Bernanke Announces QE3

by Ryan on September 13, 2012

in Economy,Election 2012,Politics,Stupid government

Federal Reserve Chairman Ben Bernanke announced that the Fed will purchase more than $40 billion a month of mortgage-backed securities, or in other words to embark on a third round of targeted quantitative easing as a way to help the stalling economy.  The markets rallied, Wall Street was smiling, and in no way was this done 54 days out from an election to impact politics.  Not at all.  No way.

I have a few problems with QE3.  First, the Fed is printing fiat money again, which is terribly irresponsible and resurrects the specter of inflation.  Second, the Fed is dumping money in mortgage-backed securities to encourage home buying.  If I recall, pushing people into homes prematurely caused our economic crisis in the first place, so I’m not thrilled we’re doing that again.  Third, this clearly signals that the Fed is out of ideas to ease unemployment, which shouldn’t be their business anyway.  And finally, the blatant political pandering of this act is truly unfortunate — we’re kicking the can down a dark alley.

As the “fiscal cliff” approaches, with Moody’s threatening another downgrade, the CBO predicting a recession next year, coupled with this act by the Fed to print-print-print, we’re in deep trouble.  I’m glad the market rallied today — we may not have too many celebratory days in the next 18 months.

UPDATE:  The Egan-Jones credit agency just downgraded America’s credit rating from “AA” to “AA-” primarily because of this Fed announcement.

{ 1 comment… read it below or add one }

John September 14, 2012 at 1:22 pm

Very good points. There is another added benefit of QE3 – the government has another opportunity to own more of America. Obama wouldn’t miss an opportunity to extend the reach of government, now would he?

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