Fire Up The Presses for QEIII

Photo Credit to Gage Skidmore via Flickr

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.

5 comments to Fire Up The Presses for QEIII

  • metaforge

    Hypothetically, if the debt limit is not raised, the Treasury can’t issue more bonds, so the Fed won’t be able to do QE – at least not through that route – right?

    • ModernSurvival

      No, not at all. Remember the Fed doesn’t buy the bonds from the Treasury, they buy from “The Goldman Sachs” and other brokers so they can make the spread. Additionally the brokers buy up from the existing bonds on the market.

      This creates the “new money” in the system and the Fed becomes the receiver on the bonds all for a simple journal entry. We now owe the same money to the Fed but new money has gone into the economy.

      Instead of paying BOA or the Chinese we eventually pay the Fed.

      Now the fed says they are a profit center and give the profit to the US Government, this is true WHEN THEY LEND MONEY, not when they buy bonds. When they “buy” a bond they are taking over debt the government owes. They technically pay the profit (interest) back but they retain the principle, principle they created and did nothing to earn.

  • C.S.

    I listened to the whole 2 and 1/2 hours or so of this fiasco in the making and my final conclusion is that these guys, both the committee and total of 536 elected officials and the Federal Reserve know exactly what they are doing. They “why” is still out there for us to find out. But a one world Government/ Corporation/ Banking Cartel seems to me to be ready in the wings and may just be impossible to stop. I hate to say this because it makes me so mad my head might explode. 51 years on this planet and just being aware for the last 2 1/2 has really made me open my eyes to what these people have done to the Country I served. It really makes me want to puke to put it bluntly. George Carlin was right when he said “the American Dream..now you have to be asleep to see it”

  • Octavian

    @C.S. I agree with your view. As the downward spiral continues here and overseas, the only ‘solution’ will be sold to the people. That is to rebase not only the US dollar, but all other world currencies. They can either make one currency or have other currencies float against each-other, or a set basis. I see this in the next 5-10 years, but it may happen sooner. They have the perfect excuse, as the ‘recession’ is a world problem, not just an American one.

  • [...] Me Calling the Coming of QEIII over two weeks ago [...]

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