The Fed's New Round of Quantitative Easing Is Like Trying to Patch Leaking Pipes by Pumping in More Water

George Washington's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
RockyRacoon's picture

The Fed is like an economic military.  We have bases all over creation just like we intervene in economies all over the world.  Does saving every other country thru dollar swaps save us in the long run?  Or is the whole dreaded mess just as absurd as military intervention, costing us our collective wealth.

metastar's picture

On a long enough timeline [in the not too distant future] the survival rate for the dollar drops to zero. ZeroFed.

Ned Zeppelin's picture

President Barack Obama’s plan to let lapse the Bush-era tax cuts for the highest-income Americans would have little effect on 76 percent of those taxpayers, a study says.

Under the Democrats’ plan to end a tax break for those earning more than $200,000 per individual or $250,000 per couple, the 3.8 million filers who fall in the $200,000 to $500,000 income range would pay $2 billion more in 2011 taxes, or an average of $532, according to a July 30 letter from the nonpartisan congressional Joint Committee on Taxation.

The July 30 study conducted for the House Ways and Means Committee shows that those earning between $200,000 and $500,000 would account for 5 percent of the planned $38 billion tax increase; the biggest burden would fall on the 608,000 taxpayers who make between $500,000 and $1 million and the 315,000 who earn more than $1 million. The first group would pay $6 billion more, or an average of $9,868, and the second group would owe $30 billion more, or $95,238 on average, the analysis said.

For those under $500,000, the tax increase is “relatively low,” said Roberton Williams, an economist with the Urban Institute who studied the joint tax committee report. “It’s less than 1 percent.”

Yep, that's what all the fuss is about.  How do you like the super-wealthy enlisting you to protest tax rates that benefit them far more than than do you?

Republican, tea partier, liberal, or Democrat: don't be a sucker - recognize that it is plutocratic elite vs the rest of us, and alot of this will make much more sense.  If it serves them GOOD, if not BAD. Forget everythign else. Greed you would not recognize as human lives in the callous hearts of those people who have all but institutionalized their plutocracy.  The politicians, by and large, serve them after they are elected, with periodic messy trips back to the electorate to explain their bizarre actions.  Political diviseness benefits them greatly - it distracts and draws energy from the real conflict that should occur.

BarrySoetoro's picture

That's right...let's go down the class warfare road, because it has always worked out so well in the past.  Did you actually type this post, or did you just do a copy-paste from your morning talking point update from Pelosi?

The bottom line is that you believe you are ENTITLED to other people's money...just by virtue of the fact that they have more of it than you do.  Newsflash for you, Ned.  In the grand scheme of the planet, the poorest slob in this country is probably in the top 5% of wealthiest people on the, as a member of the "super wealthy" club, what say you?  I'm glad we've got the Urban Institute on the case, reassurring me that I'll be just fine with a little bit less money.  Fuck Him...and Fuck the class warfare / entitlement mentality that has infected this country like a bad case of the clap.

bigkahuna's picture

The wheels could come off at any time. China could put us in the dirt by itself. It is embarrassing.

tom's picture

"Keynes implemented his policies in an era of much less debt than we have today. We're now bankrupt, with debt levels so high that they are dragging down the economy.

Even if Keynesian stimulus could help in our climate of all-pervading debt, Washington has already shot America's wad in propping up the big banks and other oligarchs.

More important still, Keynes implemented his New Deal stimulus at the same time that Glass-Steagall and many other measures were implemented to plug the holes in a corrupt financial system. The gaming of the financial system was decreased somewhat, the amount of funny business which the powers-that-be could engage in was reined in to some extent."


You should read more of and about Keynes before you post this kind of stuff, you got it all mungo bungoed.

Keynes began his career in the post-war era when the UK owed massive war debts to the US, which he argued were crippling the UK economy. His first big "hit" was a pamphlet slamming the attempt to impose war reparation debts on Germany, which he argued, in 1919, would lead to further conflict. Keynes was extremely wary of foreign debt, which is evident throughout his career, though he didn't mention it in his most popular book The General Theory as the theory at its center didn't even take into account the foreign sector.

Keynes never implemented anything. He co-authored Lloyd George's 1929 Liberal party platform proposing large-scale public works. Public works was not Keynes' own idea; he was just one of many prominent people at that time who supported it. The Liberals won 59 seats, Labour 288, Conservatives 260. But almost half the Liberals were classical liberals opposed to George's public works platform. Nonetheless it was a gain for the Liberals and Keynes was appointed to a couple advisory committees.

Then came the '29 crash and the onset of the Great Depression. Large-scale public works grew more popular including in the US, where a guy by the name of Franklin Roosevelt, who came up with the plan before he'd ever heard of Keynes, implemented the New Deal.

Later, Roosevelt met Keynes who started offering advice to him, and American disciples of Keynes, especially Alvin Hansen, became very influential in forming US policy.

Here's something I write with more detail: Don’t (always) blame Keynes

Übermensch's picture

Folks we are living through hyperinflation as Bernanke speaks.

kevinearick's picture

damned if they do (1);

damned if they don't (0).

That'll happen when they throw out the steering wheel and all the gears.

Grand Supercycle's picture

DOW/SP500 daily charts are now bearish.

So the downtrend I first mentioned in early May this year, can now resume.

dcb's picture

bond vigilantes always strike after you have put our money in treasuries. they will hit us markets when dollr is strong.

this is a bounce thing. buy alternative currencies when dollar very strong, sell when weak. I'd imagine it will be a crisis in slow motion. note from my understanding china has been selling into strength.  now the people buying are us citizens. that's when you can strike.

But I wonder if Japan will be the next attacked before us. they pick one country at a time.

when you see falling stocks, bonds, and dollar the end is near.

SteveNYC's picture

The problem is the leaks in said "pipes" happen to drop into a big Scrooge McDuck like coin vat in certain buildings occupied by JPM and GS in Manhattan. None of it will ever find you or I.

Astute Investor's picture

(Yes, Congress has just thrown twenty billion dollars at jobs and the states, but it is a tiny drop in the bucket compared to the many tens of trillions of dollars in handouts to the giant banks.)

Ben Bernanke believes that banks are "special" because, in his words, they provide unique intermediation services that help overcome informational problems in financial markets.  This statement is obviously bogus, but provides insight into Bernanke's madness.

Being categorized as "special" is all you need to know and provides the rationale for why the tens of trillions of dollars that went to the banks.


Wallace Hartley's picture

Not sure if the the banks are "special", but their upper management sure is...f-ing retards.  Getting huge bonuses based on money that was given to them by us taxpayers.  Makes me sick to my stomach.

Shameful's picture

Hold on there! How can you call them retarded?  They managed to make insane bets, lose and get paid on them anyway.  They have access to infinite money and backed up with the power of infinite moral hazard.  They drive sports cars and tool around with high price hookers.  Where is the retard part?  Seems to me like they won, and we suckers who get stuck with the bill lost.

DevelopMental's picture

they provide unique intermediation services that help (Bernanke) overcome informational problems in financial markets.

Invert, always invert...

ATG's picture

Re Today, however, Bernanke, Summers, Dodd, Frank and the rest of the boys haven't fixed any of the major structural defects in the economy.


Add Blankfein, Gramm, Greenspan, Geithner, Paulson, Roemer and most Big Corp Shadow Banks to the list...

hidingfromhelis's picture

...and the DXY is up 1.9% with this.  Makes perfect sense. <sarc off>

One pill makes you larger And one pill makes you small, And the ones that mother gives you Don't do anything at all.

Ned Zeppelin's picture

The latest Fed move seems in the category of "futile gestures."  Wonder how many billable hours were spent trying to figure out this move.

MarketTruth's picture

(Humor) So like BP, will the Fed try a 'Junk Shot' to seal the leaking pipe?

Oh wait, they already have by buying $1,250,000,000,000 of Fredd/Fann paper... and the pipe is still leaking.

WaterWings's picture

GW is asking for it using such keywords in the headline. Troll swarm in 3...2...1...

TooBearish's picture

dude its a fukking baby step wake me up when they take the balance sheet to 6 trillion

ATG's picture

A gambling man might be lured by zero cash carry into leveraging Treasuries 20 to 1.

Oh wait...