Will Austerity Measures By Feds Unleash Economic Hell?

Will Quantitative Easing By The Federal Reserve Unleash Economic Hell?
Published on 08-13-2010 Email To Friend Print Version
AddThis Social Bookmark Button

By Michael Snyder - BLN Contributing Writer

Prior to the financial crisis of 2007 and 2008, the Federal Reserve could always count on being able to stimulate the U.S. economy with a quick cut to interest rates. But now with interest rates just barely
above zero, the Federal Reserve is searching for other ways to pump life
into a U.S. economy that is staggering about like a drunken college
student. One of the ways that the Federal Reserve can do this is
through something called "quantitative easing". In essence, what
happens is that the Federal Reserve creates money out of thin air and
starts buying things like U.S. Treasuries, mortgage-backed securities
and corporate debt. But many economic analysts are now warning that
further rounds of quantitative easing by the Federal Reserve could end
up setting off a series of events that could ultimately unleash economic
hell. In fact, there are quite a few high profile commentators who now
believe that hyperinflation in the United States is absolutely
inevitable.

For those not familiar with quantitative easing, Wikipedia has a pretty good definition....

The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest
rate are either at, or close to, zero.[citation needed] A central bank
does this by first crediting its own account with money it has created
ex nihilo ("out of nothing").[1] It then purchases financial assets,
including government bonds, mortgage-backed securities and corporate
bonds, from banks and other financial institutions in a process referred
to as open market operations.

But is it really a good idea for a privately-owned central bank to have the power to create money out of nothing and to do whatever it wants with it outside of U.S. government control?

Of course not, but we dealt with those issues in another article.

What we will concern ourselves with in this article are the negative effects that could be unleashed as the Federal Reserve further abuses this power.

Now keep in mind that disasters don't usually happen overnight. They usually build over time. When the Federal Reserve begins new rounds of quantitative easing, it will take time for the effects to be felt.

And so far, the new quantitative easing measures that the Federal Reserve has implemented have been relatively mild....

*The Federal Reserve has announced that it will "continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature".

*The Federal Reserve has also announced that it has decided to reinvest principal payments on mortgage holdings into U.S. Treasury securities.

*The Federal Reserve Bank of New York announced on Wednesday that it will purchase $18 billion in U.S. Treasury securities between now and mid-September.

But most analysts are expecting quantitative easing by the Fed to accelerate - especially if the U.S. economy continues to flounder.

So is there a reason we should be concerned about all of this?

Well, yes there is.

Marc Faber, the author of "The Gloom, Boom and Doom Report", recently warned CNBC that all of this intervention by the Federal Reserve is going to create a "final crisis" that will destroy the U.S. financial system....

"Investors should have listened to me already six months ago when I wrote that the Fed will continue to monetize … they will print and print and print until the final crisis wipes out the whole system."

In a recent article, Bob Chapman of the International Forecaster described some of the financial gymnastics that our "financial authorities" go through just to
keep the current shell game going....

But first, we ignore things like monthly hundred billion plus mathematical discrepancies between the amount of the government's deficits and the amount of treasury bonds being sold. Then we give the
proceeds from the bogus excess treasury sales to foreign countries,
foreign central banks and sovereign wealth funds as well as Cayman
Island hedge funds so they can do what with it? Why, so they can buy US
treasury paper and agency paper, among other things. Yep, we set up
the straw men, fund them with counterfeit money illegally created out of
thin air beyond what is needed to fund the ever-increasing deficit
being created by the drunken sailors running the US government, and we
then magically create categories of new mega-buyers in our financial
reports to show everyone how our treasury paper is just as "beloved" as
in the old days. Why, even the totally bankrupt UK has magically
created $180 billion for the express purpose of buying up those
treasuries to keep the whole rip-off party going.

What a mess they have created.

Things have gotten so bad that even CNN is publishing articles that openly acknowledge the crisis. In a recent article on CNN entitled "Is This Finally The Economic Collapse?", Keith R. McCullough warned that the Federal Reserve openly buying large
amounts of U.S. government debt is a very dangerous threshold to
cross....

Now that the US can't cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing -- buying Treasury debt. And that could lead the country to the brink of
collapse: According to economists Carmen Reinhart & Ken Rogoff,
whose views we share, crossing the 90% debt/GDP threshold is the
equivalent of crossing the proverbial Rubicon of economic growth. It's a
point from which it's almost impossible to return.

And that is the crux of the problem - the U.S. government has a debt that is absolutely spiralling out of control. This is a problem that has been building for decades and there simply is no quick fix for it.

But the truth is that it was seen as far back as 1835. In his article for CNN, Keith R. McCullough included a very appropriate quote by Alexis De Tocqueville, the author of Democracy in America....

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."

Today, approximately 57% of the U.S. government budget is spent on direct payments to American citizens or is money that is spent on behalf of individual American citizens.

For decades, the "Congress critters" have been bribing the American people (and each other) with massive payouts and have been getting away with it.

But now we are starting to pay the price.

The truth is that the U.S. government has become an expert on wasting money. Most of the folks populating Congress are so incompetent that they should not even be hired to mop the floors of a
Dairy Queen, and yet they control how trillions of our tax dollars are
spent.

The end result is that we have a financial mess that is absolutely unprecedented.

The U.S. financial system is doomed. The U.S. government and the Federal Reserve will probably end up trying to save it with a massive flood of paper money, and in the end that will likely result in the
collapse of the U.S. dollar and hyperinflation.

But hopefully all of that is still a while away yet. For now, the Obama administration and the Federal Reserve are trying to play a very delicate balancing act and are trying to keep this giant house of cards
from collapsing.

As incompetent as they are, let's hope that they can keep things together for at least a while longer, because when things really fall apart we are all going to be feeling the pain.

.

Views: 40

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Burbia commented on KLC's group MUSICWARS
1 hour ago
Doc Vega posted a blog post

The Unnerving Frequency of Disappearances on the Appalachian Trail Pt. 1

There’s another one of the cluster zones of missing persons reports that fails to render the…See More
7 hours ago
cheeki kea commented on cheeki kea's photo
Thumbnail

Waste runs deep

"Make USAID - go away."
17 hours ago
cheeki kea posted a photo
19 hours ago
cheeki kea commented on cheeki kea's photo
Thumbnail

$ Paid Annual Leave $

"Now is the Time for American Workers to Unite! Take back the squandered taxes and demand time off…"
Monday
cheeki kea posted a photo
Monday
Burbia commented on Burbia's blog post Mystery illness strikes Russia with fever, blood symptoms, and no cure in sight.
Monday
Burbia posted a blog post

Mystery illness strikes Russia with fever, blood symptoms, and no cure in sight.

I guess releasing this bio-weapon upon Israeli neighbors would be hitting too close to home. I…See More
Monday
tjdavis posted videos
Monday
tjdavis posted a video

The Electric State | Final Trailer | Netflix

Together, robots & humans can take the whole system down. THE ELECTRIC STATE starring Millie Bobby Brown, Chris Pratt and directed by the Russo Brothers, onl...
Sunday
Less Prone favorited Sandy's video
Saturday
Doc Vega's 7 blog posts were featured
Saturday
tjdavis's blog post was featured
Saturday
Sandy posted a video

"Mommy Tells Me I'm a Girl"-Jeff Younger

Soft White Underbelly interview and portrait of Jeff Younger, a father who is fighting to protect his son from transitioning into a girl. Get 40% off access ...
Saturday
tjdavis posted a video

MindWar: Full Spectrum Cognitive Dominance [Michael Aquino Analysis]

This is my analysis and my thoughts on Michael Aquino's "MindWar". This document is a must-read if you are looking to understand the psyop tactics and cognit...
Saturday
Doc Vega posted a blog post

A Horrid Murder at Land Between the Lakes (Sasquatch?)

 Most of us hear that Sasquatch-Bigfoot are intelligent yet reclusive creatures that are closely…See More
Friday
Doc Vega posted blog posts
Mar 27
cheeki kea commented on cheeki kea's video
Thumbnail

Metropolis (1927) Full Movie | 4K Color Remastered: 2023 Colorized with Gottfried Huppertz Score

"Hey thanks for the thumbs up guys. I was blown away (like a leaf in a tornado) when I watched this…"
Mar 27
tjdavis favorited cheeki kea's video
Mar 27
tjdavis posted a video

Did you know this? I was SHOCKED!

Wounder how many people know what they do to baby chicks? Wounder if they know what the are doing to Salmon? What about the lettuce and tomatoes? This will n...
Mar 27

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted