Wednesday, March 18, 2009

Bernanke is Dr Strangelove

Or how I learned to stop worrying and love Quantitative Easing.

This is it, the US pressed the nuclear button, buying its own treasuries in order to flood the market with paper and depress long term rates.

Theft on a grand scale, international theft at that. The masses timidly applaud. The dollar tanks, the US markets rally. Why do they rally? QE is effectively delayed "inflation". Inflation means you are poorer but the numbers are up so you feel "richer". Inflation is an unfair tax as it is essentially a flat tax on the poor. More fair would be debt moratorium on fake money issued by banks, how practical that would be I have no idea. In the meantime and from distance, the US continues floating banks with taxpayer money via inflation and QE and no one is the wiser for it. What lack of basic financial education will do to an otherwise healthy democracy...

I am not blaming Bernanke either. He is applying the rule book he wrote studying the great depression, let's hope Dr Strangelove is right about this. Only a combination of QE and debt moratorium will float banks at this point. It is a great defrauding but as long most americans believe they are living in a free democracy it will fly without most people batting an eyelash. As long as the Chinese keep buying the depressed treasuries ("we hate you guys!") then it is all good.

Godspeed and may the great Obama protect our bodily fluids and our green juice!


tom said...

not exactly a comment on your post - but I got an email with the following message and I'd be interested in what you think of the concept and the numbers...
(this could be "applied" to your boomer generation post)

The Business Section asked readers for ideas on "How Would You Fix the Economy?"

Dear Mr. President,

Patriotic retirement:

There are about 40 million people over 50 in the work force. Pay them $1 million each severance, with the following stipulations:

1) They leave their jobs immediately............ Forty million job openings - Unemployment fixed.

2) They buy NEW AMERICAN cars...................... Forty million cars ordered - Auto Industry fixed.

2) They either buy a house or pay off their mortgage - Housing Crisis fixed.

Marcf said...

40^6 x 1^6 = 40^12 = 40 Trillions.

That is 4 years of US GDP global.

There would be less production since you would retire 40 mill workers. So GDP would disappear.

I am already outraged at the 1T appropriation by the US govt. Imagine 40T. And finally Medicare is on that order of magnitude, unfunded.

Roy Russo said...

"What lack of basic financial education will do to an otherwise healthy democracy"

Marc, people can't even balance their damn checkbooks. Why would you expect them to have knowledge of Econ 101?

Marcf said...

You know, yesterday I was talking with my sister (in her late 20's) and she mentioned that her boyfriend stopped reading my blog because "we don't understand the words anymore". That kind of came as a shock to me, I always thought my writing was clear as water :(. I asked my father if the narrative made sense he had the same answer. She said "you need to write a for-dummies series".

tom said...

I've heard "write what you know", "write what you need to write" and "write what needs to be written".

I've never before heard "write what your sister's boyfriend can understand".

I'm sure you'll (continue to) find your own way.