Posted on 11/04/2010 5:42:18 AM PDT by ChrisBoundsTX
Pumping money into the “disappointingly slow” economy hasn’t fixed the it yet, so why not try again – and this time go for a hail mary!
That is Federal Reserve Ben Bernanke’s game plan. The Fed is looking to inflate the economy even more by adding $75 billion a month to the it over the next eight months, totaling to a $600 billion pump. Of course, that does not include the $35 billion a month the Fed is expected to spend to replace retiring mortgage bonds.
Previously in my articles Like a Thief in the Night Part I and Part II I explained how the Federal Reserve works and how it uses quantitative easing to inflate the economy in hopes to spur it back to life. I also explained how every time they do that it devalues your wealth and potentially could lead to hyperinflation that destroyed like the Weimar Republic experienced. The Fed has made its decision to continue and play that dangerous game while most Americans go about their business ignorant of the fact that their wealth is being stolen right in front of their eyes.
From the Wall Street Journal:
The Federal Reserve, in a dramatic effort to rev up a “disappointingly slow” economic recovery, said it will buy $600 billion of U.S. government bonds over the next eight months to drive down interest rates and encourage more borrowing and growth.
Many outside the Fed, and some inside, see the move as a ‘Hail Mary’ pass by Fed Chairman Ben Bernanke. He embraced highly unconventional policies during the financial crisis to ward off a financial-system collapse. But a year and a half later, he confronts an economy hobbled by high unemployment, a gridlocked political system and the threat of a Japan-like period of deflation, or a debilitating fall in consumer prices.
The Fed left open the possibility of doing more if growth and inflation don’t perk up in the months ahead. The $75 billion a month in new purchases of Treasury debt come on top of $35 billion a month the Fed is expected to spend to replace mortgage bonds in its portfolio that are being retired…
There are immense unknowns and many risks.
In essence, the Fed now will print money to buy as much as $900 billion in U.S. government bonds through June—an amount roughly equal to the government’s total projected borrowing needs over that period.
In normal times, a Fed spending spree on government bonds would be highly inflationary, because it would flood the economy with money and raise worries about too much government spending. The mere worry of too much inflation in financial markets could drive long-term interest rates higher and cause the Fed’s program to backfire.
Prices in commodities markets have marched higher since late August. Crude-oil futures prices, for instance, have risen 15% since then, to $85 per barrel.
Michael Pence, a top Republican in the House of Representatives, said the Fed was taking an “incalculable risk.”
Perhaps I ought to say this plan has adopted as economic policy a form of "Rabbit Hole Unthinking"
And what good is that if you cannot buy anything in a collapsed economy? Just something to ponder.
absolutely. Post-911 is a perfect example.
Okay. If NOTHING is available (of life's necessities), then we're all screwed. If stuff IS available, but at a PRICE, then you can buy it with gold (little else will do in that situation).
I don’t know the answer to that, I was just thinking out loud.
I am not sure the answer is clear, because in the event of a collapse and there was still a fractured market, how does gold get reintroduced as a medium of exchange? Most people do not have it and prices will need to stabilize before a standard can be naturally formed. I hope to never have to learn those answers firsthand.
The idea is to have some gold physically in your possession. That way, you have something compact, tangible — that EVERYBODY wants, just in case somebody has some commodity you need. With gold, you can buy it. Without gold, you’ll have to beg after you run out of things to barter.
Here comes the international backlash: http://bit.ly/bjJTzR
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