How the Fed Uses Quantitative Easing to Control the World

The Provocateur ^ | 05/30/2009 | Mike Volpe

[fiscon1]

A couple days back, I wrote this provocative piece about a term called quantitative easing. Quantitative easing is the process by which any central bank, like the Federal Reserve, buys major financial instruments in an attempt to keep interest rates low and to pump money into the economy. I predicted that the Federal Reserve would have to engage in some serious quantitative easing because the Treasury Bonds were tanking and this would shoot up all interest rates. While most of the piece was well done, I failed miserably in one portion. That is this.

So, it appears that the Federal Reserve is boxed in. If bond rates continue upward, it appears that Bernanke will have no choice but to announce a major investment in U.S. Treasuries soon because that's the only way to bring interest rates back down to a level that would allow a recovery. Of course, the end of the link should tell everyone the potential disaster this could lead to. Still, it appears that in the next couple weeks Bernanke will have no choice but to engage in serious "quantitative easing" and buy back somewhere in the neighborhood of a trillion dollars worth of U.S. Treasuries.

[SuziQ]

Quant Ping!!

[fiscon1]

does ping mean you like the article?

[SuziQ]

No, that would be BUMP. PING means that you’re sending a notice of the article to another Freeper. I haven’t read the article but wanted my hubby, SirKit to see it, cause I thought he might be interested in it. I pinged him to it, in case it falls off the ‘Latest Articles’ page. This way, it shows up on his ‘My Comments’ page.

[fiscon1]

Is your husband in finance?

[uncommonsense]

I have been scratching my head over why inflation hasn't taken off in a big way. Well, it looks like Friday was the start. This is going to suck.

Could the market uptick be an inflationary rise? It's sure not based on fundamentals.

[fiscon1]

It hasn’t been rising because the economy is still so weak. All of this spending and borrowing won’t immediately cause inflation but those effects will be felt soon enough.

What are you referring to on Friday?

[LeGrande]

Tuesday or Wednesday I believe, the Fed got its butt handed to it when it tried to lower the long term interest rate.

Now the Fed thinks that it can simply buy up all the debt?

What kind of numbers are we looking at? 60 trillion and no more bond market?

We aren’t just looking at hyper inflation, we are looking at a total collapse of the monetary system if the Fed tries that.

[SuziQ]

Nope, he has a PhD in Statistics.

[uncommonsense]

Commodities really spiked. Check out gold (20% this week), silver, tungsten, and oil (30% this month, 60% in 4 mths).

The Treasury 10 year note yield went up (inverse of price) even with the Fed trying to push them down. This will stall the housing recovery among other things.

[uncommonsense]

"We aren't just looking at hyper inflation, we are looking at a total collapse of the monetary system if the Fed tries that."

The Fed seems quite intent on monitizing any amount debt Zero and the Rats bury us with. Words like unsustainable don't begin to describe the situation the Rats are creating, abetted by the "independent" Fed.

[LeGrande]

Words like unsustainable don't begin to describe the situation the Rats are creating, abetted by the "independent" Fed.

I am seriously considering building a greenhouse, getting a few chickens and installing a solar system. Normally I laugh at the gloom and doomers, but I am thinking that a catastrophe is exactly what the government is creating, with the best of intentions of course.

[uncommonsense]

If you can build a greenhouse, might as well do it. What’s the downside - a little time and money put into something you don’t want or need? Heck, you could rent it out, or barter usage of it for a housekeeper’s service...