Fed: Quantitative easing now, quantitative easing tomorrow, quantitative easing forever
The Federal Reserve’s Open Market Committee today said it will keep trying to print money until the economy recovers. In short, the Fed said it will increase its purchases of mortgage-backed securities by $40 billion a month until employment improves. So, indefinitely. Combined with other maneuvers, the Fed said its asset holdings will increase by about $85 billion a month through the end of this year. And the money-printing may not end there; from the Fed’s statement:
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. (emphasis added)
This is not what people mean when they talk about “wealth creation.” In fact, it’s very nearly the opposite of that: The inevitable devaluing of the dollar — the prices of gold, silver and several other commodities spiked in the minutes following the Fed’s 12:30 announcement — means our savings will lose value. This is the destruction of future wealth in the hopes of creating some current economic growth. In that respect, it is no different from increasing the budget deficit even further to fund even more Keynesian spending.
Will it work? Ask Japan; they’ve been trying such “quantitative easing” since 2001, without much positive effect. This is our third round of it in the past four years.
The Fed already had said it would keep short-term interest rates at or near zero until 2014. Today, it said that policy was likely to remain in place until mid-2015, which is three years from now and six years after the nominal end of the Great Recession. The new bond-buying comes on top of that.
Folks, this is what pushing the panic button looks like. It’s unclear what, if anything, comes between the panic button and the white flag.
– By Kyle Wingfield
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402 comments Add your comment
Linda
September 13th, 2012
6:03 pm
Buzzy@4:56, “Block Obama’s programs?” What is it that Democrats do not understand about WE DON’T HAVE ANY MONEY? WE ARE BROKE! Why are Democrats obsessed with spending money that we don’t have for stuff that we do not need for no apparent reason & why do they keep harping about it for years after the fact, after our credit rating has already been downgraded & when it’s threatened to be downgraded again? Is it foggy? Why do Democrats care more about the welfare of the Chinese than their own children & grandchildren?
Obama said, “You didn’t build that!” On behalf of the Republican party, I am saying, “We didn’t build him!” Obama is his own man, a progressive. Republicans can’t be blamed for his liberal, radical ideology & agenda that even his own party has voted against in the Senate 99-0. He wants the country to fail. He’s smart & knows exactly what he’s doing.
Lil' Barry Bailout - Vote American
September 13th, 2012
6:05 pm
You’re welcome, TBS. I try to help libtards understand basic facts whenever possible. Let me know if you need any help in the future.
JDW
September 13th, 2012
6:06 pm
@LBB…”liberal fascist”
Even you ought to know that the fascists were right wing.
md
September 13th, 2012
6:08 pm
“Maybe with fewer bad housing loans, less of a bubble, more shallow recession, lower debt and deficit.”
They weren’t disclosing their worth anyway, so doubtful on the housing, and if consumers have less to spend it’s also quite doubtful the recession would have been more shallow, probably just the opposite. And lower debt and deficit? Thanks for the chuckle on that one……we send it to DC it WILL get spent.
Hillbilly D
September 13th, 2012
6:10 pm
I haven’t read any of the other comments but I doubt that mine will be redundant, since my thinking goes against mainstream “economic” thinking. In my opinion, you need savings and not spending to have a strong, sustainable economy. True you can have a super hot economy for a while, based on spending but we’ve seen where that leads.
There’s virtually no incentive for a small investor to save anything when his return is going to be close to 0%. True he could probably make more money in something high risk but most members of the Great Unwashed can’t afford to be taking risk with what they have, especially when their net worth has probably taken a big hit the last few years.
If you’re going to get 0% or a little more, though less than 1%, you’re just as well off putting whatever you have in a Mason jar, in the yard.
I think the Fed, as is usually their MO, is making a bad situation even worse. They’re looking at the short term rather than the long term, which is normal for them. As clueless as Greenspan was, I think Bernanke is even more so.
Of course, I don’t even think there should be a Fed but that’s another story for another day.
Lil' Barry Bailout - Vote American
September 13th, 2012
6:12 pm
I didn’t do your work for you because it didn’t interest me. And because I didn’t want to be an enabler for your lazy Democrat entitlement mentality. Obozo might have nixed the work requirement, but I haven’t.
They BOTH suck
September 13th, 2012
6:13 pm
Barry
You make more excuses than Romney changes his positions
JamVet
September 13th, 2012
6:17 pm
Remember when the economy was based on reality, rather than play money?
Soooo four years ago.
The economy from four years ago????????????????
This sucker could go down. ~George W. Bush, September 26, 2008
(Whatever you are on, BB, I want some!)
They BOTH suck
September 13th, 2012
6:17 pm
You know the answer Barry
Tax revenue did go up in the 90s
The Bush tax cuts didn’t bring in any more revenue in proportion to historical GDP.
My point is that you are so blind and ignorant that you fail to understand or do not wish to admit that taxes are one variable of many that go into this thing we call an economy
If it was all about the tax rate, explain the economy for numerous years with much higher rates and lower unemployment.
This will require you to turn off talk radio and use your brain. That in itself might be a feat, but YOU can do this Barry
MarkV
September 13th, 2012
6:18 pm
There is at least one good thing one can say about the Romney/Ryan campaign – it often makes us laugh. And laughing is supposed to be good for our health.
The latest comedy routine I have witnessed was Paul Ryan’s interview on ABC’s “This Week” on Sunday. There Ryan was confronted with Clinton’s critique of Romney/Ryan’s $5 trillion tax cut plan, where Clinton charged that it would cause middle class families’ taxes go up by eliminating deductions, or cut the programs that help to empower middle-class families and help poor kids.
Then it went like the following, paraphrased:
Not so, disagrees Ryan, those charges have been discredited; there were five independent studies …
So how will the plan work?
By eliminating loopholes.
Which loopholes?
That will be up to Congress. “We want to have this debate with Congress. And we want to do this with the consent of the elected representatives of the people, and figure out what loopholes should stay or go and who should or should not get them.”
The laugh track was missing, but can anybody take this guy seriously? He already has five independent studies, which show that his plan will work by eliminating loopholes, which are yet to be determined by Congress.
And the comedy was not yet over. Ryan seriously proclaimed: “… we want to have this debate in the public.” And how does he want to do it? By not telling the public what his plan is. Hilarious.
Lil' Barry Bailout - Vote American
September 13th, 2012
6:18 pm
I’m with you, Hillbilly D. We need folks saving and investing, and right now the investing environment is poisoned because of our current environment of hyper-regulation, uncertainty over tax rates, government mandates, and general business-bashing.
Better to invest in business-friendly Asia.
They BOTH suck
September 13th, 2012
6:19 pm
Jam
He know enough to regurgitate the talking points he has allowed himself to be brainwashed with, but once you get past the surface…… it is all over but the crying
He is a shallow water guy. Deep end is off limits for him.
Lil' Barry Bailout - Vote American
September 13th, 2012
6:19 pm
TBS, I don’t recall anyone claiming it was all about the tax rate. You might read my 6:18, for example.
Lil' Barry Bailout - Vote American
September 13th, 2012
6:22 pm
Speaking of shallow water guys, how’s Obozo’s economic plan working out?
How’s that Nobel Peace Prize working out?
Failure on all fronts.
cc
September 13th, 2012
6:23 pm
MarkV @ 5:08 pm:
I only posed a question to which I don’t have the answer. From reading your various posts, you know everything. Why don’t you enlighten me as to what Hussein meant?
retiredds
September 13th, 2012
6:24 pm
Lil Barry: Tell us, if you please, what was the federal deficit on January 19, 2009?
Hillbilly D
September 13th, 2012
6:24 pm
Just to expand my thinking, I think the banking de-regulation that began in the 1970’s was one of the worst things that ever happened. Given the inflation of the time, etc., I thought it was a good idea then but I turned out to be wrong about that. I was a dumbass when it came to that.
JamVet
September 13th, 2012
6:29 pm
BB, the point is that YOU calling anyone a failure is well………………….. I’ll be gracious here and say ironic…
MarkV
September 13th, 2012
6:33 pm
cc @ 6:23 pm: “I only posed a question to which I don’t have the answer. From reading your various posts, you know everything. Why don’t you enlighten me as to what Hussein meant?”
If you got that from my various posts, then you have a serious problem of comprehension.
As for what President Obama meant when talking to President Medvedev, however, I think I can tell you that with reasonable certainty. He meant that after the election, if he won, he would have more flexibility in negotiation.
md
September 13th, 2012
6:37 pm
“The laugh track was missing, but can anybody take this guy seriously? ”
Yes……it matters not which loophole is eliminated if there is a number associated with the loophole…and if that loophole has not yet been identified, it is also a bit hard to say the middle class will be the ones paying for it. As it stands now, many have their hands up voting for the other guy to pay for it, so we’ll have to wait and see.
If one recalls, we ALL got tax cuts……….
md
September 13th, 2012
6:38 pm
“he would have more flexibility in negotiation.”
Pretty scary thought about a lame duck president with no worries about being re-elected.
cc
September 13th, 2012
6:40 pm
MarkV @ 6:33 pm:
I fail to understand how he would have more flexibility AFTER the election than BEFORE . . . if he was acting within the law and under the Constitution. But then, I’m not nearly so wise as you . . .
MarkV
September 13th, 2012
6:44 pm
cc @ 6:40 pm
Do not despair. You can learn.
Rush
September 13th, 2012
6:44 pm
Jam on it….Jam on it…..you’ve never been gracious. Anyone who disagrees with you must me clueless, right?
Rush
September 13th, 2012
6:45 pm
You don’t have access to Google to look up statistics, old dentist?
Rush
September 13th, 2012
6:48 pm
“He know enough”….Nice wording. I could take ebonics and put together a better narrative…….
Lil' Barry Bailout - Vote American
September 13th, 2012
6:50 pm
Lil Barry: Tell us, if you please, what was the federal deficit on January 19, 2009?
————————
Dang, another lazy Democrat!
Lil' Barry Bailout - Vote American
September 13th, 2012
6:51 pm
I think the banking de-regulation that began in the 1970’s was one of the worst things that ever happened.
———————-
De-regulation works a lot better when there’s no actual or implied taxpayer bailout available when things go south. Folks tend to pay more attention to their money.
Rush
September 13th, 2012
6:52 pm
You are surprised by the lack of initiative on their part, LBB?
Linda
September 13th, 2012
6:54 pm
They both@5:50, 5:53, 6:17, etc. Here is a chart of revenues, outlays, deficits in both current & ‘05 dollars & as % of GDP from the whitehouse website. Pour over it all you want.
Finn Mccool
September 13th, 2012
6:54 pm
Lessee, Kyle thinks sales are driven by supply…let’s read what he has to say about economics!
I’m gonna make more buggy whips…Ima create some demand – ya’ll watch this!
Lil' Barry Bailout - Vote American
September 13th, 2012
6:56 pm
I know that Obozo’s added as much to the national debt in 3+ years as Our President Bush did in eight.
yuzeyurbrane
September 13th, 2012
6:56 pm
This would not be necessary if Congress would cooperate in passing a balanced approach to deficits, taxes, and spending. Thank God the Fed is exercising the few levers it can.
td
September 13th, 2012
6:56 pm
cc
September 13th, 2012
6:40 pm
If you are looking for a intelligent discussion from MarkV then you my freind are barking up the wrong tree. He/she will always be nice and seems very educated but will never give you a firm opinion. Only tell you how your opinion is wrong but will never really state his/her’s.
Linda
September 13th, 2012
6:56 pm
They both, sorry I forgot to include it. Here it is:
http://www.whitehouse.gov/omb/budget/Historicals
Select Table 1.3.
Finn Mccool
September 13th, 2012
6:57 pm
Dow up 206 on the news……whine whine whine whine
Richard Hackney
September 13th, 2012
6:57 pm
Money printing has been tried 2 previous times in the history of the US and failed. Since we came off the gold standard under Nixon the dollar has lost 95% of it’s value. Devalueing the dollar to decrease the value of exports only drives up the cost of the middle class. Read a book called Currency Wars that will give you a history of this. We are in a currency war with China now and losing badly.
Tiberius - pulling the tail of the left AND right
September 13th, 2012
6:58 pm
Yeah, let’s do what we did before that hasn’t worked.
The definition of insanity is doing the same thing over and over and expecting different results.
td
September 13th, 2012
6:58 pm
yuzeyurbrane
September 13th, 2012
6:56 pm
This would not be necessary if Congress would cooperate in passing a balanced approach to deficits, taxes, and spending. Thank God the Fed is exercising the few levers it can.
Cooperate with what? The only thing Obama has put on the table in writing is his budget and it was rejected even by every democrat. Read Bob Woodruff’s book and it lets you know how Obama negotiates and cooperates.
cc
September 13th, 2012
6:59 pm
Enter your comments here
cc
September 13th, 2012
6:59 pm
td @ 6:56 pm:
Well, just ‘dang’, td! I was baiting the hook . . .
Richard Hackney
September 13th, 2012
7:00 pm
as for the repubs standing in the way where is a budget from the Senate? There has not been one in 3 years.
Finn Mccool
September 13th, 2012
7:00 pm
Ohh, i see, Kyle had all his money tied up in Glenn Beck gold….
Let the rest of us suffer – just make sure Kyle don’t lose his gambling money.
Lil' Barry Bailout - Vote American
September 13th, 2012
7:00 pm
Finn, you haven’t figured out that more dollars chasing the same investments makes the price go up?
I thought you were the economics guru?
Finn Mccool
September 13th, 2012
7:02 pm
The definition of insanity is doing the same thing over and over and expecting different results.
ie, I got nothing bu quotes from other folks – the same thing this poster puts on me every single day.
Outted!
They BOTH suck
September 13th, 2012
7:03 pm
Linda
I didn’t say revenue didn’t go up, but a quick peruse proves my point and what I already stated. That increase didn’t out perform historical norms against GDP, when there were higher rates. No different when rates went up in the 90s and revenue went up as well. Those increase as well were within the avg when looking at historical rates.
Any increase or decrease must be viewed along with the other variables that are taking place at any given time.
Thanks for the exchange.
Finn Mccool
September 13th, 2012
7:03 pm
I thought you were the economics guru?
Yeah, you are starting to understand my skills now…don’t knock em until you got an actual argument, dudette.
Lil' Barry Bailout - Vote American
September 13th, 2012
7:04 pm
Too bad you just outed yourself as an economics know-nothing.
Hey, now you have something in common with your Idiot Messiah!
ld
September 13th, 2012
7:06 pm
Meaningless drivel now,
meaningless drivel later,
more meaningless drivel in the future.
Tiberius - pulling the tail of the left AND right
September 13th, 2012
7:06 pm
Some of us have better things to do tthan troll on a blog all day, Finn.
Unlike you unemployed leeches.