Quantitative Easing…aka, Legalized Theft!

 

Image via Wikipedia

Over the past 6 months, the Federal Reserve has been a frequent target of mine. I’ve done my best to put into terms the harm that the central bank does to our money and our economy. It is certainly not surprising to me, or anyone else paying the slightest bit attention that a centralized bank of money & credit has not been able to solve the nations economic woes, especially when you consider that they are doing the very things that got us into this mess in the first place.

The bailouts were pushed to ‘save’ the economy by keeping toxic, failed companies alive (here’s your zombie epidemic). The stimulus bill was supposed to kick-start the economy. As any fellow coffee drinker will tell you though, the kick from a little stimulus wears off pretty soon. Novocaine doesn’t keep the pain from coming back, and an addiction doesn’t go away just because you get more of your fix.

So after countless rounds of economic ‘ammo’ that the Federal Reserve has allowed and promoted (all with the cheerleading of President Obama and the left), we are left with a poor economy, high unemployment, and massive deficits run in the wake of all this mindless spending. The next item on the agenda? Quantitative Easing.

Quantitative Easing is quite literally, the increasing of the money supply. If there was only $1,000 in your micro-economy, easing the money supply would literally create however much more money you wanted to be in the system out of thin air. You could go from $1,000 to $100,000 in no time. But what happens to people who have money saved somewhere? All of a sudden, with all that extra money in the system, their money buys less and less. It’s weaker. Something has stolen the value of it.

Quantitative Easing is usually a central banks last resort. They’ve kept the bank lending rate near 0%, and that hasn’t helped. They’ve tried financing enormous stimulus bills, and that hasn’t helped in the least. If you want a history of these types of social projects, look up The Lost Decade of Japan.

In short, Quantitative Easing is the increase in the money supply, courtesy of the Federal Reserve, or any nations central bank. They can do this because they operate on a paper (fiat) currency with no standard or peg that the currency has to be backed up by. This destroys the value of a dollar, and in turn, destroys every single Americans savings, no matter how big or little it may be. This in turn helps spark inflation. It will destroy what is left of the currency, and in many cases, take the given economy down with it.

It’s no secret that inflationary policies enacted by the Federal Reserve destroy the value of your dollar that you worked hard for. Some economists call it the inflationary tax. Heck, the dollar has lost over 96% of its value since the Federal Reserve was created. Check out gold and silver prices right now.

We’re in a sort of bond bubble (at least that’s how I see it). Central banks like to inflate bubbles in order to escape economic woes. They’ve done it with tech stocks, the housing market…all of this is encouraged economically by lowering the interest rates on lending, thus sending false signals to investors and causing a “boom” in a given sector. Right now, with global economies still sputtering, the only thing that the banks can inflate are the currencies. Where else does the funding for all this spending come from? Borrowed money on borrowed time is the name of the game. The easiest way for the Fed to increase the money supply is to buy up as many government bonds as they can, and reimburse the banks holding them with cash, created right out of thin air. The money supply increases, the value of the dollar goes down, poverty rates go up, wealth decreases amongst everyone. Don’t believe me? Wait and see.

The stimulus bill didn’t work. Bailouts haven’t worked. Spending like Paris Hilton on a drunken spending spree with a trillion-dollar line of credit hasn’t helped. Einstein told us the definition of insanity. Any of this sound like it might fit? It’s best to get angry now, because right now they are marginalizing you & your savings down to scale in the age of big-government. Speak up and out. It’s time to end this madness.