He's increasing the money supply, but doing it in a way that is likely to make more money available to the public as mortgage loans. He's hoping to cause new housing starts and put construction workers back to work.
So despite your impugning his personal integrity, his plan is logical in light of his congressional mandate. Construction is one of the largest industries that he can target, and one that has been hit the hardest with job losses. Manufacturing has had more job losses, but he can't effectively target manufacturing as well as he can home building. But Congress can, easily with an import tariff.
Employment by major industry sector
Now you can probably argue, and I'd probably agree to an extent, that there is a glut of housing and building more just to put people back to work doesn't make sense. But it's what Bernanke can do, and we'll grow into the additional housing soon enough. And it's at least producing real assets and not wasting the money on producing some alternative energy that was never even viable in the first place.
It makes a lot more sense to look at where we are spending our money, that is not producing American jobs and try to get that to produce American jobs. Thus my call for import tariffs. But Bernanke can't do that. That takes Congress or the Executive.
“He’s hoping to cause new housing starts and put construction workers back to work.”
It’s hard for me to impugn something that is so lacking as Bernanke’s character. What he hopes for, and what will transpire, are two different things. What is already occurring is inflation in commodities. We can call that collateral damage to all the little people who don’t figure into the QE scheme. While we are waiting for the construction industry to fire back up, and for another housing boom to rally the economy with real money, there will be more people going under, contributing to the glut of unemployment and housing. At best, depending on your perspective of best, Bernanke’s latest QE will cause the stock market to rally, and maybe create enough growth on paper to give Obama bragging rights come November. You go on believing this is a good thing, spawned from good intentions and legal mandate. The debt crisis will still be here, worse than ever, when it is all over.