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QE3 - The Fed, FOMC, Congress, and Election Year equals... ?
The Federal Reserve opened a new chapter on Thursday in its efforts to stimulate the economy, announcing simply that it plans to buy mortgage bonds, and potentially other assets, until unemployment declines substantially.
Federal Reserve plan to buy mortgage bonds until unemployment recovers - The Denver Post
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The geniuses at the Federal Reserve have concocted a bold new plan to revive the U.S. economy -- print a bunch of money, loan it to Americans at super low interest rates so they can speculate on rising real estate prices, extract the appreciated equity and spend it on consumer goods. In other words, build an economy of real estate, by real estate, and for real estate. The only problem is we've been there and done that. The last time it almost destroyed the U.S.economy. I guess almost isn't quite good enough for the Fed, so now it's determined to finish the job.
These actions will destroy Americans' savings and hurt people on fixed incomes.
How does cleaning up the mess from the mortgage-backed securities fraud create jobs? If you want to create jobs, pump that newly created cash into new businesses and let the Wall Street money-junkies go to prison for their crimes.
My small business won't hire anyone because of bad policies coming out of Washington. Just to much uncertainty about how much health care will cost us, what our taxes will be etc..
QE3 will do absolutely nothing to make us hire. In fact makes us less likely because at some point bubble will pop and we want our overhead as low as possible. They are trying to fix the problems with the U.S economy the wrong way. Stop trying to turn the U.S into a socialist Utopia and we might start hiring.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
In the Faber interview he mentions purchasing power and trickle-down (monetary process mechanism). That's nice.
He leaves out "time value" though - whoever gets to use the new money first can spend it at current value before it becomes inflationary and actually eats into purchasing power rather than momentarily enhancing it. Now, who usually gets 1st use? hmmmm.....
Usually people on the bottom of the ladder (minimum wage guys) get the shaft in that veiled value-transfer (because they sure ain't getting first use of that new money), so I guess that is why the discussion comes up every so often about raising the min wage. Of course, that's when the complaints against doing it arise too...
Precisely Faber, and there you have it. The middle class will suffer, the elites will become richer, we are all slaves now to the almighty Federal Reserve. All it can do to maintain this policy is buy more and more MBS until it owns every last mortgage in America. Is this capitalism when the government owns everybody's home. Today I'm just digesting this, it's so incredibly shocking, the reality is just starting to sink in. Ron Paul was our only hope....
Unfortunately Keynesian stimulus is viewed as being socialist/communist in the US. While the public giving ownership of their homes to the government, which in turn pays the elite class the return on the capital, is capitalism..
You may call it time value, I call it tax value. The free money being given to the money men will not be lent to the small business, it will be invested in US debt, at a nice rate of return, paid for by the US taxpayer. I think this is how Fiefdoms used to work in the middle ages, we call it free market capitalism...
