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9 Reasons Why Quantitative Easing Is Bad For The U.S. Economy

Buckle up and hold on - a new round of quantitative easing is here and things could start getting very ugly in the financial world over the coming months.  The truth is that many economists fear that an out of control Federal Reserve is "crossing the Rubicon" by announcing another wave of quantitative easing.  Have we now reached a point where the Federal Reserve is simply going to fire up the printing presses and shower massive wads of cash into the financial system whenever the U.S. economy is not growing fast enough?  If so, what does the mean for inflation, the stability of the world financial system and the future of the U.S. dollar?  The Fed says that the plan is to purchase $600 billion of U.S. Treasury securities by the middle of 2011.  In addition, the Federal Reserve has announced that it will be "reinvesting" an additional $250 billion to $300 billion from the proceeds of its mortgage portfolio in U.S. Treasury securities over the same time period.  So that is a total injection of about $900 billion.  Perhaps the Fed thought that number would sound a little less ominous than $1 trillion.  In any event, the Federal Reserve seems convinced that quantitative easing is going to work this time.  So should we believe the Federal Reserve?

The truth is that the Federal Reserve has tried this before.  In November 2008, the Federal Reserve announced a $600 billion quantitative easing program.  Four months later the Fed felt that even more cash was necessary, so they upped the total to $1.8 trillion.

So did quantitative easing work then?

No, not really.  It may have helped stabilize the economy in the short-term, but unemployment is still staggeringly high.  Monthly U.S. home sales continue to come in at close to record low levels.  Businesses are borrowing less money.  Individuals are borrowing less money.  Stores are closing left and right.

The Fed is desperate to crank the debt spiral that our economic system is now based upon back up again.  The Fed thinks that somehow if it can just pump enough nearly free liquidity into the banking system, the banks will turn around and lend it out at a markup and that this will get the debt spiral cranking again.

The sad truth is that the Federal Reserve is not trying to build an economic recovery on solid financial principles.  Rather, what the Federal Reserve envisions is an "economic recovery" based on new debt creation.

So will $900 billion be enough to get the debt spiral cranked up again?

No.

If 1.8 trillion dollars didn't work before, why does the Federal Reserve think that 900 billion dollars is going to work now?  This new round of quantitative easing will create more inflation and will cause speculative asset bubbles, but it is not going to fix what is wrong with the economy.  The damage is just too vast as Charles Hugh Smith recently explained....

Anyone who believes a meager one or two trillion dollars in pump-priming can overcome $15-$20 trillion in overpriced assets and $10 trillion in uncollectible debt may well be disappointed.

In fact, economists over at Goldman Sachs estimate that it would take a staggering $4 trillion in quantitative easing to get the economy rolling again.

Of course that may eventually be what happens.  The Fed may be starting at $900 billion just to get the door open.  With these kinds of bureaucrats, once you give them an inch they usually end up taking a mile.

So why should we be concerned about quantitative easing?  The following are 9 reasons why quantitative easing is bad for the U.S. economy....

#1 Quantitative Easing Will Damage The Value Of The U.S. Dollar

Each time you add a new dollar to the system, it decreases the value of each existing dollar by just a little bit.  Now the Federal Reserve is pumping 900 billion dollars into the system and that is going to have a significant impact.  Bill Gross, the manager of the largest mutual fund in the entire world, said on Monday that he believes that more quantitative easing could result in a decline of the U.S. dollar of up to 20 percent....

"I think a 20 percent decline in the dollar is possible."

#2 Inflation Is Going To Hit Already Struggling U.S. Consumers Really Hard

Already, investors have been fleeing from the U.S. dollar and other paper currencies and have been flocking to commodities, precious metals and oil.  That means that the price of food is going to go up.  The price of gasoline is also going to go up.  American families are going to find their budgets stretched even more in the months ahead.

#3 Once An Inflationary Spiral Gets Going It Is Really Hard To Stop

The Federal Reserve is playing a very dangerous game by flirting with inflation.  Once an inflationary spiral gets going, it is really difficult to stop.  Just ask anyone who lived through the Weimar Republic or anyone who lives in Zimbabwe today.  If the Federal Reserve is now going to be dumping hundreds of billions of fresh dollars into the system whenever the economy gets into trouble it is inevitable that we will see rampant inflation at some point. 

#4 Inflation Is A Hidden Tax On Every American

Tens of millions of Americans have worked incredibly hard to save up a little bit of money.  These Americans are counting on that money to pay for a home, or to pay for retirement or to pay for the education of their children.  Well, inflation is like a hidden tax on all of those savings.  In fact, inflation is a hidden tax on every single dollar that all of us own.  We have been taxed more than enough - we certainly don't need the Federal Reserve imposing another hidden tax on all of us.

#5 The Solution To The Housing Bubble Is Not Another Housing Bubble

Today, approximately a third of all U.S. real estate is estimated to have negative equity.  The Federal Reserve apparently believes that by flooding the system with gigantic sacks of cash banks will start making home loans like crazy again and home prices will rise substantially once again - thus wiping out most of that negative equity.

But the solution to the housing bubble is not another housing bubble.  The kinds of crazy home loans that were made back in the middle of the decade should never be made again.  Market forces should be allowed to bring the housing market to a new equilibrium where ordinary Americans can actually afford to purchase homes.  But that is not how our system works anymore.  Today, everything has to be manipulated.

#6 More Quantitative Easing Threatens To Destabilize The Global Financial System

We have already entered a time of increasing global financial instability, and the Federal Reserve is not going to help things by introducing hundreds of billions of new dollars into the game.  Over the past two decades, bubble after bubble has caused tremendous economic problems, and now all of this new money could give rise to new bubbles.  Already, we see financial institutions and investors pumping up carry trade bubbles, engaging in currency speculation and driving up commodity prices to ridiculous levels.

#7 Quantitative Easing Is An Aggressive Move In A World Already On The Verge Of A Currency War

Quantitative easing will likely help U.S. exporters by causing the value of the U.S. dollar to sink.  However, this gain by U.S. exporters will come at the expense of foreigners.  It is essentially a "zero sum" game.  So all of those exporting countries that are already upset with us will become even more furious as the U.S. dollar declines.  Could we witness the first all-out "global currency war" in 2011?   

#8 Quantitative Easing Threatens The Status Of The Dollar As The World Reserve Currency

As the Federal Reserve continues to play games with the U.S. dollar, quite a few nations around the globe will start evaluating whether or not they want to continue to trade with the U.S. dollar and use it as a reserve currency.

In fact, a recent article on The Market Oracle website explained how this is already happening....

In September, China supported a Russian proposal to start direct trading using the yuan and the ruble rather than pricing their trade or taking payment in U.S. dollars or other foreign currencies. China then negotiated a similar deal with Brazil. And on the eve of the IMF meetings in Washington on Friday, Premier Wen stopped off in Istanbul to reach agreement with Turkish Prime Minister Erdogan to use their own currencies in a planned tripling Turkish-Chinese trade to $50 billion over the next five years, effectively excluding the dollar.

#9 It Is Going To Become More Expensive For The U.S. Government To Borrow Money

Right now, the U.S. government has been able to borrow money at ridiculously low interest rates.  But as the Federal Reserve keeps buying up hundreds of billions in U.S. Treasuries, the rest of the world is going to start refusing to participate in the ongoing Ponzi scheme.

Peter Schiff, the CEO of Euro Pacific Capital, says that one of the big reasons for more quantitative easing is because the U.S. government is already starting to have difficulty finding enough people to borrow from....

At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.

But the truth is that foreigners are not stupid.  They can see the shell game that is being played.  As Bill Gross noted on Monday, U.S. government debt will soon become a lot less attractive to foreign investors....

QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices.

As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt.  Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

Most Americans have absolutely no idea how fragile the world financial system is right now.  Once the rest of the world loses faith in the U.S. dollar and in U.S. Treasuries this entire thing could completely unravel very quickly.   

The Federal Reserve is playing a very dangerous game.  They are openly threatening the delicate balance of the world financial system. 

Once the toothpaste is out of the tube, it is really hard to put it back in again.  Cross your fingers and hold on tight, because things are going to get really bumpy ahead.

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  • Tim

    Michael,

    Thanks for another excellent post. You’ve really helped me to understand what’s going on out there. I’ll hope you’ll continue writing these blog posts.

    • Michael

      Tim:

      As long as people keep reading them I’ll keep writing them. ;)

      Michael

  • johnny chang

    fed is now the payday lender of choice,that can only mean a massive tsunami of printing and borrowing will start to unfold next year.that 600 billion was just a drop in the bucket.

  • http://economiccollapse Dang

    A single trillion would be more then enough. If they actually want to help the economy for real. This would all that would be needed. An would also save the banks balance sheets. All the gov has to do is open a savings acount worth 1 trillion dollars in 500 banks an leave it in there forever. Then the bank can legally loan 10 times that amount out. Which would be 10 trillion dollars. Problem solved only if they loan the money to the american people. An not to bail out the gov. Or here is another one they could do to instantly inject money into the economy. Which i think is a very good one. Have a social secerty buy out for young people say under 40. Give them 35% on the dollar of what they put in. One time buy out an there gone.

  • http://economiccollapse Dang

    Having such a vast amount of money change hands is very scary since no one really knows where its going. I have strange feeling its not going where they say. If it was the other countries would be screeming bloody murder. I think my own thoughts on this. All the rest of the countries that have suposably bought treasurey bill are cashing out. I mean the u.s. gov is paying them all off early. An all this debt will belong to the american people when they declare bankruptcy.

  • Ben Franklin Jr.

    Is it any wonder that the announced monthly goals of QE so closely match the needs of the Treasury to finance the deficit? Debt Monetization is here and all it’s going to take is for someone to yell “The Emperor has no clothes”.

  • Gary

    how about taxing the rich and spreading the wealth? This would be much more effective than all the fed crap.

    The fed needs to focus on full employment and force the greedy corporations/ceo’s to pay a living wage or tax the hell out of them (corps) and the gov can provide.

  • Ernest Spano

    QE11 will result in more people going into poverty. I believe that the Federal Reserve doesn’t care about the damage being done to the lower, and middle class.

  • atrios

    Once the toothpaste is out of the tube, it is really hard to put it back in again.

    or once you **** the bed it is really hard to un**** the bed.

  • http://brunolem.wordpress.com brunolem

    I think it is mostly all in #9 and that Peter Schiff is right. This QE 2 is, before all, some form of insurance provided to the government, in order to guarantee that the new treasury bonds (approx. 100 billion dollars a month) will find at least one buyer.

    The depreciation of the dollar would be perceived as a bonus by the Fed and the government. Remember that one of Obama’s projects is to double US exports. This can’t be done without a massive depreciation of the dollar.

    On top of that, one shouldn’t forget that the US is incredibly lucky, because other major currencies do not offer better perspectives than the dollar.

    The Euro? Should be long dead! The Pound? Not much better than the Euro! The Yuan and the Yen? Local currencies!

    Of course, there are the commodities and among these, gold and silver.

    But it is obvious that these markets are manipulated by the same ones (bankers) who play with the currencies.

    Given the massive quantities of gold purchases, all over the world, by central banks as well as individuals, gold price should be well over 5,000 dollars an ounce now.

    But the price is held by short sellers.

    The question is: why on earth would anyone short sell something which appears to be a sure winner in the long term?

    The answer is that these short sellers, guided by the Fed, don’t want to see the fiat currency system crash in a matter of weeks, something that would happen if precious metals’ prices were left to the (free) market.

    They want an orderly decline and this is exactly what they have got until now: major currencies depreciating at a pace of 10 to 20% a year, and gold appreciating at a similar pace.

    Click on my name to visit my blog.

  • CJFYuma

    These asset bubbles in the stock and commodity markets end up rather ugly (crashing hard with the average “Joe Blow” losing his pants again). It’s all engineered by Ben “Blowhard” Bernanke, and his cronies on Wall Street, to pump up the over-inflated stock market, so they can then dump their crappy securities on “Joe Blow”.

    The banksters, who own Bernanke, are clandestinely selling their overvalued stocks and bonds to the greedy, gambling Asians, and gullible American Joes. The banksters bought this overvalued crap with the federal reserve notes that “Blowhard” printed up, and loaned to them for nothing. Isn’t this criminal, Ponzi scheme 100X more interesting to follow than the drug cartel war in Mexico?

    And of course Blowhard’s trillion $$$ won’t create one, measley job for Joe Blow or his children. Blowhard, and his syndicate partners know this well. It’s just a ruse to make the Joe Blows in America “think” that the Fed is helping their economic situation, so they turn their heads while Blowhard robs them blind. Got it?

  • Lugnut

    The powers that be (within our government and outside of our government) have been working on this a long time. Trashing the U.S. Dollar so as to implement a currency which will be used by the U.S. of America, Canada, and Mexico. This will be one of ten confederations within the entire world and each confederation will have its own currency. How the other confederations will be formed and what countries is overly complicated to write here. One thing is for sure all this will lead to a one world currency as well as a one world government. Time is short.
    ***Google: roman road to salvation

    1 Peter 1:3-5

  • http://www.planorperish.com/ Gutter Economist

    In the near future, problems caused by quantitative easing (money printing) will be compounded by rising interest rates.

    http://www.planorperish.com/?p=2494

    The party ended for consumers when the housing bubble popped. The party will end for the US government when the treasury bond bubble pops. The economic collapse will occur when the US can no longer support both inflation and rising interest rates.

  • Erin

    @lugnut

    “Trashing the U.S. Dollar so as to implement a currency which will be used by the U.S. of America, Canada, and Mexico. …”

    I see no point in discussing the amero, or bancor, or any other possible future NWO currency. Once the dollar gets trashed as the world reserve currency that will be the end of any world reserve currency. There is no longer a reason to have a reserve currency. There has been no good reason to have the dollar as a reserve currency since 1971, when the dollar was taken of the gold standard.

    The only valid currencies are those backed by something, a redeemable commodity, sitting in a vault. Gold, silver, copper, wheat, rice, puka beads. As long as I can take my “note” to a bank and get my commodity back I have something tangible. Anything less is just empty promises.

  • Tony

    Serious question!
    I’ve been reading on the economy for four or five years now, can’t seem to decide when it all falls apart.
    It does make a difference, if it’s five years, I’ll go to Starbucks this week.
    If it’s 6 to 12 months, completely different ball game.

    Does anyone have a solid opinion.

  • http://thecivillibertarian.blogspot.com/ Something Wicked This Way Comes

    Gary;

    GE made 637 billion and paid 5 billion in taxes in the last seven years. Does a tax rate less than 1% frost your ass? Corporations have been avoiding taxes forever.

    You can’t tax the rich. You can’t penalize people for being successful. You will ensure mediocrity and guarantee socialism. In fact, people will just say screw it. This country was founded on the principle that hard work pays off.

    I am so sick of hearing people whine about the rich like they are evil. They aren’t the problem. Progressive government paying off their cronies and elite in corporate America via that punitive tax code if the problem.

  • http://Null Wamik

    Fed is on a mission to destroy US dollar which means they have already prepared an alternative for dollar I am just waiting for announcement,there are lots of rumours going on That a global currency is going to be introduced to enslave whole world on the same lines

  • primrose

    I tend to go along with the definition of insanity: Doing the same thing over and over, expecting a different outcome.

    The same crooks who gobbled up the first Stimulus and band aid fixes are anxiously awaiting the next round of stupidity.

  • GoatLady

    Thanks, Michael, for another informative and educational post.

    When I read about inflation, current and future, I can’t keep from thinking about the many uninformed sheeple going about their daily business as usual. They won’t have a clue when big time inflation hits that it is due to dollar devaluation. Instead they will blame the store, the utility company, the gas station, etc.

  • emma

    Everytime I read your posts, it seems like you know more than you are letting on. Something doesnt seem right about this, do you think the system will go down again maybe in 2011

    The US elections were spooky – Check this out. http://www.forecastfortomorrow.com/news/2010/11/major-hit-us-elections

  • Federalist45

    The writing was on the wall as early as 1917, when Wilson led the U.S. into a World War in which it should never have been involved. After Lincoln’s War on the Constitution and the C.S.A., Wilson’s move was the most significant step toward destroying what remainded of the Federal Republic (“A republic, Sir, if you can keep it,” which, of course, we couldn’t). For Wilson and the Statists, it was a stroke of genius. He ensured that the U.S. would never again be unique and apart. Rather, the U.S. was committed then to the 100 year war to creat a New World Order, whatever form that Statist Utopia might take. There have been many fits and starts, but always the course has been towards a global hegemony. The “last, best hope” was merely the last roadblock. By entering the U.S. into WWI and by all subsequent Statist actions, the elite have managed to destroy the U.S.

    The future is bleak for us. We will be cogs in the Globalist machine, lucky to be able to feed our families (which, in the future, will resemble more the Chinese style than the one we have known for 100s of years). Private ownership of land and property? Ha, no such thing. It will all be seized in the name of security and prosperity. We will work where they tell us to work, doing jobs they tell us do, and take what they believe we deserve to get (but only insofar as it makes us beholden to them).

    Any hope, anywhere? Maybe pockets will resist. Australia may present some options, but it is unlikely. It, too, likely will succumb. The threat will be: “Join or die.”

  • freddybobs68k

    I read this yesterday, and can’t say I totally understand it.

    http://pragcap.com/mmt-101

    Still it claims…

    ” Contrary to popular opinion, Quantitative Easing is actually a deflationary event because it takes an interest bearing instrument out of the private sector’s hands and replaces it with a non-interest
    bearing deposit.”

    So can someone explain what is wrong with the argument?

  • Arr Dee

    F’ing CAPTCHA BULLSHIT – I typed in a comment but the SOB’n letter “U” couldn’t be distinguished as UPPER of lower case. I guessed wrong and POOF goes my comment.

    Whatever – not going to type all of it again, the gist of it: GARY – the “rich” already pay over 78% of all taxes. Almost HALF of US families PAY NO TAXES. Corporations are not “evil” – they provide JOBS and enable the so-called “rich” to… wait for it – PAY all of those taxes! It’s moot, though – we are tipping over very soon. Monopoly Money Days are just about here.

    F us all for letting it go this way – oh, and F-U CAPTCHA – F-U!

  • mondobeyondo

    Another one of your friendly neighborhood Ponzi schemes in action!

    The stock market is already up – it’s just salivating at the thought of all that extra money the Fed just released. Of course, the banks and markets will be the first to get the new QE money.

    By the time it trickles down to Joe Sixpack (if it ever does!!) there will be nothing left but inflation. Food prices are already going up. And your dollar won’t stretch nearly as far anymore.

    If you’re a banker, you’re singing “Happy Days are Here Again. If you’re not… good luck!

  • VegasBob

    Let’s see. The Great Recession (Great Depression II) has destroyed the economic well-being of tens of millions of Americans.

    Bernokio’s ‘quantitative easing’ is going to create massive inflation in commodity prices which will economically destroy millions more formerly middle class American families.

    Quantitative easing will not lead to the creation of one single job but Americans will soon be paying $4 a gallon for gas and $4 a gallon for milk.

    Deliberately destroying the lives of millions of people of modest means in order to keep shoveling trillions of dollars into the pockets of the rich is TREASON.

    Why is Bernokio not on trial for TREASON???

  • comnenus

    If you tax the rich, the rich will emigrate to a country which will tax them less.

    That’s why all the Russian billionaires are in London – less taxes for foreigners.

  • zack

    Reason #10 – inflation is unfair. The politically connected elites get first access to the newly created money, allowing them to buy goods at cheaper prices ahead of the rest of the population. By the time the new money trickles down to you and I in our wages, prices have already gone through the roof. People will start demanding to be paid daily instead of every two weeks.

    Great article.

    Our company Path to Asia http://www.pathtoasia.com/jobs/ helps Americans move to Asia for jobs and prosperity. Visit our site for details.

  • j r

    Just more wealth transfer from the American middle class to the criminal class.

    Why doesn’t the Fed just create $300 trillion and give each American a million? We can all be rich with just a few keystrokes on the Fed magic money computer.

  • michelle

    Silver is over $26

  • lostinmissouri

    Gary…. How about just killing all the poor. Then everyone will be rich and no one will care.

    (it’s a joke….when you look at me like that…I’m joking)

  • Kevin

    The second QE2 was announced the Australian dollar went over parity with the US dollar. I saw it happen at the speed of light. This has not happened ever since the Australian dollar was floated over 30 years ago. I agree with everyone that this latest move by the Feb is heading to banana republic land. I love this site. It is like watching a car crash. You hate to see it but you can’t take your eyes off it.

    The second that the financial and global markets realize the game is over there will be a massive crash. The question is What will be the tipping point? Does anyone have any guesses?

  • http://www.hedgethebets.com/ Philip M.

    The FED’s current unease about QEII can prove prophetic. Not that this unease is going to impact the monetary policy in any significant way.

    http://www.hedgethebets.com/latest/2010/10/feds-qeii-is-no-shot-in-the-arm/

    QEII (quantitative easing, part two) is no shot in the arm for the real economy. The reason why quantitative easing will not have the desired effect this time around is that the underlaying problem has evolved. The challenge we are facing now is not a lack of liquidity. It is a lack of credit. More cash will only fuel new bubbles.

  • The Beast

    @Michael:
    I’ll keep reading as long as you keep writing… :D

    Best warm regard…

  • Matt

    Another good article.

  • Ridiculousness

    That’s a whole lot of money, with no transparency. And it will fail. Because it is designed to fail. It always fails, and everyone always acts surprised. Because you can’t pay it back!

  • Mike

    Ignorant egg heads who could not run a kid’s lemonade stand. This is the last hurrah. When this fails, the whole system goes tits up. What is going to happen if/when the Fed has to start reigning all this QE money in?
    The Fed and Treasury all have big portfolios of shit mortgages. By causing inflation, is this going to drive home prices up? Why the hell would the banks lend any of this money at 3-5% when they can get 20-25% returns by pumping up the stock market? The US consumer again takes it in the ass to benefit the bankers. These guys should all be arrested be tried for Treason!

    Mike

  • http://www.rantyrantrant.blogspot.com Vasper85

    Neither politicians nor bankers can solve the world’s problems because the problems of the world are neither political nor financial, they are technical. It is not access to money we need it is access to resources. This continued cycle of consumption and money printing will destroy everyone’s standard of living. Well nearly every one, those who own the assets will be fine, while those with a pile of money and bonds will starve.

  • KeepYourrRosariesOffMyOvaries

    Okay, this may be unpopular but I support QE2, 3 or 4 for that matter. Why??? you might ask. Because nothing can save this ship but that is no reason to stop bailing even though you know it won’t work in the end.

    It does do one important thing however, it gives you a little more time. More time to gather supplies, more time to have a plan where to go, to get silver, gold, copper money etc.

    So Bernanke and everybody are tap dancing ever faster to keep this joke afloat, but what is the alternative? To let it all collapse now? NO, better to keep it going as long as possible before people riot for food, before the elderly die in the gutter for lack of housing, food, medical attention etc. Before martial law gets declared. If it is going to get that bad, then by all means print more worthless money if it keeps things going for awhile longer. I love how they print more money and inflate the currency but have learned to keep interest rates artificially low so that it seems there is no inflation, however, prices (the other side effect of printing money with nothing to back it) are rising and they haven’t figured out a way to disguise that yet.

    IF you think that this economic mess can be turned around, then no, it isn’t a good idea to print more worthless money (oh sorry, quantitave easing), but, if you believe that it is a fait accompli now that it will all collapse, then by all means, keep it going as long as possible.

  • Grekko

    This madness can end tommorrow if the legal tender law is repealed. Competing currencies, gold and silver need to be reinstituted. The market will decide which is best. Jim Rogers is correct. Bernanke only knows how to print money, and it will get us nowhere, fast!

  • http://boblupoli.blogspot.com/ Bob Lupoli

    Here is my take on the issue, the first QE was done by Greenspan that started the housing bubble and Americans began to spend freely on borrowed money, it increased consumer spending and created a false unsustainable growth in the US economy that bubble busted in 2008.
    With all of the Federal bailout and easing after the bubble busted the recession remains, and unemployment remain at 9.6% this is the Government official number, but some wise Economist and investment guru dispute the number and claim the unemployment is much higher.
    Now a second QE is to occur many doubts it will work.
    Here is the greatest deception that is being committed on the American people by both political parties:
    The politicians fail to focus on the fact that America is being De Industrialize
    Nor is such fact being spoken about by either political parties; reason it serves the interest of Corporate America to relocate to countries out side the US the benefit is high profits from cheap labor. The politician on both sides of the isle has been silenced since their funding for the most part comes from these elite of special interest group that just loves low paid workers that may not be obtained
    In the US. These group of elite Capitalist know from history that high profits may be achieved if they could legally buy slaves, however that practice has been
    Made illegal.

    The second comment by the reader address some of the fault of the Republican Party, The label of conservative which applies to the Republican party in the past was accurate, but that label during the past ten years has changed and that party today which claims to be conservative is no longer a conservative party, During the eight years of Bush it created a bubble, it created two wars financed by borrowed money both un winnable Wars, moreover accumulated a massive debt to the tune of trillions of dollars.
    In the mid term 2002 election this party spin has been small Government and lower taxes, prosperity and more jobs, the aspect of small Government has been said by the Republican party for the last three decades and neither the Republican or Democratic party has ever down sized the growth of the Government, therefore the spin is false and not achievable, the second lower taxes again another false spin, how could you lower taxes when Government spending keeps increasing; how could you lower taxes when both parties favor wars and the military Industrial complex.
    How could you create more jobs in America when it is to the detriment to the Corporate bottom line to hire Americans, the preferable choice where possible hire Labor in countries where labor may be hired for $35, 00 per month.
    Here is what happened in the 2002 election;
    First the Democrat to the voters come to our side and we shall save you, some believed the spin and when to that side.
    The Republican said the same thing and some then went to the Republican side.
    Since neither party has convinced the voters that the ultimate savior is one of the party, the voters in effect created a grid lock Government and failed to give one party a decisive mandate to govern the country.
    A similar scenario occurred in Germany when finally a charismatic leader Hitler appeared on the scene, his promise to save the people was believed by majority of the German people, and for this reason they gave him a decisive mandate to Govern the country.
    They called him the Fuehrer, and they began to celebrate since the Fuehrer
    Did fulfill the promise he made, by curing German unemployment.
    Later came the disaster of war that is another story.
    If you need to use a crystal ball in predicting what holds for the future of the US,
    You must read the history of Germany from the period of the German depression, and when the central Bank attempted to revive the economy by printing more money that did not work.
    Moreover, read as to what has occurred in 1990 in Japan again it remained in recession.
    The German scenario may occur in the US since Berneke is attempting to revive the US economy by the printing press.
    I agree with the comments of the writer as to the present citizens of America
    The population of America has changed with an increase of uneducated Americans.
    The brain washing technique meted to them by the news media and the spin of politicians that serve special interest group now easily influences the voters,
    In their confusion as to which party will turn the country around they voted for a Grid lock Government

  • http://www.hedgethebets.com/ Philip M.

    Yes, I agree quantitative easing is certainly bad for the US economy!

    The Fed has recently announced QEII (quantitative easing two, named like this in fond memory of QEI, which has saved us from a re-run of the Great Depression at the onset of this financial crisis). Could this be a hint at China’s growing reluctance towards investing in U.S. treasuries? Given current low yields, it seems reasonable to assume the Chinese aren’t thrilled.

    http://www.hedgethebets.com/latest/2010/10/why-feds-adventures-with-u-s-government-debt-and-chinas-interest-in-natural-resources-could-flare-up-inflation/

    Our biggest trading partner China has been by far the biggest investor in long-term U.S. government debt, as it needed a safe haven to bank its mounting trade surpluses. Should China seriously shift its focus towards buying up natural resources such as energy, rare metals (needed to manufacture technology products) and commodities, we would be looking at inflation at some point down the road.

    If we do contract inflation, the Fed will be forced to resort to a contractionary monetary policy with higher interest rates.

    This would bring the stuttering U.S. economy to an instant halt.

  • Jason

    VegasBob: because Ben Bernanke represents the prime capital holders who own this country and to a fair extent, the world, the same prime capital holders that have owned the world for centuries. Mainly he’s just a celebrity, like the president, and most of congress and the senate,…an actor, in a political theater.

    There’s been times when we stood up (Thomas Jefferson, Andrew Jackson, etc.) but their messages are largely forgotten and everything is aligned for these guys, the only ones that can really throw it for them are fast asleep, drunk on consumerism and entertainment. They’re gonna be just fine, moving their capital from the west and north (US & Europe) to the east and south (China & India),…been doing it for a few democrat/republican cycles,…why shouldn’t they, the name of the game is return on investment right?

    People stand up, start demanding more in the way of rights and services, they become a liability…diminished returns in the way of increased social services and benefits for the livestock…we’re a tax farm and harvest is coming.

    No, the ones you see on TV pretending to run the country? Those people are just there to help facilitate the growth of the capital machine and to manage the destruction in its wake.

  • http://www.hedgethebets.com/ Philip M.

    The Fed adventures with US government debt and China’s interest in natural resources could flare up inflation

    http://www.hedgethebets.com/latest/2010/10/why-feds-adventures-with-u-s-government-debt-and-chinas-interest-in-natural-resources-could-flare-up-inflation/

    The Fed has recently announced QEII (quantitative easing two, named like this in fond memory of QEI, which has saved us from a re-run of the Great Depression at the onset of this financial crisis). Could this be a hint at China’s growing reluctance towards investing in U.S. treasuries? Given current low yields, it seems reasonable to assume the Chinese aren’t thrilled.

    One thing is for sure, QEII is not a shot in the arm for the real economy this time!

    http://www.hedgethebets.com/latest/2010/10/feds-qeii-is-no-shot-in-the-arm/

    The FED’s current unease about QEII can prove prophetic. Not that this unease is going to impact the monetary policy in any significant way.

    QEII (quantitative easing, part two) is no shot in the arm for the real economy. The reason why quantitative easing will not have the desired effect this time around is that the underlaying problem has evolved. The challenge we are facing now is not a lack of liquidity. It is a lack of credit. More cash will only fuel new bubbles.

  • http://michaelkorswatcheswomen.com/ Jeff

    Ross Perot warned us about NAFTA , the little big man , does he still sound crazy , he also said the worst that we could do is look around and see who has the best system and use that .

  • http://Activism101.Ning.com Cromag

    News Flash!!!!  A Falling Currency Is How Trade Deficits Adjust! http://ow.ly/19Qe2j

  • http://DEADPRESIDENTS.BIZ Michael

    These guys should be tried for treason. Yes, treason. They are printing money that has less value with every note issued. Legal tender, my ass. It’s fiat currency with a diminishing rate of globally recognized value with each and every “counterfeit-like” influx to the monetary supply. We may as well start using Monopoly money and trading cards…at least, oh, hold on…the Fed has the monopoly on counterfeiting already. Get out of jail free cards all around…pass the buck. Literally.

  • Gary

    How about this dolt do some QE in my pocket? I did nothing wrong and now have to work for 1/2 my former wage due to these fools ruining the economy. Why are the same people being tasked with fixing it?

  • Jack

    Reality

    google

    Bernanke’s Failed CNBC Predictions

    Eliot Spitzer: “The Federal Reserve Is A Ponzi Scheme” (Inside The Fed’s Secret Pile Of Trash With Ratigan, Spitzer & Toure

    Marvin Barth Says QE2 Won’t Fix `Underlying Problems’

    9 Reasons Why Quantitative Easing Is Bad For The U.S. Economy

    Quantitative Easing Explained

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