WTF Is "$600M Quantitative Easing"?

[GAR]

On Wednesday, November 3, 2010, the U.S. Federal Reserve announced that it will print $600 BILLION to stimulate the U.S. economy. That announcement was a bald-faced lie.

The Fed would probably have to print up far MORE than that amount to keep the U.S. economy from imploding .. so prepare for double-digit inflation NOW>



The confidence that the market has placed in Mr. Bernanke is entirely misguided. I think anyone who really believes that he will print ONLY $600 BILLION in this second round of "quantitative easing" should have his head examined.

Some estimate that he would have to print FIVE TIMES that much; closer to $3 TRILLION to make any discernable difference.



Look: It's clear that Obama & Company want to be re-elected despite the public's great displeasure. It's also clear that they must re-invigorate the Democratic party despite the public's unfavorable opinion of Congress's actions these last 2 years. But if they want to accomplish those goals, they must first stimulate the economy.

Obama's big problem: The midterm elections have now GUARANTEED that Congress will NOT approve further stimulus spending. To the contrary: The leadership of the new Congress is committed to CUTTING the federal budget in every way they can.

That leaves the White House with just one, single, solitary tool for stimulating the economy and its a DANGEROUS one: The ONLY way left is to demand that the Federal Reserve take up the slack for the U.S. Congress; kick the printing presses into overdrive and flood the world with trillions of newly created U.S. dollars.



If any other Fed Chairman were at the helm they'd tell Obama to go get fucked. There's no way that Bill Martin (Fed Chairman under Eisenhower and Kennedy), Paul Volcker (under Carter and Reagan) or even Alan Greenspan would have caved into this bullshit idea from Nazi Germany that printing our way out works

I said this back on DDLR this would happen and some here said "shuttup racist" well get ready - here he comes now. He's turning into a Chocolate Jimmy Carter before your very eyes, so fuck you! I TOLD you fucking so didn't I!

But Bernanke? Oh he'll hold the hard line on the presses right..? Heck no! He's the man who virtually INVENTED money printing in modern America.

This is precisely why I now see massive new EXTREME volatility; and off-the-charts profit opportunities in every investment market you can name: Stocks. Bonds. Currencies. Precious metals. Oil and select commodities. And more, some will make money and you'll hear about fantastic new wealth and gains, but most will lose.



Why? Because to take gains from some point, causes losses upon other points and behind these "points" on paper are real people with real money at stake. You just don't create something from nothing, that's the law of physics: nature does not tolerate a vaccuum and alot of people will be hurt in the process.

So that's why I believe that this extreme volatility will present us with many of the greatest losses in generations despite some - very very few - of these "wonderful profit opportunities in generations" you're about to be seeing these next 2 years.

[GAR]

http://en.wikipedia.org/wiki/Quantitative_easing

Quantitative easing (QE) is a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system, generally through buying of the central government's own bonds to stabilize or raise their prices and thereby lower long-term interest rates. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero. It has been termed the electronic equivalent of simply printing legal tender.<sup id="cite_ref-0" class="reference">[1]

</sup> A central bank implements quantitative easing by first crediting its own account with money it creates ex nihilo ("out of nothing").<sup id="cite_ref-bbcnews_1-0" class="reference">[2]</sup> All fiat money is created out of nothing: out of thin air. It is, however, backed by all - the sum total of - the underlying value systems in an economy, namely sound governance, sound economic policies, sound monetary policies, sound industrial policies, sound commercial policies, etc. Annual inflation above the central bank´s inflation target indicates the excess of fiat money created in the banking system. The central bank then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations.

The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus hopefully induce a stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.
Risks include the policy being more effective than intended or the risk of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.<sup id="cite_ref-bbcnews_1-1" class="reference">[2]</sup>

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.<sup id="cite_ref-guardiannews_2-0" class="reference">[3]</sup> However, another explanation is that the name comes from the Japanese-language expression for "stimulatory monetary policy", which uses the term "easing".<sup id="cite_ref-voutsinas_3-0" class="reference">[4]</sup> Quantitative easing is sometimes colloquially described as "printing money" although in reality the money is simply shifted from member bank dollar deposits to financial instruments.<sup id="cite_ref-4" class="reference">[5]</sup>

Examples of economies where this policy has been used include Japan during the early 2000s, and the United States, the United Kingdom and the Eurozone during the global financial crisis of 2007–the present, since the programme is suitable for economies where the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

[Kristy]

*SIGH*

So GAR is once again typing any relative news item from his paranoia bunker he can muster up until his medication kicks in?


*logs off*

[GAR]

Pull what's left of that SSI check out of the bank, Kristy.. shits' gonna hit after first-quarter Jan retail report!

RUN do it now, don't wait for January!

[Nitro Express]

Nobody in their right mind is holding government paper long-term. You would have to be crazy to buy 30 year US bonds today. As far as the short-term goes, nobody knows. Bernanke is just playing out the clock because it's all he can do. If he raises rates he will worsen the economy and be out of a job. If he keeps rates at zero and prints money, he buys some time.

The smart people are getting out of long-term dollars and are running for commodities, agricultural land, and moving their money around to various foreign currencies. The problem is nobody wants to hold paper long-term. Maybe the world's franctional reserve banking system has gone defunct. If the US Dollar crashes it will take the Euro and Yen down with it. Nobody trusts the Chinese so nobody is going to be parking money over there either. So anyone with any real money are buying up water rights and food producing land. This is one reason Brazil's economy is on the rebound. Brazil has 18% of the world's potable water and people are buying those resources. We are going back to the basics because the writing is on the wall. People would rather have water and banannas than paper.

[Nitro Express]

What we are going to see is rampant inflation on food prices. Other prices may stay the same. Cotton and food prices are through the roof, so clothing and food will be expensive. What really determines the fate of the dollar is the people willing to accept it. What they are willing to trade for that dollar. Nobody knows when it will go worthless or what is really going to happen.

[GAR]

What we are going to see is rampant inflation on food prices.

Granted I live in the most expensive side of town, I'll post a pic of the meat section at Ralphs and probably earn some responses like "why would anyone live in LA" because right now BEEF is astro-fuckin'-nomical.

You won't believe it, inflations' happening right now okay. It's on, the deflation of my dollar and increases in prices for grub equal inflation.. and on top of that Congress thinks they did such a good job, they want to expire taxbreaks.

[GAR]

Oh you'll hear talk of curfews again, gas odd/even fueling days, Martial Law plans.. it's gonna be 1979 all over again.

It's like Ron Paul says, "how many times can you bail the US dollar out from malinvestment?"

<object width="480" height="385"><param name="movie" value="http://www.youtube.com/v/9RqqGIwCFW8?fs=1&amp;hl=en_US"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/9RqqGIwCFW8?fs=1&amp;hl=en_US" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object>

Of course things seemed way worse two years ago when this discussion was being held - but that was an uproarious figure of $300 billion?

Last week's print-fest was twice that, so what have the Republicans said about this.. NOthing.

That's why there's a growing validity in Tea Party gatherings.. it's all about taking tax dollars to service debt purchased because congress cannot balance it's budget.

[Nitro Express]

Granted I live in the most expensive side of town, I'll post a pic of the meat section at Ralphs and probably earn some responses like "why would anyone live in LA" because right now BEEF is astro-fuckin'-nomical.

You won't believe it, inflations' happening right now okay. It's on, the deflation of my dollar and increases in prices for grub equal inflation.. and on top of that Congress thinks they did such a good job, they want to expire taxbreaks.

I'm on the other side of the equation. I own the cows.

[Nitro Express]

Look. There is always going to be a free market. If people decide the no longer want dollars they will trade something else. What happened is currencies that once had the reputation people trusted got hijacked and central banks printed money and traded it based on the reputation until they ruined it. Simple as that. We've ran on that hype for decade and now the party is over. The system is breaking down. Worldwide. Nobody knows where it's going to go. Who really holds the power is the people themselves. We are who decide what something is worth, not the banks. It's demand and we are the demand.

[GAR]

I've had this experience with the Koreans that bring shit over here to the US for sale - come to find that the one builds this "thing" and needs supplies locally - so they do a trade. Finished goods, they talk it out and find a value, then swap stuff and both walk away agreeing they each got a 1:1 ratio value in the deal.

Then the guy loads his container, gets into LA then starts running phone on it.

Where there's goods, like you got grazing out back there, there's trade and where there's not, there's salesmen. I have no doubt that when currencies collide, we'll be back to Colonial trading days such as my Korean dude still does back home.. but people who cannot create the urgency to buy, and have nothing for trade are going to be FUCKED without a job.

[Seshmeister]

Look. There is always going to be a free market. If people decide the no longer want dollars they will trade something else. What happened is currencies that once had the reputation people trusted got hijacked and central banks printed money and traded it based on the reputation until they ruined it. Simple as that. We've ran on that hype for decade and now the party is over. The system is breaking down. Worldwide. Nobody knows where it's going to go. Who really holds the power is the people themselves. We are who decide what something is worth, not the banks. It's demand and we are the demand.

Absolutely.

I never read the original post but if it's about some Obama economic hidden agenda then it's just wrong. The politicians in the West are running about like headless chickens the moment and it wouldn't matter who was in power they would all be doing the same thing, i.e. whatever they are told to by the economists who aren't sure themselves.

Pretending this is anything to do with Obama or 'socialism' or reforming healthcare is just childish nonsense in the same way that your politicians used to spend half their time ranting on about irrelevant crap like gay marriage.

Scary times.

[GAR]

I never read the original post but if it's about some Obama economic hidden agenda then it's just wrong.

In a nutshell: Using vague language that common people (like me) do NOT understand (I have to wiki shit everyday to follow this crap), the Fed Reserve's Bernanke has announced we're going to print $600 billion US dollars to:

- buy fuciking US Treasury Bonds
- from the very banks that broke us,
- who must first obtain the bonds FROM the Treasury,
- which then go onto the Slush fund shelves and filing cabinets at Social Security.

Except that 2 years ago the figure floating at the time was 300 and today it's TWICE that amount.

[GAR]

Why can't government do it's job and balance the budget? Nobody sent them to DC to whip out this grand agenda, thinking they were going to ignore the basic order of business.

THAT is why the Democratic party imploded.

As misguided as the Dems are, you can't ignore the fact they were inventive. I expect the Republicans to counter that with similar creativity. It's so frustrating - it's like watching a crime show where the Dems are ALWAYS the fucking thieves, and the Republicans the lazy cops that do no good leaving the whole town to get shot up by Mexicans. It's fucked up!

[Nitro Express]

My degree is in finance and what I learned studying it and working in the finance industry is it's made esoteric on purpose. They want to confuse you. In actuality finance is simple as hell if you know what's behind the magician tricks. It's all about knowing the tricks and being connected. Any idiot can be an investment banker.

Ok here's the lesson:

Derivatives: Simply buying an asset on credit and reselling the debt to another party. Then the next party takes out another loan using the debt purchased as collateral on the loan. So basically it's using purchased debt as an asset (assets=liabilities+owner's equity) to buy more on credit and then sell it. It's a snowball effect and creates bubbles that pop.

Credit Default Swap: It's a bet. It's two or more parties betting on anything and if you win the bet you win and if you lose, you hide the loses on a separate set of books and then have the government (tax payers) cover them.

Now let's use some common sense. The Federal Reserve is printing money (so to speak because most of it created on a computer) then they give the big banks the money at 0% interest and the Federal Reserve buys it back at 3% interest. But who owns the Federal Reserve? The big banks. Also, every dollar issued by the Federal Reserve has an interest amount charged to the US Treasury. So basically, the big banks and fed have a money making scheme going and the US tax payer is getting charged interest on all the funny money being made.

On top of that none of the money is going to the smaller banks and going to the regular people. So it's stimulating nothing. Of course the big players are rallying the stock market but gold is increasing in price as well. A sign of a rigged stock market and a world who is pulling their money out of paper and buying gold. Weird times indeed.