The Beginning Of The End
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How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us

The mainstream media is hailing QE3 as a great victory for the U.S. economy.  On nearly every news broadcast, the "talking heads" are declaring that Ben Bernanke's decision to pump 40 billion dollars a month into our financial system is definitely going to help solve our economic problems.  The money for QE3 is being created out of thin air and this round of quantitative easing is going to be "open-ended" which means that the Federal Reserve is going to keep doing it for as long as they feel like it.  But is this really good for the average American on the street?  No way.  Despite two previous rounds of quantitative easing, median household income has still fallen for four years in a row, the employment rate has not bounced back since the end of the last recession, and new home sales have remained near record lows.  So what have the previous rounds of quantitative easing accomplished?  Well, they have driven up the prices of financial assets.  Those that own stocks have done very well the past couple of years.  So who owns stocks?  The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.  Those that have invested in commodities have also done very nicely in recent years.  We have seen gold, silver, oil and agricultural commodities all do very well.  But that also means that average Americans are paying more for basic necessities such as food and gasoline.  So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us.  Is there any reason to believe that QE3 will be any different?

Of course not.

This time the Federal Reserve is focused on buying mortgage-backed securities.  Yes, the same financial garbage that helped cause the last crisis.  The Fed plans to gobble up tens of billions of dollars of that trash every month from now on.

But will the Fed pay true market value for those mortgage-backed securities?  If you believe that, I have a bridge to sell you.

So this is going to be a huge windfall for some people, and that does not include us.

Not a single penny of this 40 billion dollars a month will go directly into our hands.  The theory is that it will "filter down" to us eventually.

But that hasn't happened with previous rounds of quantitative easing.

So where does the money go?

A recent CNBC article discussed a very interesting report from the Bank of England about the effects of quantitative easing....

It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.

Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.

Many said the BOE's easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that  “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it."

Wow.

Who benefits from quantitative easing?

According to the Bank of England, it is "mainly the wealthy" who benefit.

As I noted the other day, Donald Trump said essentially the same thing when he told  CNBC the following....

"People like me will benefit from this."

As I already discussed above, a lot of quantitative easing money gets into the financial markets where it pumps up the prices of financial assets.

But not all of it goes there.

We were told that the whole idea behind quantitative easing was that it was supposed to get banks lending again, but this has not happened.  Instead, banks are sitting on unprecedented amounts of money.  Just look at how the first two rounds of quantitative easing have caused excess reserves being held by banks to explode from close to zero to over 1.5 trillion dollars....

Of course one of the biggest problems is that the Federal Reserve is still paying banks not to lend money.

Yes, you read that correctly.

The Federal Reserve is paying banks to park money with them.  So instead of risking their money by lending it out to us, the banks can just park it at the Fed and make risk-free profits for as long as they want.

Must be nice.

If the Federal Reserve really wanted banks to start lending again, all the Fed has to do is to stop paying banks not to lend money.

But of course if more than 1.5 trillion dollars suddenly started flooding into our economy (especially after you consider the multiplier effect) we would be dealing with nightmarish inflation unlike anything we have ever seen before.

So if you want to know why inflation was not even worse after QE1 and QE2 it is because more than a trillion and a half dollars is being parked with the Fed.

So did QE1 and QE2 do any good for average Americans?

Let's go to the charts.

This first chart shows that the percentage of working age Americans with a job has stayed extremely flat since the end of the last recession.

Does it look like QE1 and QE2 made a difference to you?  I don't see any difference....

Okay, but what about new home sales?

Did QE1 and QE2 help them?

Nope....

But the mainstream media is still buying the baloney the Fed is pushing.

The mainstream media is promising us that home sales will soon rise and that lots of new jobs are on the way.

Sadly, the truth is that things have steadily gotten worse for average Americans over the past 4 years despite all of the money printing the Fed has been doing.  If you doubt this, just read this article.

But this is all that Ben Bernanke seems to have left.  When printing money doesn't work, his answer is to print even more money.

QE3 is likely to cause agricultural commodities and the price of oil to rise even further.

So unless you can convince your employer to give you a corresponding raise, this is going to mean that your paychecks are not going to go as far as they did before.

And so that means a lower standard of living.

In a recent article, Bruce Krasting issued an ominous warning....

Higher inflation expectations in the US will filter around the globe. Post the extraordinary steps Ben took yesterday, people will be stocking up on “stuff”. Things like rice, flour, cooking oil, soy, wheat and sugar. If you can eat it, buy it now. It will be more expensive in a month. While your at it, fill up the gas tank, the price is going up next week and every week for the next few months.

In addition, the policy of the Federal Reserve of keeping interest rates as low as possible is absolutely crippling the finances of many retirees.  Even the former president of the Federal Reserve Bank of Atlanta, William F. Ford, recognizes this....

One of the overlooked consequences of the Federal Reserve’s recent rounds of monetary stimulus is the adverse impact those policies have had on the interest income of savers. The prolonged and abnormally low interest-rate structure put in place by the Fed has made life particularly difficult for retirees and others who depend on conservative interest-sensitive investments. But the negative effects do not stop there. They spillover into the overall performance of the economy.

Just about everything that the Federal Reserve does these days is bad for ordinary Americans.

But the Fed is not going to stop.  The Fed is addicted to money printing now, and as a recent article by Peter Schiff explained, the Fed is just going to "up the dosage" until it gets what it wants....

The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he won't turn off the spigots even if things noticeably improve.

This is complete and total incompetence by Ben Bernanke and his cohorts over at the Fed.

Economist Marc Faber believes that Ben Bernanke should resign, and I agree with him....

"If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash."

And yes, a crash is coming.

Bernanke can try to put it off for a while, but every action he takes is just making the eventual crash even worse.

And some in the financial community clearly recognize this.  For example, credit rating agency Egan-Jones downgraded the credit rating of the United States to AA- on Friday.

The primary reason they gave for the downgrade was QE3.

Ben Bernanke and the Federal Reserve are destroying the U.S. dollar and destroying our financial system for a short-term economic sugar high.

It is utter insanity.

That is why we desperately need to get the American people educated about the Federal Reserve system.  It is at the very heart of our economic problems and yet neither major political party is willing to blame the Fed for the problems that it is causing.

A bunch of unelected bankers that are not accountable to the American people are running our economy into the ground and the American people do not even realize what is happening.

Please share this article with as many people as you can.  Hopefully we can get the American people to understand that more money printing is definitely not the solution to our problems.

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  • http://EconomicCollapse Already Gone

    A person would have better results talking to a Jackass then trying to reason with today’s Society.

    • Alvin

      Well no – Isn’t the Jackass the Dempcrap party symbol ? Soooooo the Jackass is today’s society.

  • Ernie Williams

    Ernie Williams
    Your comment is awaiting moderation.
    September 17th, 2012 at 11:09 am · Reply

    Michael, what does “Your comment is awaiting moderation ” mean?
    Ernie Williams

    • Michael

      Ernie:

      All comments go into a moderation que so that I can filter out most of the spam, violent comments, overtly racist comments, etc. etc.

      So your comment will get posted but there is always going to be at least a little bit of a delay.

      Michael

  • http://EconomicCollapse Already Gone

    Hey Michael. I have noticed that alot of your articles are showing up on the SHTF.com website.Keep it up!

    • Michael

      Yes, Mac is great and I am always honored when he posts one of my articles. :)

      Michael

  • bobbobbob

    u toothless 1 still all of europe has dental ins and u dont HAHAHAHAHA
    at least u dont reproduce– go work 4 BAIN
    hahahaha

  • http://TheEconomicCollapse Darin

    Wow, and on top of all of this our Marxist president will probably get reelected. It’s time for folks to call on God and put their trust in Jesus. He is our only hope!

    • GSOB

      Darin,

      Christians had surrendered the world to the enemy willingly. They were busy asserting that it is a virtue to be unconcerned about the problems of this world.

    • Scooter

      The savior construct was designed as the ultimate twist to evil”s comprehensive plan; that those of greatest moral inclination (Christians for instance) would abdicate their personal responsibility in restraining and confronting evil in lieu of an outside force (a savior), thereby gladly participating in a system that ultimately desires to enslave the entire human race because once the system becomes grotesque enough, someone else (the savior) will clean it up. “Jesus” as he is called now, was not at all who you think he was, but his example and message was nonetheless infinitely important.

      ps. don’t fall for their fake rapture

  • http://theeconomiccollapseblog.com Ron T

    Understand the ‘Endgame’ and you understand the insanity. This is a plan and I might add well executed. Remember the ruling elite need a crash to buy up assets at bargain basement prices. Also, the next step after a worldwide crash is to institute world government, total control by these neo-con luciferians. They truly believe they can usher in a utopian society. And don’t forget there is no sympathy for the average world citizen as the desire it to eliminate 95% of the eaters.

  • dfnj2006

    I knew a doomsday prepper back in 1991 who told me the economy would totally collapse by 2000.

    I have no love for the bankers, but it seems to me things are not really that bad and nothing a good election would not cure. I just don’t buy the premise that if we allow Iran to sell oil in gold or euros it will be the end of the dollar. All we need solve to all our problems is cut military spending to $500 billion and raise taxes on income above $250,000 by 4%. It doesn’t matter how much you pay in taxes what does matter is the purchasing power of your take home pay. The rich get a LOT more richer when their customers have money!!!

    The problem is the red state voters are just so far to the right from the propaganda machine. Did you hear the one Fox news reporting Obama aids were throwing babies up in the air and catching them on bayonets?

    • http://n/a garrett

      It’s the 1.3 quadrillion dollars of derivatives that will take the system down. By the way, there are 15 zeros in one quadrillion dollars.
      opensecrets . org tell just how much support each candidate gets from the banking cartel.
      a bit more intense since the money changers-lenders of old

      • slip

        Everything is planned, I agree with you that the derivatives bubble is going to take down the system and with the fiscal cliff coming, I think the entire government will shut down, of course on top of that a major correction in the markets will pop the bond bubble, toss in a major natural disaster or two and then the games begin…order out of ciaos. The “saviors” will be a total controlling government, everything in you life will have the government stamp on it. And with things so bad, people will sign up thinking its for the best…

  • Monnie

    The sociopaths orchestrating this disaster are ruining us deliberately even as they enrich themselves. We’re the useless eaters, and they’ve decided we’re done.

    • slip

      I agree, we are the “eaters” and must be culled, prepare for the most historic end of life and transfer of wealth the world has ever known.

  • GSOB

    Man’s choice is between theonomy and autonomy, God’s law versus self-law. Man, being a sinner, a fallen creature, can only create laws and societies which, in their developed form, simply amplify man’s sin. The result is tyranny, rule without God.

  • GSOB

    The word tyranny comes from the Latin tyrrannus; it means normally rule by an oppressive power, but, very commonly, tyrannies have been popular.
    That is why I think that Obama will be with us another 4.

    Adolf Hitler was clearly a man with a popular following, as was Mussolini, and others as well. A tyranny can be a popularly elected party, or group of men. It can exist without a single tyrant.

    The essence of the tyranny is that no absolute and God-ordained law and justice prevails, only the will of a man, a group or party of men, or a majority or a minority of men.

    The essence of tyranny is that it represents in some form the will of man, not the law of God.
    On the other hand, theonomy means literally the law of God.

    In our time, theonomy represents to all too many people the essence of evil, for the will of man is held to be the source of determination, of law, and morality.

  • curt w

    Bernanke will never admit this but,

    I think he is trying to bring jobs back from overseas by devalueing the dollar.

    If he drastically decreases the value of a dollar then our goods look cheap to other countries that have a stronger currency.

  • Randome-11

    Anyone still think those guys are really overtaxed and contribute positively to the economy?

  • jd

    Mike,

    I really respect people like you, ZeroHedge, Peter Schiff and others who try, week after week after week, to get the disturbing truths out there. But on at least some level, it’s gotta be discouraging to watch this train wreck continue to unfold, day after day, despite many years of warnings from you and many others.

    Can America be saved if America is not willing to save itself? Was the decline of Rome an avalanche, shaped by forces over decades that are now simply to large to surmount.

    It may be time to place greater emphasis on family/self-protection strategies, on the basis that these warnings will do no good and that the collapse is inevitable. Sometimes, true reform and true change takes a crisis.

    • Michael

      jd:

      I do not have much hope for America on a national level.

      That is why I try to focus on encouraging people to prepare on a family/community level.

      Michael

      • chunkeroo

        I agree with you Michael – our societies mores have deteriorated to the point of no return. This is one of the best articles I have read recently and I think it explains a lot of how we got to this point:

        http://www.city-journal.org/2009/19_3_work-ethic.html

        But basically it illuminates why morals matter – and as Christians we understand this.

  • Larry

    Gerald Celente: Criminal Banksters Launching New World War.

    http://www.youtube.com/watch?v=N0JDVddYWMg

    This is an hour long video of Gerald Celente and Alex Jones.

    This is the first time I have ever heard Gerald Celente say that his gold won’t be worth anything during the coming World War III. It will be nuclear and wipe out most people on earth.

    • http://theeconomiccollapseblog.com/archives/jacob-rothschild-john-paulson-and-george-soros-are-all-betting-that-financial-disaster-is-coming/comment-page-1#comments Trout

      Thanks for the link Larry,disturbing to say the least. I am not sure if you noticed but as Alex Jones was flipping thru his copies of recent stories The “Helicopter Ben” story from this blog was in the stack. Priceless information Micheal Snyder. Keep up the fine work and God bless.

      • http://theeconomiccollapseblog.com/archives/jacob-rothschild-john-paulson-and-george-soros-are-all-betting-that-financial-disaster-is-coming/comment-page-1#comments Trout

        Michael,sorry about spelling your name wrong above.:)

  • Mondobeyondo

    If you ever get the feeling that “they” don’t care about us, you are correct. “They” (the powers that be, the Illuminati, the elite, call them what you want) do care about you, insofar as to how much they can lie, cheat, steal, tax, imprison, kill, plunder, etc. from you. Then they’ll toss you to the side of the road and yell, “Have a nice day!” as they run off with your life savings, and your job, and your rights, and everything else you hold near and dear. It sounds downright satanic. AND IT IS!!

  • http://www.survive2balive.com GA

    Things are getting really bad throughout the world. One little event could spark global war. One small incident could cause global economic collapse. The death spiral is getting tighter and deeper. Prepare now. Get a strategy in place to help ease the succeeding of the coming pain. Learn some basics at http://www.survive2balive.com Keep reading sites such as this in order to stay informed. Intel will be key. Prepare expeditiously!

  • A.S.

    Bernanke is just following the game plan of what the Bilderbergs talked about this past summer…

  • George

    In my opinion, all of the three Quantitative Easing programs have shared a common goal– deferring the next major economic depression. The Great Depression of 1929 was ushered in by margin calls in the context of a highly leveraged US stock market, as Chairman Bernanke well knows. Today’s derivatives market may be even more highly levered than the stock market of 1929. The prevention of margin calls on collateral in the derivatives market may be the only way to prevent a 1929-style depression. Every step in the QE process can be explained as a fresh attempt to protect the derivatives market from a
    collapse caused by margin calls.

    Consequently, the bank
    bailouts, “collateral transformation” via repurchase agreements, gold acceptance, MBS purchases by the Fed, and the continuation of Operation Twist all make sense if the derivatives market needs fresh AAA collateral to avoid margin calls and a depression-causing, market collapse.

    Tragically, because of decades of financial and fiscal mismanagement,it is now a case of pick your poison. If QE is abandoned, the derivatives market, and then the world economy,will likely collapse in a second Great Depression. If QE is maintained, the US economy will suffer years of stagflation and there will be international currency and trade wars.

  • Washington

    Published on Aug 23, 2012 by William Binney is among a group of N.S.A. whistle-blowers, including Thomas A. Drake, who have each risked everything — their freedom, livelihoods and personal relationships — to warn Americans about the dangers of N.S.A. domestic spying; A top-secret program he says is broadly collecting Americans’ personal data. Read more about N.S.A. domestic spying:

    http://invisibler.com/the-program-interview-with-william-binney/

    The dangers of N.S.A. domestic spying

    https://www.youtube.com/watch?v=OemwW60VxDY&feature=player_embedded

  • jhon

    michale

    There is only one thing that can be done to disrupt this plan, it is to call on all who know truth to stop working sell every dollar they have take up arms and say enough is enough. the only reason it has not crashed yet is the elite do not yet have all resourses in place for massive genocide why wait another day. declare a day and change the tide

  • T-Bone

    Keep buying gold and guns. 90% of Americans don’t have a clue about what will happen when the !@#$ hits the fan. Chem-trails,planet X,fema camps, dollar collapse, petrodollar collapse and war with countries going off the petrodollar are future don’t look good.

    • Mondobeyondo

      I read somewhere that the real reason the U.S. invaded Iraq (apart from grabbing an entire country brimming with oil), was that Iraq decided to abandon the U.S. dollar for its international trade in oil. So much for that “weapons of mass destruction” nonsense.

      Iran looks to be doing the same – they’re definitely looking to make agreements with other nations for their petroleum transactions. (But “Iran is making a nuke bomb! We must stop them!!” makes for a nice smokescreen). So, here we go again! The U.S. has this thing with invading little Mideast countries lately. That’s if Israel doesn’t make the first move, and they aren’t afraid to do so. For the U.S., a war with Iran would be for economic advantage. For Israel, it would mean their survival – period.

  • Fred

    This might be the final chapter before the New World Order takes over. Just think the people of this country as well as other countries may witness more turmoil in the world, than all the turmoil that took place in the 20th Century. Having no debt, a small amount of gold and silver may be the only way to survive the economic turmoil in the near future.

  • Carl Jones

    The problem is that CASH is just cash! Everyone knows the US Dollar is worthless and there is a good reason why the banks won`t lend.

    There was a time when lending (debt/money creation) created growth, but this no longer works.

    The other misleading point in this article, is that saying banks have cash, means that banks are sfe places to put your money…they are not safe.

    Banks look safe (safer), because they hold assets and these assets are valued at X. These assets are never tested in the market place. Many say these assets are worth only a few cents on the Dollar. So these banks are bust!!

    Can I go to the bank and say “my childs crayon drawing is worth $2 million…please lend me some money at your usual next to nothing rate…please”!!lol

    And there is another thing, interest rates. Low rates means low or no real growth. So the Fed does not see things getting any better for years.

    I hold the view that the financial collapse was designed and I now hold the view that it was done in such away that it can`t be fixed…until after WW3.

  • FreeMan

    This speaks for itself.. from records of purchases made March 2011 compared to listed prices Sept. 2012, same company, same products, same quantities.
    Barley – up 15% Oats – up 5% Corn Meal – up 8% Pinto Beans – up 25% Small Red Beans – up 28% Small White Beans – up 17% Lentils – up 8% Garbanzo Beans – up 25%. Average % increase in 18 months, 16.375%. Differences in prices increases vary vendor to vendor, for example, Lentils at a local grocery store are up 25%.

    It’s not going to get any better.. buy now, store well, profit later.

  • Peter

    I don`t buy the gold silver thing.
    If deflation hits your gold and silver will go down.
    Oh but wait, the charts say otherwise. You can`t compare the past apples and oranges.
    We had a gold backed dollar, also gold prices were fixed.
    Do you know there is so much of it sitting in vaults around the world if they dump even 10 percent of it, the prices will go through the floor.
    What would you rather have, a pound of gold, or a pound of apples, when you are starving.I do believe in keeping some cash as you never know where this takes us, cash is king, you can buy stuff when every one goes bankrupt.(ok just for now hold non American cash). Trickle down economics is working great, they just forgot to tell you the rich are on the bottom.
    Also number 1 thing you need to have, that saved so many people in the great depression is land. Gives you a place to live and you can grow some food. Think I give up my land for your pound of gold, I don`t think so. Ill just take your gold when you starve to death.

  • Scooter

    Propping up the banks and the economy is purely a stall tactic so that we can reach the grand devastation at the precise sacred mathematical time appointed by TPTB. To suggest that these powers care at all about our so-called wealth is ignorant. This is and has always been a spirtual endeavor for these types. We need to stop analyzing our problems from within the box they created for us.

  • Washington

    QE3 – Pay Attention If You Are in the Real Estate Market Thursday, September 20, 2012 – by Catherine Austin Fitts

    http://www.thedailybell.com/4323/Catherine-Austin-Fitts-QE3-Pay-Attention-If-You-Are-in-the-Real-Estate-Market

  • Pingback: Episode 94 The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans | Aware And Prepared

  • http://www.trustydragon.net Travis

    Yes a crash is coming, QE3 is a huge mistake and is only going to make the dollar that much more worthless. These are very troubling times we live in that is for sure.

  • linda

    Even gold will be worthless until things settle down again. But unlike cash, its value WILL return. So hoarding it is a good idea. You’ll have a base to build on.
    But don’t just buy coins or bars. You’d be amazed at where you can find gold, if you look.
    I’m an avid estate-saler, and I ALWAYS stop to go through the jewelry. I have cashed in over 4 grand this year alone, in scrap gold I pulled from those jewelry boxes, gold items that cost me 50 cents or a buck apiece, tops. Contrary to what you might think, few people are so careful to look at everything.
    Also, much earlier gold jewelry and other items, Victorian, Edwardian, are not marked with the well-known “14K”, they might have older European marks, or none at all. And you can also get lucky and find old mine-cut diamonds in that older stuff too.
    I bought an old belt buckle last year, marked “W. Boehm, 1865″,that’s it, no other marks. I paid 50 cents for the “old brass buckle”, which I knew by feel wasn’t brass. When I got it home, I tested it, 18 karat. Weighs over an ounce.
    A nice return on that 50 cent investment.

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