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| Economy |
| Quantitative Easing: Economic Suicide Pill |
| 2010-11-04 |
| The question being asked all across the world of business news is: Will QE2 be successful? Because this policy is literally economic suicide, the question becomes: Will the Federal Reserve be successful in the assisted economic suicide of the U.S. government? I find this an utterly appalling question -- which highlights the intellectual bankruptcy of government policymakers and the bankers who goad them onward Quantitative easing is nothing more than a euphemism for printing money out of thin air. Its one-and-only purpose is to destroy the currency being printed. It is pure dilution and absolutely no different than a corporation vowing to improve its fiscal performance simply by printing a lot of new shares. We can illustrate the inherently evil nature of this monetary abomination by working through the "mechanics" of this policy. First, the explicit goal of QE2 is to increase inflation. By now, all readers should be familiar enough about "inflation" to know that it is literally nothing more than the speed with which our currencies are being destroyed. In the case of the Federal Reserve, we understand all too well how "successful" it has been in creating inflation. Since it was invented in 1913, the Federal Reserve has been directly responsible for the U.S. dollar losing 97% of its value (i.e. inflation has raised prices by more than 20 times what they were in 1913) -- despite the official mandate of the Federal Reserve for "price stability" (i.e. protecting the dollar). Now, Ben Bernanke is vowing to "succeed" in destroying the remaining 3% of value of the world's reserve currency. Here is how printing money accomplishes Bernanke's "goal." First of all, as with any kind of dilution, printing new dollars makes all of the "old" dollars worthless. So, right there, the Federal Reserve is already 100% guaranteed of "success. In fact, the Federal Reserve has already been "very successful" in creating inflation -- in the real world. Visit Shadowstats.com, operated by respected U.S. economist John Williams, and you will hear that U.S. inflation has been in the range of 8.5% - 9.5% all this year. Williams performs his calculations using the exact same methodology used by the U.S. government a generation ago, before the U.S. government intentionally incorporated various statistical lies into this measurement. Understand the enormous "rewards" which a government receives for lying, by grossly under-stating the rate of inflation. Payouts on $100's of billions of U.S. government benefits per year are indexed to the rate of "official" inflation. By grossly understating inflation (and cheating all of the recipients of those benefits), the U.S. government can get an instant, multibillion dollar windfall from that one lie, alone (every year). |
| Posted by:tipper |
| #12 What would today look like if the government had not stepped outside the true limits as originally imposed by the Constitution? |
| Posted by: gorb 2010-11-04 23:23 |
| #11 Bubble, bubble, toil and trouble, JohnQC. As for trouble, you've seen nuthin yet. |
| Posted by: twobyfour 2010-11-04 22:40 |
| #10 Government handouts now make up over 20% of personal disposable income. 40.8 million Americans on food stamps (record high) and 45% of the unemployed having been seeking employment for 27 weeks or more (record high). Our local newspaper is still showing high foreclosure rates. I can't tell that foreclosures have gone down much over the nation. This would mean that inventories are high. Much housing is underwater--the mortgages are higher than what it can be sold for. Consumer confidence is low. People who have jobs are uncertain whether these jobs will continue. Unemployed people are uncertain whether they will get jobs. Main street doesn't seem to have benefited much from the stimulus programs. Jobs are going to have to come first. Spending will come after jobs are created. Henry Ford realized that people had to have good paying jobs to buy his cars. The stock market is up a couple of hundred points today but that doesn't necessarily translate into jobs. Seems like this is mostly speculator activity. QE2 will lead to some inflation and increased prices on basics as well as everything else. Our economy seems to be based on bubbles. |
| Posted by: JohnQC 2010-11-04 19:22 |
| #9 P2K, The intention is to spur inflation and avoid deflation. They want prices to start rising for two reasons: 1. People will start buying things because they don't want to pay more later. Neither will happen: 1. Older people (more and more of us), who have money, will see prices rising and realize they have to spend less and save more just to be able to afford necessities, like food. So, you're correct, they would flunk Econ 101. So who gave 11 unaccountable bankers the power to determine the value of our money when the Constitution gives it to Congress? |
| Posted by: Nimble Spemble 2010-11-04 17:43 |
| #8 IIRC the 500-600 billion figure stuck me as something mentioned recently as the amount that corporations and other institutions are holding back from the economy because of uncertainty of the extent government is going to screw up the market and economy. If this is the Fed's means of 'jump starting' the economy, they failed Econ 101. I don't see those corporations or institutions altering their thinking by this act. However, I do see the speculators who's means of manipulating markets, paper or commodities, have been burned by the collapse of the housing and oil bubbles just past as being handed the means once again of screwing over the rest of us with this new paper. |
| Posted by: Procopius2k 2010-11-04 16:26 |
| #7 Would I rather live in 2010 or 1910? A false choice. The question is whether you would rather live in 2010 after a century of currency debasement where spending by going into debt was paramount or after a century in which the currency retained it's value and savers were rewarded. Just as I would rather live in 2010 than 1910, I would rather have lived in 1910 than in 1810. The difference is that the value of the dollar in 1910 bore some resemblance to its value in 1810. In 2010, the dollar bears no resemblance to its value in 1910. We were able to live high off the hog in the second half of the 20th century because the rest of the western world destroyed itself in the first half. Now its repaired and the rest of the world has caught on to how to get rich. Congress was granted the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;". Congress has abrogated this responsibility by turning the power to regulate the value of money over to the unaccountable Federal Reserve. The result has been a century of debasement. And not coincidentally, a debasement of currency alone. Bernanke needs to think about all the central bankers who are revered for destroying the value of their currency. For that is the path he is heading down. The fault is not his alone, but he is the one who will be remembered. |
| Posted by: Nimble Spemble 2010-11-04 15:09 |
| #6 Itsa tough one. In 1910, there were a lot of women around. Nowadays, it almost seem that many many of them turned to hyenas (bare our respective femalian mods and contributors). Of course, my daughter is not a hyena. But the thing is, the young men presume that she is. No one of the youngons wants to marry, because they know that they may be potentially quantitatively eased. The real women are the true losers of the feminazism. |
| Posted by: twobyfour 2010-11-04 14:55 |
| #5 #4 Before we get too wound up over the Fed and the loss of the dollar's value since 1913, ask yourself this: Would I rather live in 2010 or 1910? Steve, these are in my mind two different issues. Yes, I'd rather live in 2010 than 1910. However, it wasn't the Fed who got us to 2010. It was the ingenuity, hard work, and the sacrifices of many along the way (such as by the military). |
| Posted by: JohnQC 2010-11-04 11:48 |
| #4 Before we get too wound up over the Fed and the loss of the dollar's value since 1913, ask yourself this: Would I rather live in 2010 or 1910? For me it's no contest. Sure, I need many more dollars to have the same 'purchasing power' today compared to 1910. But I have them. And I live a LOT better today than I would have as a doctor in 1910. The issue isn't what the dollar is worth today versus before. The issue is how well we all live, and what our prospects are for the future. |
| Posted by: Steve White 2010-11-04 11:28 |
| #3 As long as they're in the position to loot, they'll loot. The legal caste and other elites have forgotten or buried the concept that the Constitution was an instrument to limit power. The inconvenience and the imperfections to attain goals that put in place was a guard against even greater destruction that is created when limits are not imposed. Good intents do not make up for disastrous results. The alternative is to make routine human sacrifices of those who fail as an example to others who'd overreach to deter repeat offenses. |
| Posted by: Procopius2k 2010-11-04 11:10 |
| #2 I'm not an economics expert but from what I can read, this move will devalue the dollar. It will be worth less (or worthless). It will be as if everyone had a 20% tax imposed or cut in pay. This will be hard on seniors who live on fixed incomes. Their retirements got looted in 2008 when the stock market went to hell. Is this the second or third looting of the economy--or can we just view it as constant? |
| Posted by: JohnQC 2010-11-04 11:02 |
| #1 James, Oh Boy, you guys really know how to cook the books, first the unemployment rate and now the inflation rate. Karl, yep, we did it during the Clinton years big time but this Obama creap has taken statistical lying and politicizing of economic data to an entire new universe. Gadzooks those Chicago boys couldn't tell the truth if their lives depended on it. |
| Posted by: James Carville/Karl Rove 2010-11-04 10:44 |