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Fed Announces QE-Infinity

September 14, 2012 by  

Fed Announces QE-Infinity

The Federal Reserve announced Thursday that the United States will definitely go into another round of quantitative easing, despite the economic failure of QE1 and QE2.

The central bank announced in a statement:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The difference between this round of quantitative easing and previous inflationary stimulus attempts made by the Fed is that this time the central bank announced an open-ended timeframe for bond buying. Essentially, the Fed has given itself the power to buy bonds for as long as it wants without announcing any more quantitative easing.

Gold stocks, as expected, skyrocketed after the announcement.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • RevNowWhileWeCan

    QE3 Stimulus= Borrowing more money from private banks, to put into a broken system, to be paid back with interest by the taxpayers. #UNSTIMULATING
    Like him or not, Paul knows the banking system…….

  • r

    They must be intentionally trying to collapse the system so they can rebuild it the way they want. What other reason can you think of? Cloward Piven strategy.

    • Warrior

      Ding, ding, ding, ding, ding! What we’re seeing is the set up for the ultimate collapse of the dollar. Hello NWO funny money. All debts forgiven, some get new wooden nickels on the dollar, some get gold coins. Redistributionist grand scheme. Sovereign “states” no more, sovereign “countries” no more, just a place you can call “home”. I wonder how many seats are available at the “table”? Can’t be that many, because groups are fighting like hell to claim one.

      • The Christian American

        No, they’ve got an out. Now that they’ve exhausted gold, silver and Federal Reserve notes that were backed with the wealth of America both public and private, they’re printing counterfeit money and the world is jittery. The out? Make all oil sales in the Mid East and Africa payable only in dollars. Their oil is to back our dollars. Saddam and Gadhafi tried to sell oil for EU’s and look what it got them. Why do you think they are trying to colonize that area?

    • The Christian American

      No, they intend on making all oil sales only done in dollars, the world’s sovereign currency. If they succeeded, the printing presses would be running 25/8. Right now the Mid East and African oil is the target but they’re having Russia and Brazil to contend with. Also China who doesn’t want to be held captive to their paper money.

    • toosmarttovoteGOP

      Actually it’s the Republicons who are bent on collapsing the system. Again. First the Great Depression and now their humiliating failure of Obama and the Dem’s preventing its repeat. Look at you history.

      This was unofficially codified in “The Battle for Reagan’s Soul”, an op-ed piece published in the Wall Street Journal on May 16, 1980 in which Irving Kristol wrote:
      “… And what if the traditionalist conservatives are right and a Kemp-Roth tax cut, without corresponding cuts in expenditures, also leaves us with a fiscal problem? The neo-conservative is willing to leave those problems to be coped with by liberal interregnums. He wants to shape the future, and will leave it up to his opponents to tidy up afterwards.”

      Except that these traitors didn’t allow that short “liberal interregnum” to be able to “tidy up afterwards.” Anyone who votes for such as these is either an idiot or a traitor.

      • Vicki

        toosmarttovote says:
        “This was unofficially codified in “The Battle for Reagan’s Soul”, an op-ed piece published in the Wall Street Journal on May 16, 1980 in which Irving Kristol wrote:
        “… And what if the traditionalist conservatives are right and a Kemp-Roth tax cut, without corresponding cuts in expenditures, also leaves us with a fiscal problem?”

        Turns out that the Kemp-Roth tax cut brought a huge increase in revenue to the government. So had the Democrats (You know, the ones in charge of the House. The place where laws are written to spend money) not vastly INCREASED SPENDING, we could have paid off the debt already.

        Revenue 1980 – 517 billion
        Revenue 2000 – 2025 billion

        Regrettably during the same time period democrats increased spending from
        1980 – 590 billion
        2000 – 1789 billion.

        Think how much better we would have been if the expenditures had stayed at 517 billion.

  • Rafael

    They are building a huge bubble, the bet is when is going to burst.

    • JC

      Hard to say when, but you better be ready “now”.
      paper money is going to be worthless ( or rather, “more” worthless) so you might
      want to figure out how you’re going to deal with that while we rebuild America.

      • The Christian American

        Paper money NEVER had any value. It merely was a certificate for some commodity on deposit with the biggest thieves of all, the US government. You use to be able to give them the paper and get back gold or silver. Between FDR and Nixon we longer can do that.

  • ladybug

    If you voted for Obama because he is black, you are a racist. If you didn’t vote for Obama because he is black, you are a racist. I did not vote for Obama because his campaign was all talk and no substance. He did not say what “Change” was and now we know and I’m glad I didn’t vote for him. independent voter

  • The Christian American

    Let me tell you how it works. The Federal Reserve in colusion with the congress and treasury prints paper money with ZERO commodity to back them. They distribute the Federal Reserve NOTES (FRN’s) to the people. This isn’t money in the traditional sense. It’s NOTES, due and payable to the federal reserve. These notes are no different than the note you sign when you buy a house or car, The Fed gave us paper and they get a piece of America in exchange. That piece is a chunk of America, both public and private. What you thought was yours all of a sudden is the federal reserves. Sound crazy? Sound like fraud? IT IS. Rothschild, the godfather to banks around the world said: “I care not who makes the laws, so long as I control the money”. He said that while standing on the floor of congress.

    • Robert

      I agree with you, The Rothschild Family High Jacked the USA in 1913 by creating the Federal Reserve which is as federal as federal express Cause The Federal Reserve is a private Corporate Bank and is not part of the Federal Government. They have been able to enslave the US and the rest of the world in debts bringing the world to it’s knees to usher in a New Global Currency with a New World fascist World Government that will and an Iron grip in removing the Bill of rights, the US Constitution, and a police state much worse than anything we have ever seen in the past.

      • Toy

        The Fed Res. was created through trickery and is the tool that has enabled the the present situation to come about. You ask private company to print pieces of paper for you. Congress asks that it be called money, against the Constitution.
        The company obliges and says, That since these pieces of paper are called Money, we will charge you Interest on them! Any amount you like? What Government could resist? No need to raise those pesky Taxes, just let Inflation take care of it: Everyone knows that inflation isn’t the Gov.’s fault.
        Scrap the Fed! Don’t go back to the gold standard, it can be controlled too easily.
        Silver would do nicely.

  • Jay

    I hate to say this, but this will pretty much guarantee Obama another 4 years. How so?

    Quantitative easing—a fancy term for the Federal Reserve buying securities from predefined financial institutions, such as their investments in federal debt or mortgages—is fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy. It is a primary driver of income inequality formed by crony capitalism. And it is hurting prospects for economic growth down the road by promoting malinvestments in the economy.

    How is the Federal Reserve contributing to regressive redistribution, income inequality, and manipulated markets? Let’s flesh this out a bit.

    Last month, Bernanke said that quantitative easing had contributed to the rebound in stock prices over the past few years, and suggested this was a positive outcome. “This effect is potentially important, because stock values affect both consumption and investment decisions,” he argued, apparently under the belief that the Fed has a third mandate to support rising stock prices.

    This is ironically a trickle down monetary policy theory, where rising stock prices mean more wealth and more consumption that trickles down the economic ladder. One problem with this idea is that there is a gigantic mountain of household debt—about $12 trillion worth—that is diverting away any trickle down. An even worse assumption is that the stock market really reflects what is going on in the real economy.

    Where the Occupy movement should really be teed off is when you consider that most equity shares in America are owned by the wealthiest 10 percent. That is not inherently a problem—wealthier individuals with more disposable income will have more ability take ownership stakes in companies than those in lower income brackets. And it is not a call for class warfare. However, it does mean that when the Fed engages in quantitative easing it is providing a benefit to a very narrow segment of society at the expense of others (either through future inflation or through the cost of raising taxes to pay for increased federal debts). That is the definition of crony capitalism.

    At the same time, all Americans have seen the prices of basic goods increase over the past few years in large part due to rising commodities prices. The whole idea of QE is to drive investors out of lower risk investments like mortgage backed securities and government debt and get them to put that money in “more productive” use—lend it, build skyscrapers, invest in technology, etc. Since there is little confidence about the future of the economy, many investors have crowded into the stock market with their money, and still others have invested in commodities.

    The problem is that investing in commodities can push up prices on things like gas, meat (because of feed corn prices), bread (because of wheat prices), and even orange juice. There certainly have been other contributors to commodities prices going up, but if the Fed has boosted stocks, they’ve boosted commodities too. So not only are the cronies gaining from quantitative easing, there is a negative wealth effect too.

    The cronyism doesn’t end there. In a Dallas Fed paper released in August, OPEC chief economist William White points out that easy monetary policy favors “senior management of banks in particular.” And even Bernanke himself suggested (as if it was a good thing) that quantitative easing purchases “have been found to be associated with significant declines in the yields on both corporate bonds and MBS.” Translation: the Federal Reserve has made it artificially cheaper for corporations to borrow money and has pushed up the prices of houses (benefiting homeowners but hurting homebuyers).

    Correct me if I’m wrong, but I thought cheap loans allowing businesses to leverage up and juiced housing prices were key parts of what got us into this mess?

    All of this might be acceptable to some if quantitative easing was helping the American economy recover. The reality is that quantitative easing has made it cheaper for the government to borrow, has artificially propped up the housing market (making it take longer to recover), and has dramatically manipulated the distribution of capital in financial markets. And the economy has not been in recovery.

    The plans announced today will exacerbate pre-existing malinvestment and income inequality. What is this continuous round of purchases going to do? It won’t get banks lending any more than they already are. And even if it did, households and small business still have a lot of debt that will keep them in a deleveraging state for a while. It won’t help the housing market bottom out, clear away toxic debt, and end the wave of foreclosures that need to process. It is not going to push up incomes, create new jobs, or change the technological revolution that is altering the face of employment in America.

    To put it simply: More quantitative easing is not going to move the dial much on the growth meter.

    Taken together, the crony capitalism and negative wealth effects of quantitative easing should clearly give pause. The fact that QE promotes activities that led to the housing bubble should have stopped its progression as an idea a long time ago, especially since these problems are greater than any gain that would come from this now perpetual pace of money creation.

  • Your Globalist Friend

    You were born into bondage. Resistance is futile. Humanity is doomed.


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