QE4 Is Here: Bernanke Delivers $85B-A-Month Until Unemployment Falls Below 6.5%

forbes ^ | december 12, 2012 | Agustino Fontevecchia

[lowbridge]

Ben Bernanke continues to make history at the Federal Reserve. On Wednesday, the FOMC announced more quantitative easing at a rate of $85 billion a month for an extended period of time. The Bernanke Fed has also modified its guidance, noting its ultra-accommodative stance will remain in place until the unemployment rate falls below 6.5% and inflation projections remain no more than half a percentage point above 2% two years out.

QE4 is here. Only a few months after announcing what had been dubbed QE3, an open-ended $40 billion a month program to buy up mortgage backed securities (MBS), the FOMC decided to extend its asset purchases in 2013 as Operation Twist expires.

[TArcher]

A Benny for the Old Guys?

 

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.
---from T.S. Eliot's "The Hollow Men"

[DH]

And on it goes....money for the “big banks” and realty market.

America has become the “drunk sailor” in port with a visa card without any limits.

Obama and his minions have certainly guaranteed that China will not have to invade us to take us over.

It’s not done by military might...it’s done by credit card.

[JohnnyP]

At least drunken sailors spent their own money.

[Lionheartusa1]

0bama does not need QE4 to reduce the unemployment rate ,, one call to the MSM stating the current rate of U/E is now at 3.6% should do it . What good is a corrupt govt. if you can’t fudge the numbers and pass them along to the water carriers ???

[Graewoulf]

Surprise News Flash: “The proven failure of ‘Prime-the-pump’ Keynesian Economics is STILL denied by Bernanke!”

“THE OVERSPENDING WILL CONTINUE UNTIL WE HAVE NO MORE DEBT !”

(Duh, the problem IS the Overspending, Professor of Economics Bernanke - - - ).

[shibumi]

Rare photo of
Ben Bernanke
as a child

[rbg81]

Make no mistake, the Fed is using $$ created out of thin air to buy 80-90% of US Treasuries. Why? To keep interest rates down so our exploding deficit remains nominally affordable. The Banks also benefit because the Fed buys their underwater mortgages on the promise that they will likewise purchase “risk free” US Treasuries.

But this free money is not cheap. Its being paid for by savers who can’t get decent interest on their CD accounts. It also WILL be paid for by investors who are forced to take on more risk to get any kind of return. It also distorts market dynamics as Banks don’t need to make loans to anymore. In short, its stealth wealth transfe. No law — or smoking gun of any kind — is required.

[B.O. Plenty]

When hyperinflation gets started, there is no stopping it until the crash.

...the Bernack will then fold up his tent, retire to the Bahamas and live happily everafter.....when what he needs is to be dealt with "at the most populous intersection of the town at high noon".....

..these people need to pay a price for being wrong:

It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.

Thomas Sowell

[ThePatriotsFlag]

Does the House fund the Fed?

[ClearCase_guy]

The House. Yeah. Maybe they can stop this. [/s]

[Justa]

In the ‘30s the public funds actually went to the unemployed via WPA, CCC, and other work projects. This time however it’s all going to private banks to subsidize operations and realize profit. Worse yet, under the pretext of being “stuck with bad mortgages” the banks keep the notes on the properties. So the public doesn’t even receive the property which the banks were bailed-out for using public funds. Then they get to sell the note all over again and the process repeats.

[Soul of the South]

Bernanke is part of the Bush legacy.

[erlayman]

Printing money could actually be a beneficial strategy of deleveraging to mitigate the pain of austerity if the fiscal cliff does send us over the edge. But I am not an economist and have no idea really...

[MrB]

---

The Gods of the Copybook Headings

---

AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: “Stick to the Devil you know.”

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!

[MrB]

I’m betting that Boehner has a plan to put a stop to this!
/s/s/s/s

[Yosemitest]

I like your graphic.
If you believe the Democrats Fabian Fascists and their ILLEGAL Leader, the Arab-Kenyan, will do what they say they will do,
then it's a 10 % cost to save 67 % of your money to do it.
If you believe the value of our dollar will continue to be devalued by the Democrats Fabian Fascists and their ILLEGAL Leader, the Arab-Kenyan,
then you believe that the value of gold and silver will only increase.

" ...the huge problems with debt we had in 1929-30 and today that we did not have in 1965.
This creates much more of a need for deflation today than in 1965.
The whole point of the Inflation Cycle is to move out of the Growth Cycle into the Rest Cycle.
The economy grows for 18 years and then rests for 18 years.
The Rest Cycle is just as important for the process as is the Growth or the Inflation Cycle.
Deflation Cycles need to
1) destroy debt;
2) move the country away from the speculative frenzy of the Inflation Cycle which favors the rich and special interests;
3) close the gap between the rich and the poor, so the country can avoid civil war;
4) raise interest rates to do all of these things, destroy debt and reward savers especially.

Easterling's point, in the second chart, is that stocks need to decline back to the green band at the bottom of the chart before another Bull Market can begin again.



I say this decline needs to be done by 2019, since geometry is the trump card in all of this.

... Any and every period of extended forced lower interest rates is inflationary because of what it does to the local currency, the US Dollar in our instance.
Dollar devaluation has been the policy of the Fed throughout most of the Inflation Cycle (and attempted Reflation Cycle -- which has been, in fact, the Disinflation Cycle).
More dollars circulated, even if just circulated between the banks and the US Treasury, via the Fed, reduces the value of the Dollar --
meaning that 'real' profits from stock gains are being diluted by low interest rates.
That is why the Dow/Gold ratio makes sense to consider, since gold is a Dollar-Inverse indicator.

In this chart, the higher the price, the greater 'real' stock profits.
So, although the Deflation Cycle 1965-1983 looked minor, benign, costing the investor Time only, in terms of real profits in stocks, the period was catastrophic.
So, since 2001, real stock profits are being gored by a declining dollar.
Deflation Cycles often 'appear' to be sideways markets only -- a loss for investors of 18 years of potential profits
-- but when viewed through the prism of lower 'captive' interest rates, the decline in stock values since 2001 is also catastrophic, as the chart below demonstrates.



Note how this chart of stocks priced in gold corresponds almost perfectly to my Deflation and Inflation Cycles
(1911-1929 Inflation; 1929-1947 Deflation;1947-1965 Inflation; 1965-1983 Deflation; 1983-2001 Inflation; 2001-2019 Deflation).

Source - Michael J. Clark, Hanoi, Vietnam

So do I lose 33 percent of my labor from many years, in closing out my IRA now,
or do I risk losing it all into a devalued dollar that is rolled into the Social Security plan, like Rush explained?

" Okay, so to review this, these two sound bites, I just wanted to get them out there, Teresa Ghilarducci.
Here is the plan.
What she wants to do is take your 401(k) at the August 2008 level, whatever it was worth then,
that's what you are going to be given the equivalent of.
That will be put in your Social Security account, and then the government, not you, is going to invest that money,
your Social Security plus whatever the amount of your 401(k) is,
they're gonna invest that money that they take from your retirement account.

"We're gonna buy a government bond with what we take, that will guarantee you 3% plus inflation,
and then we will require that you put 5% of your pay into your 401(k) every year,
although it's not yours anymore, it's the government's."
So the government is getting all of the money up front.
What they're doing is eliminating the deduction. You don't get a tax break anymore.
The government is taking all the money and holding it at a promised 3% plus inflation return for your retirement.
And so whatever the amount of your Social Security was in August of 2008, added to your Social Security trust fund account,
whatever the hell that is when you retire,
divided by whatever monthly is what you will end up with.

The reason they're doing this is because the tax deduction is costing the government $240 billion a year.
All the 401(k) holders combined are contributing $240 billion total to the 401(k),
government doesn't get that, and they need it now, see.
Government needs it. I mean, we got a real problem.
We got a fiscal cliff.
They need the money, not you.
So the original rule that you started your 401(k) is now being yanked out from underneath you.
And, see, whatever you have in your 401(k) now, you will keep. It's a tax break.
Everybody that has their 401(k) plan will be grandfathered in, but instead of getting a tax deduction
like a decrease in your taxes by whatever your tax rate is,
then you're gonna get $600 a year.

This was four years ago, folks,
and now today two magazines have revised this,
and, by the way, the magazines just didn't out of thin air say,
"You know what? Let's do a 401(k) story."
Somebody at the regime calls 'em and leaks it.

Okay, time to put this into play now.
So TIME is complying with the regime, and The Atlantic complying with the regime, and they're putting it in play now. "

Former Hedge Funder Presents A Terrifying Vision Of THE END GAME

[Captain PJ]

We could just print 16 plus trillion shiny new dollars and drop them off in China and our other creditors door steps and say “thanks were even”.

[DH]

At least drunken sailors spent their own money.

---

You have a good point there.

How’s this change: ...like drunken Democrats spent others money...