down appreciably. Inflation results from “too much money chasing too few goods,” and the Fed has control over only the money – the “demand” side of the equation. Energy and food are the key inflation drivers, and they are on the supply side. As noted by Bloomberg columnist Ramesh Ponnuru  in the Washington Post in March:

Fixing supply chains is of course beyond any central bank’s power. What the Fed can do is reduce spending levels, which would in turn exert downward pressure on prices. But this would be a mistaken response to shortages. It would answer a scarcity of goods by bringing about a scarcity of money. The effect would be to compound the hit to living standards that supply shocks already caused.

So why is the Fed forging ahead? Some pundits think Chairman Powell has something else up his sleeve.

The Problem with “Demand Destruction”

First, a closer look at the problem. Shrinking demand by reducing the money supply – the money available for people to spend – is considered the Fed’s only tool for fighting inflation. The theory behind raising interest rates is that it will reduce the willingness and ability of people and businesses to borrow. The result will be to shrink the money supply, most of which is created by banks when they make loans. The problem is that shrinking demand means shrinking the economy – laying off workers, cutting productivity, and creating new shortages – driving the economy into recession.

Demand has indeed been shrinking, as evidenced in a November 27 article on ZeroHedge titled: “The Consumer Economy Has Completely Collapsed – ‘It’s A Ghost Town’ for Holiday Shopping Everywhere.” But retailers have cut their prices about as far as they can go. While the rate of increase in producer costs is slowing, those costs are still rising; and retailers have to cover their costs to stay in business, whether or not they have customers at their doors. Rather than lowering their prices further, they will be laying off workers or closing up shop. Layoffs are on the rise, and data reported on December 1 showed that U.S. factory activity is contracting for the first time since the lockdowns of the Covid-​19 pandemic.

It is not just activity in shopping malls and factories that has taken a hit. The housing market has fallen sharply, with pending home sales dropping 32% year-over-year in October. The stock market is also sinking, and the cryptocurrency market has fallen off a cliff. Worse, interest on the federal debt is shooting up. For years, the government has been able to borrow nearly for free. By 2025 or 2026, according to Moody’s Analytics, interest payments could exceed the country’s entire defense budget, which hit $767 billion in fiscal 2022. That means major cuts will be needed to some federal programs.

Breaking the “Fed Put”

In the face of all this economic strife, why is the Fed not reversing its aggressive interest rate hikes, as investors have come to expect? Former British diplomat and EU foreign policy advisor Alastair Crooke suggests that the Fed’s goal is something else:

The Fed … may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation “dragon” (they would need to be much higher to do that). The purpose is to break a generalized “dependency habit” on free money.

Danielle DiMartino Booth, former advisor to Dallas Federal Reserve President Richard Fisher, agrees. She stated in an interview with financial journalist and podcaster Julia LaRoche:

Maybe Jay Powell is trying to kill the “Fed put.” Maybe he’s trying to break the back of speculation once and for all, so that it’s the Fed – truly an independent apolitical entity – that is making monetary policy, and not speculators making monetary policy for the Fed.

The “Fed put” is the general idea that the Federal Reserve is willing and able to adjust monetary policy in a way that is bullish for the stock market. As explained in a Fortune Magazine article titled “The Stock Market Is Freaking Out Because of the End of Free Money – It All Has to Do with Something Called ‘The Fed Put:’”

For decades, the way the Fed enacted policy was like a put option contract, stepping in to prevent disaster when markets experienced serious turbulence by cutting interest rates and “printing money” through QE [quantitative easing].

… Since the beginning of the pandemic, the Fed had supported markets with ultra-​accommodative monetary policy in the form of near-​zero interest rates and quantitative easing (QE). Stocks thrived under these loose monetary policies. As long as the central bank was injecting liquidity into the economy as an emergency lending measure, the safety net was laid out for investors chasing all kinds of risk assets.

… The idea that the Fed will come to stocks’ aid in a downturn began under Fed Chair Alan Greenspan. What is now the “Fed put” was once the “Greenspan put,” a term coined after the 1987 stock market crash, when Greenspan lowered interest rates to help companies recover, setting a precedent that the Fed would step in during uncertain times.

But the “free money” era seems to be over:

The regime change has left markets effectively on their own and led risk assets, including stocks and cryptocurrencies, to crater as investors grapple with the new norm. It’s also left many wondering whether the era of the so-​called Fed put is over.

Off the Top of My Head

American Lifestyle: Fall in Love. Get Married. Fall Out of Love. Get Divorced. Rinse. Repeat.

by John Lawrence

Celebrities set the tone of American lifestyles, and most of them adhere to the serial marriage model. Except for those who have millions of dollars and prefer to go on fighting after the marriage is resolved like Johnny Depp and Amber Heard. It wasn't enough that Heard got a $7 million divorce settlement. She could have taken the money and gone home. I mean $7 million is a considerable chunk of change, but she chose to go on fighting even after the divorce. She wrote an article which defamed Johnny Depp. At least according to him it was defamatory. So naturally he sued her for defamation. Meanwhile, the media and the lawyers were getting rich. When there are so many more important issues that money and energy could be devoted to, much money and energy were poured into the issue of whether or not Amber Heard had defamed Johnny Depp or vice versa. So what. Who Cares. Even more entertaining than their movies. We are entertaining ourselves to death.

Then there's Taylor Swift with whom one can hardly keep up with all the songs she's written and records she's made off of her serial relationships. Not to mention all of her Swifty fans who cried crocodile tears over the fact that they couldn't get tickets to one of her concerts. Boo. Hoo. Children are starving in Africa, and people are feeling abused because they can't go to a Taylor Swift concert? What kind of values are these? People are all about emulating celebrities so when a Swifty actually gets into a relationship or a marriage, they must ask themselves, when the simplest problem comes up, "what would Taylor do". Why probably just drop the guy like a hot potato and then write a song about it. This trivializes human relationships. Of course money is not an issue regardless of what happens. Celebrities have more of that commodity than they know what to do with. At least what to do with it constructively like the man who took his fortune, went to Africa and repopulated a game reserve from scratch thereby creating jobs in tourism for the local population. He spent $100 million of his own money, but singlehandedly brought hope and prosperity to a great many people.

Mozambique's Gorongosa National Park was the envy of Africa. Wildlife drew tourists from around the world. But, beginning in the 1960's, a man made catastrophe (war) slaughtered the animals until, it was said, there was nothing left but mosquitos and landmines.Then Greg Carr decided it was his life's work to restore Gorongosa National Park to greatness and restore the local population to some semblance of a decent life. He educated the children, imported all kinds of animals that had previously made a home there, and by the miracle of sexual reproduction, the various herds of predators and prey animals returned themselves to their former glory. At least there are some millionaires and billionaires who want to do good deeds with their money. Then there are the self indulgent celebrities and all their followers who could care less about anything other than their own petty and expensive needs and habits.

Off the Top of My Head

How to Solve the Homeless Problem and Bring Rents Down at the Same Time

by John Lawrence

Open public campgrounds with amenities that anyone could access. The homeless should have to live there by local ordinance rather than public streets. Many others would choose to live there rather than pay exorbitant rents. Market forces would drive rents down. The homeless would be off the public streets. In Sweden they have Allemansrätten, the Swedish right to camp on public land.  It's guaranteed by their Constitution. Many, who are not homeless, would choose to camp on urban public land until rents came down. As apartments lay vacant, landlords would eventually be forced to reduce prices. Where is it written that everyone has to have a mortgage or pay rent? The homeless are camping now, but just in the wrong places - on public streets. They don't lack tents. They don't lack food. What they lack is sanitation. Public campgrounds on vacant land owned by cities, of which there is plenty, could provide that. Security could be provided for a lo less than public expenditures on police now occurring because many of their calls are homeless related. This solution would not solve all of society's problems, but it would be very cost effective and would clear the public streets so pedestrians could use them safely and sanitarily.

All the other solutions for which millions of dollars are being spent could still be provided. However, the millions of dollars now being spent are not getting the job done.Granted families with children need proper housing so housing solutions should focus on them not single individuals. The elderly need to be given special consideration. Parking areas for people with vehicles who wish to sleep in their vehicles on city owned vacant lots would cost the city nothing or next to nothing. Portable rest rooms and showers are already available at a meager cost.Why aren't cities using them? They could also provide factory made portable cabin sized housing modules at minimum cost. Why do they insist that everyone has to be properly housed in two by four construction which is very expensive. Shelters aren't for everyone for a number of reasons. Some people have pets that aren't allowed in shelters, and some just want their own individual space even if it's a tent on the sidewalk.

Is it that the rental industry doesn't want to see a low cost public solution to homelessness that anyone who wants to save money could avail themselves of? An Allemansrätten for America? Why does the public tolerate their sidewalks and public areas being clogged by homeless tents and paraphernalia? This is as much a solution for them, the general public, as it is for the presently homeless and the very poor because, let's face it, the very poor just can't afford current rents and there are very few single room occupancy (SRO) units available. Single tent occupancy on sanctioned public camp grounds would be something better than what exists now especially if a few inexpensive amenities were provided such as toilets and showers, and it would FREE UP PUBLIC STREETS. It would cost a pittance compared to the money that' is now being spent on homeless non-solutions.