Today we will discuss something that is difficult to explain and understand but could destroy the American economy or bring about a worldwide economic collapse. I find when explaining a difficult subject it helps to use TV and game references. Things most Americans were raised on and very familiar with. Let's play Jeopardy. Alex, I would like Really Bad Decisions By The Federal Government. The Answer, for a whole lot of money we really do not have is? Quantitative Easing. Alex, 'What you do when you are in a recession, when you want to create jobs and more housing and thus build the economy by creating inflation' That is a correct question. Problem is the country loses.
What's it all about Billy, is it just for the moment we live...
The Federal Reserve under Chairman Janet Yellen, successor to Ben Bernake, is currently 'creating' $75 Billion dollars each month by printing or creating electronic money out of thin air. Kind of like how Rumpelstiltskin made gold from straw in the famous Brothers Grimm tale. At least the gold was backed by straw in the fairy tale. Now after she creates this 'money' the Federal Reserve goes to brokers like Goldman Sachs, you remember them. They are the large, politically connected stock brokerage firm that almost destroyed the economy but were never prosecuted. The revolving door allows executives from brokerages like Goldman Sachs to move seamlessly from the private sector to government where they regulate the industry they used to work for and will work for in the future. Kind of incestuous if you ask me. Anyway, Yellen takes this new money and buys Treasury notes from the brokerages. This keeps the stock market up and everyone makes money off the transactions in the form of increased value of their stock portfolios. That is everyone but the American people. They are paying higher prices for virtually everything due to inflation caused by this influx of cash.
You may ask 'Billy Jack', is it not a good thing to encourage home building and creating jobs, as it keeps unemployment down? Well, that is the fairy tale that the Federal Reserve has been selling for over 20 years. What will the long term effect be? Well to explain that we will go to a very old board game that most of us have played. Monopoly. If you recall, in the game the goal is to acquire as much property and cash as you can and avoid pitfalls like going to jail. Well, suppose one of the players has a small printing press and they are printing new cash as they please as the game progresses. None of the other players can win as they will never have enough cash to purchase the various properties for sale. In addition the player printing the cash can begin to set prices for the properties placing them beyond the reach of the other players. The regular players, taxpayers can never win.
Obama's False Promise to Reduce the Deficit
If you apply this to food, fuel, clothing, housing, and virtually everything people have to use on a regular basis, you create inflation where no matter how much you earn, you can barely keep pace with prices.
I have two characters who will explain in greater detail what Quantitative Easing can eventually bring about. Do you all remember the movie War Games? In the movie the game that had no winners was Tic Tac Toe. In the real world it was Thermal Nuclear War, which of course also has no winners. Quantitative Easing can lead to a worldwide economic collapse. There would also be no winners there.
Quantitative Easing AKA Printing Money - The Tombstone News
Inspector Javert
Patriot
California Concealed Carry
No comments:
Post a Comment
What are your thoughts?