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Barack Obama And Ben Bernanke Continue To Defend Quantitative Easing, But For The Rest Of The World The Verdict Is In: They Hate It

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Even as Barack Obama and Ben Bernanke publicly defend the Federal Reserve’s new $600 billion quantitative easing program, top finance officials around the globe are expressing alarm and outrage.  But what did Obama and Bernanke expect?  “Quantitative easing” is little more than legalized cheating.  For a moment, imagine that the global economy is a giant game of Monopoly.  Essentially what Bernanke has done is that he has just reached under the table and has slipped another $600 billion on to his pile of money, hoping that the rest of the players will not call him out on it.  The rest of the world has heavily invested in the U.S. dollar and in U.S. Treasuries, and this new quantitative easing program is going to devalue all of those holdings.  If the Federal Reserve continues to go down the road of monetizing U.S. government debt, other nations are rapidly going to get spooked and will soon refuse to invest in U.S. dollars and U.S. Treasuries.  When that day arrives, it is going to cause mass panic in the world financial system.

Already, investors across the globe are flocking out of the U.S. dollar and into safe investments such as gold and silver.  On Monday, gold closed at an all-time record high of $1,403.20 an ounce on the New York Mercantile Exchange, and silver closed at a 30-year high of $27.43 an ounce.

Unfortunately, our leaders seem absolutely clueless about what is really going on.  In fact, Barack Obama is very much in Bernanke’s corner.  During his trip to India, Barack Obama made it clear that he very much supports this new round of quantitative easing by the Federal Reserve….

“I will say that the Fed’s mandate, my mandate, is to grow our economy. And that’s not just good for the United States, that’s good for the world as a whole.”

This is the exact opposite of what Barack Obama should be doing.  He should be demanding accountability from Ben Bernanke and the Federal Reserve.  He should be trying to get the U.S. financial system back on some kind of solid footing.

But we all know that is not going to happen.  Obama had no problem renominating Bernanke to another term, and Obama has publicly supported him at every opportunity.

Well, if Obama isn’t going to do it, shouldn’t some of our other representatives in Washington D.C. be calling for the resignation of Bernanke?  After all, how many chances does one guy get?  Bernanke’s record is littered with so much gross incompetence that it makes Wade Phillips of the Dallas Cowboys look like Coach of the Year.  The video posted below shows Bernanke reassuring the public over and over and over between 2005 and 2007 that the U.S. economy was in great shape and that we would continue to experience solid growth….

How long is it going to be until everyone wakes up and starts acknowledging that “the emperor has no clothes” and Bernanke is running the U.S. economy into the ground?

At this point, Bernanke has lost virtually all credibility.  In 2009, he promised the U.S. Congress that the Federal Reserve would not monetize U.S. government debt, but now that is exactly what is happening.

Most of the top finance officials in other countries realize what is going on, and they are really starting to make their displeasure known.  The following are just a few examples of the global outrage that has been expressed about the Fed’s new quantitative easing program over the past few days….

*Xia Bin, an important member of the monetary policy committee of China’s central bank has called the Fed’s new quantitative easing plan “abusive” and is warning that it could set off a global economic meltdown.

*On Monday, Chinese Finance Vice Minister Zhu Guangyao expressed his extreme dismay regarding the Fed’s new quantitative easing scheme….

“As a major reserve currency issuer, for the United States to launch a second round of quantitative easing at this time, we feel that it did not recognize its responsibility to stabilize global markets and did not think about the impact of excessive liquidity on emerging markets.”

*German Finance Minister Wolfgang Schäuble, who has called current Fed policy “clueless”, says that he is absolutely disgusted with the Federal Reserve at this point….

“They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous.”

*Luiz Inácio Lula da Silva, the President of Brazil, says that he is incredibly upset about QE2 and that he is going to arrive for the G20 meetings in Seoul ready “to fight”.

*Bloomberg is reporting that at the upcoming G20 meetings, Russian President Dmitry Medvedev is going to “insist” that any future quantitative easing measures be globally coordinated.

*Even some top Fed officials are speaking out publicly against this new round of quantitative easing.  For example, Kansas City Fed President Thomas Hoenig recently made the following statement about the new direction the Fed is taking….

“I worry that by pumping in significant amounts of dollars we then build the inflationary pressures for the future, and we do encourage then an easier credit environment that helped create this problem in the first place.”

The Federal Reserve had better hope that the rest of the world does not get scared off from buying U.S. government debt.  According to the Wall Street Journal, in order to repay maturing bonds and finance the budget deficit, the U.S. government will have to come up with 4.2 trillion dollars over the next year.

If the rest of the world cuts back on buying U.S. Treasuries, the Federal Reserve is going to find itself with a gigantic mountain of debt that it will be forced to monetize.

So what happens someday when China, Japan, Russia and the major oil producers in the Middle East decide that enough is enough and they are not going to buy any more U.S. debt?

Don’t think it can’t happen – these nations are not stupid and if they realize that the U.S. dollar is going to continually keep falling in value there could be a dramatic move away from U.S. debt.

If the rest of the world quits lending massive amounts of money to the U.S. government, our leaders will be faced with three options.  The U.S. government could start trying to operate within a balanced budget (which would crash the economy), interest rates on U.S. government debt could be raised until people would be willing to invest in Treasuries again (which would probably crash U.S. government finances and the economy), or the Federal Reserve could just start monetizing most of the debt on a regular basis (which would likely eventually crash the entire world financial system).

In order for the current world financial system to maintain stability, it is essential for there to be faith in the U.S. dollar and for there to be faith in U.S. Treasuries.  Once faith in them is lost, it will only be a matter of time until the world financial system totally crumbles.

This new round of quantitative easing could be the “tipping point” that opens the door to the eventual complete and total collapse of the U.S. dollar.  Let us hope that the dollar does not completely fail any time soon, but with jokers like Bernanke and Obama running the show, there is not much reason for optimism.

  • Private Bankers running the financial empire dont care about rest of the world they only want more wealth,crash of US dollar is a pre planned thing.It is a big step towards creating a new world government &(to create a new empire you have to destroy the previous).

  • When every one is thinking the same thing – no one is thinking. The rest of the world is going to print massive amounts of their own monopoly money and take all those excess US dollars out of circulation. This will result in a strong US dollar and a US dollar bull market. All currencies, however, will continue to fall relative to gold and silver.

  • VegasBob

    If Obama wanted to promote economic recovery, he would act to stop the looting and start prosecuting, starting with Lord Blankcheque at Goldman Sachs and working down the list.

    He would order banks to use mark-to-market accounting and order all insolvent banks to be taken into FDIC receivership.

    If Bernokio wanted to promote economic recovery, he would stop the money-printing, expose the government’s fraudulent computation of the CPI, and normalize interest rates.

    Instead we continue to get deception, deceit, obfuscation and outright lies from both Obama and Bernokio.

    I don’t know if Obama has commited criminal acts. The last time I checked, ignorance of economics was not a crime.

    However, Bernokio has clearly committed perjury in sworn testimony to Congress. For this alone he should be impeached and convicted. For his usurpation of the role of Congress in appropriating money for government expenditures, Bernokio should be tried for and convicted of treason.

  • The Beast

    So they want to keep their unsustainable way of living by messing other countries asset? The currency war might be a prelude to a nuclear war….sigh

  • China, Japan and others are not stupid, they are stuck!
    They have gone too far. They cannot go back, and if they refuse to move on, they fall together with the US.

    To get out this vicious circle, a first step for them would be to get rid of the dollar as the world reserve currency.
    The OPEC would have to decide that they accept payments in euros, yens and some other currencies.
    Then, many other commodity exporters would probably follow suit and the dollar would quickly lose its status, thus allowing exporters to recover some financial freedom.

    But, the fact is that many OPEC members owe their power to the US military, which help them to stay in power in their countries (Saoudis and the likes…).

    China has a different problem: it needs Wal Mart and the US consumers to keep its own people employed and away from the streets.

    In short, all these countries’ leaders are not stupid: they want to stay in power!
    If the cost (not for them) is to indefinitely pile up worthless dollars, so be it!

    Click on my name to visit my blog.

  • Suetonious

    “This new round of quantitative easing could be the [b]”tipping point”[/b] that opens the door to the eventual complete and total collapse of the U.S. dollar.”

    This is webbot language for the period Nov 5 through Nov 14, which is a period of building tension until a total financial collapse beginning on Nov 14. It’s woo-woo stuff, but this was forecast almost a year ago – and look at what’s happening now. Check it out at

  • paul

    Did the American people had enough? The printing money out of thin air may have ran its course. Maybe its time to purchase real gold or silver coins that we the people can trade. Maybe China can supply our coinage needs and drop the phony paper dollar. Given the choice I prefer to trade in real gold coins then make believe air paper

  • Another excellent article. One needs only to look at this morning’s gold price (within a few cents of $1,420 as I write this) to see a clear message to the U.S. Administration – at least that’s how I see it. Moreover, the tone of President Obama’s trip to India, as reported on last evenings ABC Evening News, strikes me as being one of likely losing more U.S. jobs, not gaining U.S. jobs. I am beginning to wonder what I am missing. I am developing, which focuses entirely on Resource and Resource Stock Research for the very reasons underlying the majority of posts on this blog. If you have 8 minutes and want to hear why that website exists, and what I am attempting to do with it by way of ’empowering investors’ you can listen to an interview I gave last week at

  • dippity doo

    “Nothing to see here.
    Move along.
    The sky is still blue, the sun still rises.
    Drink and be merry.
    All is well.”

    Gotta love the irony of optimists who dont know they are in fact delusional.

  • Mickey Mouse

    This is so neat. We are all going to eventually be billionaires. I will flaunt my new found wealth by using 100 dollar bills as wallpaper, and I will create shirts made out of 1000 bills taped to each other. I will be so popular among the women, who will see my money and think that I might still have enough to buy a day’s worth of groceries (the groceries might run for a cool million dollars).

  • Ben Franklin Jr.

    “When your only tool is a hammer, then every problem looks like a nail”

    The tipping point came and went with QE1. The slide down only become steeper from now on.

  • Maria


    Would you please do two or three articles covering this scenario…

    What would happen if we end the Fed?

    What would happen if we abolish the IRS?

  • Sinbad

    Well Obama can always wage another war, like his predecessors and plunder its real value.
    Any guesses about target? 🙂
    That way USA will gain true wealth of that economy while it restores true democratic values in it and on the other side it can show its teeth to anybody who even thinks of pushing dollar out of its throne of reserve currency.

    But with each passing month and tumbling dollar this war campaign becomes harder to accomplish.

  • Lennie Pike

    All of this protesting of QE coming from other governments is only for the consumption of the American Sheeple so that a little more frog boiling pot time can be bought while the widely accepted plan to destroy the dollar is carried out.

    The end result of the NWO plan is almost complete. China, the U.S. and just about every other country are joined at the hip financially. There already is only one world wide financial system. Only a few Arab countries who are presently being attacked because they are not part of the system remain to be brought into it – and maybe Russia, maybe not.

    The pay-off for these thugs to join forces is huge. The fact that what’s remaining of the economy of the U.S. upper middle class on downward will be destroyed is irrelevant because of the huge pay-off. They already are one force and all that they lack is finishing us off and getting us accustomed enough to accept a Chinese model police state which is also happening – noticed it yet? Noticed that it is being accepted also? Everyone is afraid of their government. Well, not everyone. A few of us are not and will not be afraid to die fighting against these non-humans when they finally force the issue and put us between a rock and a hard place with our backs up against the wall-when it’s time to get on the boxcar – or sooner.

    We are the last remaining country on the planet where millions of private citizens own small arms and that is a huge problem for them. If that were not the case, things would already be a lot different around here.

    The Economic Collapse is a great blog. See also and keep thinking with with an attitude of mistrust when it comes to these elite Godless pricks – you can’t believe a word they say that is broadcast from their propaganda machine.

  • Michelle

    Get the rest of your preps in – pronto!!

    The S is hitting the Fan

    Lawyers & Money won’t help you – get guns gold groceries and good with God…

  • zack

    Bernanke and Obama live like kings on the backs of the American public, while we see prices going up for groceries and gas. Google is developing its own CPI measurement called the GPI, which should be an effective way to call BS on the government’s fake numbers.

  • William

    I believe that missile launch over SoCal yesterday was China’s way of telling us “Hey dumbass! The party is over!” It will start going down hill even faster now. If you’re not ready by now, sorry to hear it. Glad none of my kids are in diapers at least.

  • mondobeyondo

    The Fed is running out of magic bullets. They can’t push interest rates any lower, so their last hope is quantitavive easing. They’re getting desperate.

    It won’t work. You might as well stick an IV needle in a skeleton.

  • Mike and Crew…

    I found an excellent read regarding QE2. This guy seems to know what he is talking about.

    Essentially he see QE as a waste of time, simply stripping any available yields down to zero. This article kind of calmed the madness for me.

  • It has all been predicted.
    Years ago.
    We all se the scenario unfold as it is followed by TPTB.

    If you see that the road is exactly the one on the map and you see this road ends at an abiss, do you slow down or step on the gas?

    It’s up to the American people to stand up and call it to a halt because they will have to pay for it.
    Or send the marines to make the rest of the world shut up. That’s also an opportunity.

  • There is much discussion going on about the state of the economy, or the State of The Union if you will. Some economists argue that we are entering a deflationary cycle – like Japan’s ‘‘lost decade” of the 1990’s. Others believe that the U.S. economy is headed straight into high inflation. Either way, it is likely that this transitional phase is going to be quite a rough patch.

    There are two reasons why post-Keynesian inflation will not be a threat to your savings for some time to come. For the economy to overheat you need a strong demand and this won’t happen with massive household deleveraging (which has not yet even seriously begun) and baby boomer’s thrifty retirement. On the other hand, any inflation in developing economies has a negligible effect on prices over here because imports of China’s goods and India’s services are still sufficiently competitive to wipe out a lot more jobs in America. And don’t forget: With the Republicans in charge we could even see European-style austerity. We are definitely looking at deflation for quite some time to come.

    Paul Krugman, the New York Times editor with a Nobel Price in economics to brag about, voiced one of the most pointed arguments in “The Conscience of a Liberal: Permanently High Unemployment”. If you want to read something, read this one. Krugman has been right so far.

    • 007

      Bull crap. I hear this dribble all the time and it is absolutely not true. History bears witness that inflation can take root and flourish in a very sick economy. Look at our economy under Carter. Hence, the term stagflation. The economies of Weimer, Zimbabwe and Argintena were all in shambles when hyper-inflation struck. Even beter check out ancient Rome as it collapsed.

      This is just Bernanke’s excuse to keep printing despite unanimous agreement it will eventually result in disastrous inflation.

      It has already started.

  • It’s odd, but it’s very hard to believe that this melt down is happening by happenstance.

    The U.S. is, or was, full of the world’s best and brightest. It’s hard to accept the behavior of the best and brightest is not much better than the worst and the dumbest.

    Is that what the data telling us? The Best and The Brightest of the World are really the Worst and The Dumbest?

    So, if that is difficult to believe. Perhaps there is another explanation? Perhaps The Best and The Brightest know exactly what they are doing. Perhaps someone, or some group (maybe the best and brightest) are benefiting from the fiasco.

    How these benefits can accrue to them is hard to determine from this vantage point.

    After all, I’m not one of The Best and The Brightest.

  • Tom

    Me, I love QE2. I am making a mint on commodities. Metals and food prices are soaring. Love it!

  • American Patriot

    There us nothing “Federal” about the Federal Reserve.

  • One of the few concepts in economics that actually holds true is this one. Inflation = more dollars chasing the same amount of goods and services. QE=more dollars. A no growth GDP=the same amount of goods and services. What is there about that that anyone finds difficult to understand?

    • 007

      Hey Michael, I am having trouble posting or your new comment system. Seems like I can only post as a reply. If I try to just make a comment the text and comment go blank. Thought you should know. Still think your articles are great.

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