Back on June 23rd I reported that for the first time Ben Bernanke and I were in agreement.
At that time the good chairman had decided it was time to stop printing money, better known as quantitative easing.
If you are not exactly clear on what quantitative easing is, this simple video will explain it and both a humorous and depressing way.
The key thing though is that less than a month ago, The Federal Reserve Chairman said three things of great importance…
- Two rounds of quantitative easing didn’t work
- It was time to stop doing it
- He was confused as to why it didn’t work
At this point anyone with a pulse should have drawn two conclusions
- Bernanke is a disaster, the man who holds the nation’s credit card is confused as to why blowing 5 trillion of our dollars didn’t work. - Hell listen to Ron Paul eat his lunch in this video.
- As he didn’t get why it didn’t work he was probably lying when he said it was time to stop. The fact that he was confused should have told you he still believed that printing money was the solution and eventually he would decide that they simply didn’t do enough of it.
Of course in my first article on this subject I stated clearly, “I predict QE3 will happen down the road”, but even I am shocked here. Bernanke how now executed an about face that would make a Marine envious with its speed and relative quickness on such an important issue. It only took 20 days to go from, “it didn’t work, it is time to stop and I am not sure why it didn’t work” to “it may time to start doing it again because we have to get the economy going”. Yes old helicopter Ben is at it again according to a report on CNBC old Ben now has told congress he is working on a some new ways to stimulate the economy, how you ask, from the article on CNBC…
Minutes to the central bank’s June meeting on Tuesday suggested that, while some members were pondering the possible need for additional easing amid a weak economy, the Fed is not yet ready to take any further action.
But the minutes also reflected divisions within the central bank over further easing, and Bernanke’s speech provided a further indicator that a QE3 move is far from off the table.
“Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further,” Bernanke said.
Let me give you the nuts and bolts, Jack Spirko version of this, “we have a number of ways in which we could act to ease financial conditions further” means simply, if the economy stays in the crapper for much longer we will start buying up bonds again with computer entries, gobbling up toxic assets at tax payer expense and flood the markets with money because it is the only thing we can do.
Indeed it will be the only thing they can do as city after city continues to declare bankruptcy and run to the states for bailouts. They may talk of raising interest rates but that is the only thing you say when the interest rate is basically zero. Yet raising rates is not really an option. Do that and the duct tape holding the false recovery together flies apart.