Here’s a headline that should disturb your sleep:
Fed’s Printing Press to Fund Deficit for 6 Months
Printing money at the Fed, printing bonds at the Treasury. Very cozy.
To find a buyer of all the government debt he’s printing, Treasury Secretary Tim Geinthner doesn’t need to travel to China, just walk a mile over to the Federal Reserve building.
With the Federal Reserve set to print $600 billion in order to buy Treasury securities, it is essentially funding the $1.2 trillion deficit for the next six months, according to Ed Yardeni, President of Yardeni Research. It’s even more if you count the reinvestment of proceeds from its mortgage-backed securities portfolio.
“You essentially have the world’s largest hedge fund down the street from the world’s largest prime brokerage,” said Yardeni, who has held positions at both the Federal Reserve and the U.S. Treasury. “I think that QE-2.0 is a very bad idea because it increases the odds of a trifecta of bubbles in stocks, bonds, and commodities.”
Bubbles are what you have when you forgo real productive investments. Here’s some totally, completely unrelated news:
Dollar dives:
The dollar fell against its higher- yielding peers after the Federal Reserve said it will buy an additional $600 billion of Treasuries to boost the U.S. economy.
Stock market hits record high — in India:
India’s benchmark Sensex index has closed at a record high, after the Federal Reserve’s decision to buy US$600 billion in government bonds to shore up the shaky U.S. recovery drove a surge of foreign investment into the world’s second-fastest growing major economy.
The benchmark Sensex index closed up 2.1 percent, at 20,893.6 points, just topping a January 2008 closing high of 20,873.33, according to Bombay Stock Exchange data. The index touched an intraday high of 20,917.0, just 290 points of its January 10, 2008 all-time intraday high.
“It’s the Fed’s quantitative easing,” said Nandan Chakraborty, head of research at Mumbai’s Enam Securities. “It’s great for India.”
Gold hits new record high on inflation concerns:
Gold prices set a fresh record Thursday as investors flocked to the safety of the precious metal amid escalating inflation and currency worries.
. . . The Federal Reserve’s $600 billion monetary stimulus, announced Wednesday afternoon, helped jump start gold’s rally Thursday. The program aims to stimulate the economy by expanding the money supply, but market participants are concerned the excess liquidity will drive up inflation and depreciate the dollar without generating growth.
If this keeps up, the conspiracy kooks are going to stop sending me “proof” that President Obama was born in Kenya and start whispering about his secret life in Zimbabwe.
– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.
Maybe you could tell your editor for the link to this post: The expression is: "He has another 'think' coming". The noun 'think' refers to the verb 'thinks'; otherwise the expression makes no sense.
Much like printing extra money. Good God; I thought Bernanke was smarter than this.
Reply to this commentLinkReport AbuseI understand now why Obama is heading off to India. I am sure he will be very popular there, and he certainly isn't that popular here at the moment. Is he really taking 3000 other people and, if so, whom? But it is estimated that he will spend $2B while on his jaunt. If we extrapolate that over a year, perhaps it would be worth paying it to keep him gone. 10 days @ 2B => 365 days at 73B (if I did that right). That's serious money, but think of all the damage he won't do here ... I suppose he can get in plenty of trouble elsewhere, though.
Reply to this commentLinkReport AbuseI have taken eight trips to Zimbabwe over the last eight years. The first was in Sept. 2002 when one US dollar was worth 500 Zim dollars. My next trip was May of 2003 and it was up to 1500 Zim dollars to one $ US. I skipped 2004, but in June 2005 it was about 100,000 Zim to one US and that was after Gono (their Treasury Secretary) had removed three zeros from the currency. By this time you could no longer buy petrol on the road as it had all gone to private black market dealers. Twice more Gono removed three zeros from the currency. In October 2007 it was roughly 100,000,000 to one or something like that as it starts getting too silly to keep track of. I would always bring lots of single dollar bills as only the good old US dollar was considered King and all that mattered. In May of 2008 I watched my Professional Hunter write a check for $ 500,000,000 (Zim) so he could buy groceries for camp. That same trip I saw a woman with baby on back deliver a suitcase of cash in order to buy five mellons in an open market. Sometime in late 2008 or early 2009 the Zim dollar just disappeared and the whole Zim economy reverted to the US dollar. I was there this past September and they have the most filthy US dollars in the world being constantly recirculated. BTW, Zim is where all those $ 2 bills end up. They now have supplies in the stores and petrol on the road and the beginnings of stability and a comeback thanks to the might US dollar.
We are not as bad as Zimbabwe and never likely to be, but it is only a matter of degree. It can happen here, so keep your AR-15 well oiled and plenty of ammo available. Things can turn nasty very quickly.
I guess I better start buying Euros for my next trip.
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