Posted on 11/09/2010 2:08:18 AM PST by Scanian
The day after the election, the Federal Reserve launched QE2, the second round of Quantitative Easing. This public relations euphemism attempts to hide the fact that the Fed is "printing money" (the Fed actually does it electronically these days). "Cheating, debasing and inflating," as in stealing from the public, is a more accurate description.
Bernanke indicated from 600 to 850 billion additional dollars would be created. To put this in perspective, the Tarp package was in this range. The total Federal Reserve balance sheet was $829 billion at the end of 2004 and only $869 billion in August 2007. At the end of 2009 it had ballooned to over $2,200 billion. This announcement means it is headed to $3,000 billion (3 trillion).
Ben Bernanke weakly defended his action with the following justifications:
•... further support to the economy is needed •Easier financial conditions will promote economic growth. •higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. The first two statements are true as stated, but unlikely to be affected by additional QE. The third is partially true, although it is unclear that his action will raise stock prices. Furthermore, empirical data is not supportive of the alleged relationship between stock prices and spending (see the Kass reference below).
Many economists and analysts believe that the Fed actions will not help. Several believe they will actually make conditions worse (two examples are Doug Kass and Pimco's El Erian).
The Real Reason for QE2
Mr. Bernanke's justification for committing nearly another trillion dollars does not meet the "smell" test. In prior life, Professor Bernanke would flunk an Econ 101 student for such weak justification (of course we know no one really gets an F at Princeton, no matter how deserved).
(Excerpt) Read more at americanthinker.com ...
A trillion dollars here and a trillion dollars there and now we’re talkin’ real money!
The Fed’s latest shovel ready spread the wealth around initiative!
Wait til the no-government union joes find out there are no unions in communism.The Fed shall be eliminated and we shall return to stable money.
Insolvent already. The reaction of the Tea Party may have been too little, too late. I hope we have two more years to get this under control.
can we arrest Bernake yet?
I knew this situation was bad news but this article scared the hell out of me.
In the old days they’d be getting a rope.
I knew this situation was bad news but this article scared the hell out of me.
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Same here. I don’t know enough about the bond markets to evaluate it except logically, and it makes sense. Why the hell else would Bernacke be doing QE2 unless it was because we are already insolvent? What have the Chinese and Japanese told us about their bond buying, that we the public don’t know . . . but Bernancke does? Priming the pump or whatever rationale Bernancke is presenting can’t possibly be believed.
I wonder what interest rates would clear the market without all the negotiations and political intervention and quantitative easing. The Fed is trying to avoid depression and inflation with high interest rates and fiscal austerity . . . by setting us on a course for hyperinflation.
Geez, I feel like such an idiot for buying all of those gold and silver coins the last 5 years or so. Sarcasm tag is now off, lol.
For a Man who claims he spent his whole studying the Great Depression, he is doomed to repeat it. <p. Here comes the pain, Bennie. The only good thing is Obama will get the blame.
Ping
That's not “lack of courage”...that's willful blindness or Harvard-class stupidity.
Soros told him to.
IMHO, we don't have two years! Prepare!
There are already some ominous rumors that the banks are fearing a “paper run” on physical dollars, and are as a group seeking to strongly limit, or outright refuse, cash withdrawls.
This began in earnest last Friday. It makes sense to do so with QE2, because there are now any number of things that could cause a public panic.
So, in what may be your final warning, I would strongly suggest that you have a few thousand dollars in “mattress money” in a safe place in your home. Otherwise you might find yourself in a world of hurt.
bump for learnin
I’ve been following that policy for about a year now.
Since right after they passed Porkulus, I think.
I wouldn’t be surprised if he were in on it.
But we should try to avoid the temptation to make a bogeyman out of Soros. Saying we see him behind every dirty deal, without solid evidence, keeps us from being taken seriously by some folks.
The Economy was clearly trying to tell us that things were going wrong in the 70s. I think that we successfully masked the problem for almost 30 years with out of control spending, both at the Government and consumer level. But now the bill is coming due and our leaders are desperate for one last “boom” to make it all right. Of course, many of the past booms of the last 30 years were really big distortions, but the goal is to put off the day of reckoning at any cost. We have done so many bone-headed things trying to maintain “prosperity” (job offshoring, illegal immigration, wreckless bank lending & entitlement growth, etc) that everyone in the know fears what’s coming next.
Just my 2 cents.
Remember, some economists estimate something like US$16 TRILLION in American-owned liquid assets either participate in the illegal cash-only underground economy or sit in a offshore financial center beyond US borders as an income tax dodge. We should MASSIVELY overhaul our income tax system so it encourages American residents to keep their savings and capital investments in the USA (e.g., the Forbes flat income tax plan or the even more radical FairTax), and most of that US$16 TRILLION in liquid assets return under better tax circumstances, effectively the world's biggest "private bailout." And that would be such a gigantic stimulus to the economy it would make the 1980's economic boom seem like a minor event in comparison.
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