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
Finn Mccool
September 13th, 2012
7:07 pm
Kyle, Japan, really? Do you understand the limitations put on Japan by the IMF after the 1997 fiasco? Are you taking that into account?
the IMF is like the cool version of the mafia. They whipped Asia into shape and we’ve seen only stability since.
md
September 13th, 2012
7:07 pm
“We are in a currency war with China now and losing badly.”
And the sad part is we are complicit……..we thought we could tap into billions of new consumers and they turned the tables on us………
Finn Mccool
September 13th, 2012
7:09 pm
ok, I gotta go play my game. Have fun conservative yokels.
“Iba believan weza gotsta stop thesea other peoples froma reaproducina.”
Question
September 13th, 2012
7:22 pm
There are more people on food stamps than there are stockholders. Exactly how is the stock markets increasing value going to help Shameka feed her little tykes?
Pizzaman
September 13th, 2012
7:24 pm
Looks like the Market really likes what the Fed’s doing. Our 401’s are back to pre-Bush levels and if you were fortunate enough to be able to keep all or some of it through the crisis. Has to be really bad news for side Kyle. But no matter, since Rush says it’s not about Romney but about defeating the President, you can always de-nominate Willard and nominate Elmo. He’ll be a much better candidate.
I'm just sayin'
September 13th, 2012
7:25 pm
Romney’s plan to rev up the economy? Once he signs polygamy into law and men take on 5 more wives, the weddings alone would add a spark. When you add in buying 5 more houses…
md
September 13th, 2012
7:33 pm
“Once he signs polygamy into law ”
Said in jest, but one has to wonder where the gay marriage issue ends up. I don’t care what consenting adults do, but I have to wonder where it stops. The current definition not only defines traditional marriage, but it also provides a legal line……if we move the line where does it stop? If gay marriage was discrimination, then so is telling individuals how many people they are allowed to love…….the can has been opened, it’s time to see how many worms are actually in the can.
And in legal terms, moving that line will be really interesting when applying it to all the social programs in which we are already having a tough time affording…….5,6,7 spouses covered under SS? Interesting times ahead……..
TRUTH
September 13th, 2012
7:34 pm
Here’s a novel idea…why not just pass the jobs bill? It would create jobs, which in turn brings purchasing power and much needed revenue. Don’t think it would work? Ask any municipality, city, county, state government and I’m sure they would agree that it would be aa very good thing. How about this, let’s go single payer, we all pay into it and we could have health coverage for all and take the costs off the business owner. Just a thought……..well, as long as a Democrat is in office, the ReThugs will oppose, even if it IS in the best interests of the country and it citizens….
THE GOP….ONE MASSIVE FAILURE! AND TONE DEF TOO BOOT!!!
OBAMA/BIDEN 2012
Del
September 13th, 2012
7:48 pm
Man we have some real Kool-Aid drinkers on here this evening. Keynisian economics has never worked and it’s not working now. Back to true capitalism and supply side economics.
Just Saying..
September 13th, 2012
7:51 pm
Tax cuts now, tax cuts tomorrow, tax cuts forever.
Just Saying..
September 13th, 2012
7:54 pm
“Keynisian economics has never worked…”
Del: Factual reference for your statement, please?
Del
September 13th, 2012
7:55 pm
The ME has been a boiling cauldron for sometime and now it’s reached the boil over point. This feckless president must stand up and admit his policy of appeasement hasn’t worked and now we must take a far different course. We cannot tolerate these attacks against America and our people.
Aurelius
September 13th, 2012
7:55 pm
“Bernanke originally took office as Chairman on February 1, 2006, when he also began a 14-year term as a member of the Board. His second term as Chairman ends January 31, 2014.”
From: federalreserve.gov
Del
September 13th, 2012
7:57 pm
Just Saying, factual reference for your disagreement please.
dummy1966
September 13th, 2012
8:05 pm
Hum the amount of dollars up. Value over seas fall. Oil goes up. Gas even high than now. I need to buy more silver. Anyone remember pics of people in some country’s at end of wwii . People with wheel barrel’s full of money. Going to the store for eggs and bread. Becouse their money was worthless
Think before you vote Obama again America.
They BOTH suck
September 13th, 2012
8:05 pm
Del
The economy works in multiple facets imo. There is no one single formula that any Administration utilizes. They all use a hybrid to some degree or another, at least to the extent that the government is working within the economy.
If Keynesian doesn’t work on any level, let’s both take a trip to Columbus and Hinesville and see if the local Chamber of Commerce will meet with us for 5 minutes. That is all it will take. Heck the receptionist will be able suffice.
We are going to tell them that the US military is closing their bases and ask them what it will do to their local economies.
We will see what they say in terms of how that will impact their towns?
Lil' Barry Bailout - Vote American
September 13th, 2012
8:08 pm
Incompetent Barry can’t get the job done, so he needs Papa Bernanke to come in and bail him out. Probably won’t accomplish much other than further debasing our currency. Incompetent Barry doesn’t mind that, since his loser base doesn’t have any!
retiredds
September 13th, 2012
8:08 pm
Lil Barry: A very bright response to my question. Since you don’t know here it is:
The deficit on 01/19/2008 was $10,626,877,048,913.08 (and by the way Lil Barry that is $10 trillion plus).
Now another question: What was George W. Bush’s last budget that was passed by the Congress? And to show you I am not a lazy Democrat, it was a deficit budget of $1,300,000,000,000.00.
Now as you know an incoming president inherits his predecessors budget whether he be a Republican or Democrat. So if you add GW’s budget of $1.3 trillion to $10.6 trillion … voila you get $11.9 trillion. The current deficit number as of 11:52:29 GMT (tha’t Greenwich Mean Time) is: $16,050,527,503,457.09 so it would appear that the debt attributable to president Obama is: approx. $5.2 trillion which is about 32.2% of the total. That means that 67.8% is attributable to past administrations and congresses.
It doesn’t make me feel any better that the deficit is where it is but I just thought I would put the facts before you ( I hope this does not disturb you too much).
Also while I am at it my solution to the debt issue is to let the sequester take place. Don’t let the Congress or President have any control over it. Continue the sequester process until the U.S. debt is zero. At that time pass a Constitutional Amendment to balance the Federal budget (just like GA does). Build a rainy day fund of $10 trillion (yes $10 trillion). Once that is accomplished then look at tax cuts but at no time thereafter should the US run a deficit. And if the US declares war on another nation or entity, then sell bonds to fund the war in its entirety.
How about them apples. Would you support that? I will be interested to see.
From the one you accused without any basis in fact of being a Lazy Democrat.
Del
September 13th, 2012
8:09 pm
Any clear thinking person whose watched the video clips of this slime in Egypt, Libya and the ME knows we’re dealing with an enemy that appeasement won’t overcome.
Lil' Barry Bailout - Vote American
September 13th, 2012
8:09 pm
The failing economy is just the failing public school system all growed up.
They BOTH suck
September 13th, 2012
8:10 pm
No matter what size the military is, the money that flows into the bases, towns close to those bases and the contractors is basically Keynesian economics.
Fort Hood is another one. Those towns close to it are not growing just because companies are relocating there. It is for the most part a direct relationship to the increased FED dollars and personnel that have moving there.
And of course, more of those people requires more workers on and off the base to support those additional troops, families and civilians coming to the base.
Granted, you can’t run an entire economy that way by any means, but it is proof that no matter how you slice it we operate in a hybrid to some degree or another
They BOTH suck
September 13th, 2012
8:11 pm
Barry
The President runs the FED. When did this start?
Lil' Barry Bailout - Vote American
September 13th, 2012
8:11 pm
retiredds: The deficit on 01/19/2008 was $10,626,877,048,913.08
———————-
Incorrect.
Linda
September 13th, 2012
8:12 pm
TRUTH@7:34, Why don’t Obama & the Democrats appoint a Jobs Council? Oops, they already have.
Why doesn’t Obama just meet with his Jobs Council? Oops, he doesn’t have time.
Would Obama’s Job Council actually tell him him what the problem is with the economy? That is, why job creators are not creating jobs? Maybe. Maybe not.
Why doesn’t Obama listen to the CEOs & job creators who have been speaking out all over the internet & cable news media?
Is another “jobs bill” the answer? No.
Can the US economy benefit from another stop-gap, temporary measure from DC? No.
Does bandaid economics work? No.
Has the fed. govt. ever created long-term private sector jobs? No.
Does the fed. govt. create state jobs for teachers, fire-fighters or police officers? No.
Why keep digging the hole bigger?
WHY DON”T WE LISTEN & LEARN FROM THE JOB CREATORS WHY THEY ARE NOT CREATING JOBS & SIMPLY CORRECT THE PROBLEMS?
Lil' Barry Bailout - Vote American
September 13th, 2012
8:15 pm
retiredds: What was George W. Bush’s last budget that was passed by the Congress? And to show you I am not a lazy Democrat, it was a deficit budget of $1,300,000,000,000.00.
—————————-
Incorrect. Our President Bush proposed a budget that included a deficit of $400 billion.
http://en.wikipedia.org/wiki/2009_United_States_federal_budget
Lil' Barry Bailout - Vote American
September 13th, 2012
8:17 pm
Obozo was in office for most of the 2009 budget and had Democrat majorities in both houses. He could have reduced the deficit if he wished.
Lil' Barry Bailout - Vote American
September 13th, 2012
8:18 pm
They BOTH suck: The President runs the FED. When did this start?
——————-
You made the claim, not me. Do tell…
They BOTH suck
September 13th, 2012
8:19 pm
Barry @ 8:17
That is very true statement. And it is also true that a Republican House can stop writing checks today if they like.
They allow the spending, so they can cry about spending.
Both are culpable.
Just Saying..
September 13th, 2012
8:19 pm
Del: “… feckless…”
C’mon Del, McCain used it first.
“…factual reference for your disagreement please.”
So in your logic world, any assertion stands, unless it can be disproved. That’s why your yawns keeps elephants away from your house, everybody knows that.
They BOTH suck
September 13th, 2012
8:19 pm
Barry
You said Obama needs to FED.
What were you implying? Apologize if I misinterpreted your post
yuzeyurbrane
September 13th, 2012
8:19 pm
Is this Kyle’s blog or Linda’s blog? Hard to tell based on space given Linda.
They BOTH suck
September 13th, 2012
8:20 pm
needs the FED…..
excuse me
They BOTH suck
September 13th, 2012
8:21 pm
Barry
Did the FED keeping rates low during the housing bubble contribute to that bubble and what appeared to be a robust economy?
Just Saying..
September 13th, 2012
8:21 pm
“If Keynesian doesn’t work on any level, let’s both take a trip to Columbus and Hinesville and see if the local Chamber of Commerce will meet with us for 5 minutes. That is all it will take. Heck the receptionist will be able suffice.
We are going to tell them that the US military is closing their bases and ask them what it will do to their local economies.”
WAY too many steps for Del to follow.
Lil' Barry Bailout - Vote American
September 13th, 2012
8:23 pm
Both are culpable.
————–
Can’t disagree with that. And I’m liking the inference that it’s criminal!
Just Saying..
September 13th, 2012
8:25 pm
“Has the fed. govt. ever created long-term private sector jobs? No.”
So much for a President Romney making any difference…
Lil' Barry Bailout - Vote American
September 13th, 2012
8:26 pm
Jobs would be created if the federal government were to get out of the way. Government IS the problem.
So much for Obozo doing anything other than more damage.
Just Saying..
September 13th, 2012
8:28 pm
“Incorrect. Our President Bush proposed a budget that included a deficit of $400 billion.”
Lil Barry: If you don’t budget expensive wars, you have phony budgets.
They BOTH suck
September 13th, 2012
8:30 pm
Barry
We might disagree on many things, how much to cut and where……. however I have never said that spending doesn’t need to come down.
Both sides like to cry about the other, but it takes two to tango, especially when one it isn’t the same party in the WH and the House.
The House can shut it down, but it takes away that political jab or they take the hit as did Newt. Not a huge Newt fan, but at least he said F it and shut it down.
Granted he took a PR hit along with the party, but he just didn’t talk about it.
Current House is as political as Obama. They can stop approving appropriation bills anytime they like, but it doesn’t fit the game they are playing. Obama is a game player as well, do not get me wrong.
Both parties are inept at running the Fed government and both have shown it when they had total control.
Just Saying..
September 13th, 2012
8:30 pm
“Is this Kyle’s blog or Linda’s blog? Hard to tell based on space given Linda.”
Lighten up on Linda. She doesn’t have that many outlets…
Linda
September 13th, 2012
8:33 pm
retiredds@8:08, You are totally in La La Land. If the deficit had been $10,626,877,048,918.08 on 1/19/08, then the natl. debt would be at least $26.6 T today rather than $16 T.
You are getting budget deficits mixed up with the natl. debt.
You are also getting proposed budgets in Jan. or Feb. in advance of the fiscal year, which begins on Sept. 1 of each year, with the actual budget deficits at the end of the fiscal year.
I didn’t read the rest of your long post, because you are off base.
If budget deficits are so important to you, maybe you can shed light on the fact that the Senate had not passed a budget in over 3 years.
Just Saying..
September 13th, 2012
8:33 pm
“Government IS the problem.”
Lil Barry:
Your plane to Somalia is warming up. Just think of all the freedoms you’ll enjoy.
Lil' Barry Bailout - Vote American
September 13th, 2012
8:37 pm
Our President Bush’s “supplemental” budget for Iraq/Afghanistan wars in 2009 was about $70 billion, so go ahead and add that to his proposed on-budget deficit of $400 billion.
Bottom line, Obozo is the only pResident to have proposed and run trillion-dollar budget deficits.
Fail.
retiredds
September 13th, 2012
8:40 pm
Lil Barry: you are right about GW’s budget. But I don’t think it was very realistic and I am convinced he knew that. One more piece of cr4p he passed on to a future president, future presidents, our children and grand children. See the following from Wikipedia:
With projected receipts less than projected outlays, the budget proposed by President Bush predicts a net deficit of approximately $400 billion dollars, adding to a United States governmental debt of about $11.4 trillion. The actual spending signed into law in the final bill was increased by over $400 billion. And actual tax receipts totaled approximately $2.1 trillion, $600 billion less than the $2.7 trillion expected. The actual deficit in 2009 was $1.4 trillion.[3]
GW did not leave this country very good shape. A good steward would have done much better. From your posts it is very clear that you don’t like president Obama. But I would love to see anyone on this blog tell me that they (and yes you LB) and/or McCain would have solved the problems we face in the 3 1/2 years Obama was in office. My guess is you will say anyone could. But talk is cheap (as is blogging).
This is my last post so have a happy day.
Linda
September 13th, 2012
8:42 pm
Yuzey@8:19, Just can’t stand conservative women debating your progressive agenda ideas? My goodness! Kyle gives you & your irk just as much space as he gives me. Go, Yuzey! I’ve missed you, too.!
Lil' Barry Bailout - Vote American
September 13th, 2012
8:44 pm
Obozo took a bad situation and made it worse…in the short term by jacking up spending to 25% of GDP, highest since WWII, by bashing business, by hyper-regulation, and by destroying the rule of law (see GM/Chrysler bankruptcies)…and in the long term by saddling the economy with the outrageous and unsustainable costs of Obozocare.
Lil' Barry Bailout - Vote American
September 13th, 2012
8:59 pm
Here’s a link showing the amounts of supplemental spending for the last thirty years. Go ahead and add those amounts to Our President Bush’s measly $160-$400 billion deficits and you don’t come anywhere close to Obozo’s $1+ trillion deficits.
Remember when Obozo called Our President Bush’s deficits un-American?
Lil' Barry Bailout - Vote American
September 13th, 2012
8:59 pm
And now for that link…
http://www.cato-at-liberty.org/emergency-spending/
Lil' Barry Bailout - Vote American
September 13th, 2012
9:02 pm
And just for the record, I don’t think this “emergency” spending should be allowed to be kept off budget, and for that matter I believe the government should use the same accrual accounting that eeeeevil corporations use. That way, they couldn’t hide the tens of trillions of unfunded liabilities that entitlement spending is going to impose on the children of the productive class.
Linda
September 13th, 2012
9:06 pm
Just Saying@8;30, Maybe you don’t realize that I haven’t blogged here at all since Jan. until a week or so ago.
Maybe you don’t realize that the natl. election is less than 2 mts. away.
Maybe you don’t realize that this election is not so much about the economy as it is a plebescite on the type of government we prefer to have in the future.
Maybe you don’t realize that I have plenty of outlets that have kept me busy for months.
Maybe you don’t realize that my husband & family encourage me to do everything I can to communicate that our country is in jeopardy.
Maybe you don’t realize that my blogging here to advance the cause of the fiscal conservatatism
costs both me & my family a lot of money.
When you get to be our age, you will realize that the fed. govt. can no more spend its way out of debt & into prosperity & decrease its debt by spending more money that it does not have than you can in your own household.
Good luck to you in your future.