Ed’s Daily Notes for May 1st   1 comment

Bloomberg: Fed to Keep Trimming Stimulus as Economy Shakes Off Stall

The Federal Reserve said it will keep reducing the pace of bond purchases as the economy shakes off the winter doldrums, putting the central bank on a course to end the unprecedented stimulus program by the close of 2014.

Growth “has picked up recently,” the Federal Open Market Committee said yesterday in a statement in Washington, hours after a government report showed gross domestic product barely expanded in the first quarter. “Household spending appears to be rising more quickly.”

The committee pared monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions are likely in “measured steps.” At that pace, the quantitative easing program intended to push down borrowing costs for companies and consumers would end in December.

The Fed is playing a dangerous game here. They are basically hoping the economy will pick up by itself as QE is withdrawn.

Bloomberg: A Single-Payer System Won’t Make Health Care Cheap

Bloomberg’s Meg McArdle debunks the theory that single-payer healthcare is the solution for the U.S. in the link above. A must-read.

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One response to “Ed’s Daily Notes for May 1st

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  1. Good article on the single-payer system. By the way, we shouldn’t fret about the miniscule 0.1% increase in GDP because obamacare will ride to the rescue. Health-care spending grew 10% year over year and accounted for over 1% of total economic growth (in terms of the headline GDP growth rate, not in terms of a 100% share) for the first time in history. The BEA data on health-care spending growth as a share of total GDP growth dates back to 1959, and until this quarter it had never contributed more than 0.8% of overall economic growth.

    But wait. If health-care spending had remained flat, the headline GDP number would have showed a 1% decline in the economy. Can you say recession. Obamacare is meant to control health-care spending, not send it through the roof, and an economy can’t thrive if its growth is being driven by unhealthy people trying to get well. Gee, I thought obamacare was supposed to cause a $2500 savings to the average American family (and you get to keep your doctor).

    http://www.fool.com/investing/general/2014/04/30/is-obamacare-the-only-thing-helping-the-american-e.aspx

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