Quantitative Easing

[Steve Stuck]

There is a very dangerous game being played right now with our economic situation. I was looking at the bond market for the US and saw a little blurb come across where the Federal Reserve is going to start buying up more US government debt next week. This is extremely dangerous and historical data points to all indicators of massive inflation. The Fed Reserve has already dumped in about $300 Billion dollars in buying up bonds, now they may buy another $1.7 Trillion over the course of the next year to help out our government deficits. The Federal Reserve has no money and will print this money which is not good since it debases our dollar and makes our bonds look very cheap. This has already shown its effects with other wanting out of the bond market.

To better summarize what is happening; government is creating money out of nothing hoping it will stimulate the economy through lending (zero percent interest rates) and spending. This is called quantitative easing. China has already warned us about this step and will be reluctant to fund our debt.

Here are some other points to consider:

-Unemployment rates in this country are very skewed and some analysts believe we have a 15% unemployment rate. There were some indicators the government took out during the Clinton administration in order to make unemployment look low.

-The federal government reported inflation at zero percent for the year. This is a basic lie since they have manipulated leading indicators in their self reporting. Many leading economists put inflation at 6.7% for the year. John Williams from Shadow Government Stats is a great economist who has kept in all the old indicators to produce very real time numbers.

-Washington must raise a further $900bn by September. Governments around the world must fund $6 trillion of deficits this year, exhausting the capital markets.

-Dallas Fed chief Richard Fisher said his recent trip to Asia was an eye opener. "Chinese government senior officials grilled me about whether or not we are going to monetise the actions of our legislature."


Bottomline, our government is spending way too much money now and in the future. Serious action in deficit reduction will be needed in the form of cutting social programs and overall government spending in order to repair our fiscal outlook. New ways of collecting taxes that spur productivety in our country will be needed. Cutting personal income and corporate taxes will be the right step to spur growth. Programs like Social Security and Medicare need to be privatized in order to lesson debt burden off our government.