Guest Post: QE For the People - What Else Could We Buy With $29 Trillion?

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

QE For the People: What Else Could We Buy With $29 Trillion?

Central banks could be helping communities instead of enriching predatory, parasitic "too big to fail" banks and financial feudalism.

In a system that depends on lies and the credulity of the citizenry, the greatest lie is that the Federal Reserve's "quantitative easing" bailouts of the banks somehow help our citizens and communities.

To clarify this, ask yourself this question: what else could we have bought with the $29 trillion the Fed loaned or backstopped to the banks?

If you enjoy quibbling about the total sum of Fed support, be my guest; the Levy Institute came up with $29 trillion after poring over all the data, while the Government Accountability Office’s (GAO) tally topped $16 trillion. That's 100% of the nation's GDP and roughly 100% of the $16 trillion national debt.

While we're asking about opportunity costs, let's ask what else we could have bought with the $10 trillion that the Federal government has borrowed and blown in the past 11.7 years. The national debt was $5.727 trillion when G.W. Bush was sworn into office on January 20, 2001. It had risen to $10.626 trillion when President Obama was sworn into office in January, 2009. It is now $16.016 trillion, an increase of $5 trillion in less than four years in "debt held by the public" (i.e. the Chinese central bank, the Japanese central bank, the Federal Reserve, etc.)

You can check the totals for any recent date on treasurydirect.gov.

From time to time I have suggested alternatives to "wars of choice" and bailing out the financial Plutocracy, for example Cost of Iraq War: $3 Trillion; Cost of Solar Plants to Power all 105 million U.S Households: $500 Billion (April 10, 2008) and We’re Dropping the Ball on Renewable Energy (June 25, 2011).

$500 billion is roughly 3% of $16 trillion. That is rather astounding, isn't it? We could have switched to a (largely) solar-powered electrical grid for a mere 3% of what the Fed squandered to save the "too big to fail" banks. Yes, yes, I know we need a massive energy storage system for any solar-powered grid; shall we throw $1.1 trillion at the problem? That would total a mere 10% of what the Fed has provided to "save" crony-capitalist financial feudalism.

Correspondent S.H. (U.K.) has provided a community-centric, forward-looking alternative use of central-bank QE. Here are some excerpts from his essay Making Quantitative Easing Useful. I encourage you to read the entire essay, as it speaks to much more than what we could buy with the QE squandered on protecting financial feudalism. Though S.H. references QE in Britain (U.K.), the dynamics and opportunity costs are identical in the U.S. and every other nation burdened with the malinvestment of preserving a corrupt, exploitive, predatory neofeudalist financial system.

Looking at the state of the country and the economy, then one has to say that we seemed to have gotten precious little out of such a massive mal-investment. In fact, the majority are actually worse off on account of the inflationary effects of QE and its negative impact on pensions, savers and working salaries.

 

So now we have institutions that talk about investment, that talk about growth, that talk about rebalancing economies, that talk about big societies, but then do absolutely nothing in order to engineer or bring the changes they propose about - as frankly - it-s just too difficult for their limited understandings.

 

Let us be optimistic and not turn a drama into a crisis, but rather turn a dramatic crisis into a rather amazing transformational opportunity. Instead of being fearful and not engaging with the problems we face, we need to confront them and start thinking in new ways and generate some form of political, social and economic excitement.

 

This is not socialism. Socialism is the mis-guided concept of a government centrally determining and engineering its population in their most narrowly conceived 'productive' form. Socialism sees humanity as something to engineer as a human resource or raw material for the dominating demands of industrial mass 'productivity'.

 

Socialism tries to mass-produce its people on an industrial scale as just so many productive clones. I would reject this notion on the grounds that it is totalitarian and too restrictive. Instead of socialism I would rather pursue a politics that engenders and fosters sociability, co-operation and affability and a 'productivity' or even non-productivity conceived in all sorts of new ways.

 

A big society needs big communities with great amenities. Instead of massive dubious crony capitalist infrastructure projects determined by national governments for the limited benefits of those few corporations large enough to take them on, each community could study their communities and democratically decide what amenities needed building and how they could be generally improved.

 

If we decide we are interested in becoming fit and healthy then every community obviously needs excellent sporting facilities, so should have a gymnasium, all weather soccer pitches, basketball, tennis and squash courts, running tracks, cricket pitches etc. We need many more swimming pools.

 

Each community also needs an infrastructure of useful buildings. An auditorium that can be used for community decision making, for theatre and for local musicians to perform in. Such buildings could also be used to hold wedding receptions and host other social occasions. They should be freely made available as temporary market places, or for martial arts instruction, music tuition, dance instruction, keep-fit and a host of other uses. Public recording studios, video studios, woodworking centres, and art facilities could all be put in place.

 

We all have different skills and knowledge, yet we lack the sufficient community infrastructure to share our skills and teach one and other how to do things. How to grow your own fruit and vegetables and how to cook healthy and well balanced meals, how to draw and paint or make pottery, how to make films and documentaries, how to design electrical circuits or program chips, how to design, program, maintain and host web sites. The greater parts of our educations and knowledge is acquired outside of education systems and stem from researching and following our own particular interests.

 

To be sure there a great many excellent videos published on the internet that can show you a lot, but its not the same as being shown in person when in addition to a social aspect of meeting people with similar interests, it is also possible to have points of difficulty clarified or allow for skills feedback where applicable.

 

If we're going to print money then local authorities or even communities themselves can issue 30 year bonds which the central bank purchases, eventually to retire. Communities then start building their improved amenities using exclusively local companies labour and local firms buying all supplies locally. We have an opportunity to build ourselves a prettier, healthier, more co-operative and socially cohesive world and create many construction jobs that will make a real difference in the economics and quality of life within each community directly.

 

Such an approach will also help recapitalize the banking system as all the money will eventually end up on deposit with banks as assets.

 

In economic terms we need at least 100 public state of the art CAM (computer aided manufacturing) centres. As we all have computers and CAD (computer aided design) software is readily available, so in principle there is nothing to stop us from designing chairs, guitars, hose fittings, tables....the list is endless. With laser cutting machines, CNC routers, Object or 3D printers the technology is available for everyone to design and produce prototypes, objects for sale or for themselves. It's easy to design something, what is incredibly difficult in getting it into production.

 

The potential for self-design and the realization of creative potentials is stunning. The technologies are all currently available to put this in place, we merely have to establish the infrastructure and means of transmission between systems.

 

With 100 or more CAM centres to which the public could simply upload their CAD design s for one off or limited productions runs, we could release the amazing amount of national talent the we have always had by making it impossible for anyone not to be able to produce something.

 

Whether their productions be commercial or for personal consumption or produced as gifts would not matter because a lot a great products will be designed and realized for larger scale production, based simply upon the law of averages. Such centres would also be available for schools where serious educational investments need to be made in the areas of engineering and design and technology. The more one is allowed to design the objects of one's own consumption, the more one is inclined to build more quality into the object and take much more pride and care of ownership of it as it is such a personal process that involves deep personal investments.

 

At the same time, by making such investments then there are great rewards to be made in terms of the acquisition of new skills and knowledge and also in terms of creative self-achievements. This is productivity as a form of the consumption of the objects one produces and the self achievement and self determination that arises from being part of the whole productive process. We are all prototypes, waiting to construct ourselves and our worlds according to our own best desires, interests and wishes.

 

In our current societies, as much as the objects that surround us also define us, then they are not of our own designs and making. Inevitably we live as kind of mass-produced consumer clones. As new technologies continue to develop and emerge that suggest that there is no reason for this to remain to be the case.

 

With this new model, governments could set up centres for manufacturing and the people own the means of production, but one would be engaged within it freely on a democratic and completely ad hoc basis where one always becomes engaged and involved precisely around one's own particular aims and interests. This is to maximize satisfaction from the entire process of production from design and inception to its physical realization.

 

Communities need facilities in order to grow and develop the kind of cohesive social bonds needed to move forward together. It is the task of governments at local and national levels to be the facilitators of such movements.

Thank you, S.H., for a thoughtful and thought-provoking exploration of central bank-supported loans for actual community development. Yes, it can be argued that some of these projects may be a "waste of money." Once again I ask: what did we get for $16 trillion? Did we get anything that actually aided citizens and communities? That the "too big to fail" banks have maintained their chokehold on the nation--how did that aid citizens and communities?

If the TBTF banks had been liquidated instead of "saved," the nation could have 500 regional banks that were liquid and well-regulated instead of a feudal "blob" that sets the agenda for the Fed and the machinery of governance.

If you have any doubts about this, please read the new book The Payoff: Why Wall Street Always Wins (print) (Kindle).

The parasitic financial sector has looted the nation, and the Federal Reserve is the enabler of this predation. There are alternatives to crony-capitalist neofeudalism, if only we're brave enough and thoughtful enough to stop supporting our financial and political Aristocracies.

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GetZeeGold's picture

 

 

 

A stable full of Volts?

BaBaBouy's picture

Well We Could Have Doubled the GOLD reserves at FT. Knox...

Ooops, I mean we could have Coverted the Tungsten At Ft. Knox Into Actual Real GOLD...

Dr. No's picture

Doubled?  You think there is gold there?

Dr. Richard Head's picture

iPads for everyone and their pets. 

LMAOLORI's picture

 

 

This author wants more Socialism to fix the Banker's Socialism and from the looks of the comments everyone's so excited that their children and grandchildren and unborn generations would be debt serfs forever? Some of the very same commenters who blame the boomers for wanting the money back they were forced to pay into Social Security a system set up before they were even born suddenly have their hands out for money. Yea just keep digging the hole deeper making future generations indentured slaves as long as the hand out is for them -Hypocrites!

RobinHood73's picture

94K for every living american, or loan equivalent at zero percent interest against dubious collateral.

GetZeeGold's picture

 

 

Sounds good to me....where do I sign up?

 

Which candidate for President do I have to vote for to make that happen?

 

Dr. Richard Head's picture

Apparently former candidate for Congress, who competed against scandel ridden Mark Foley's seat in Florida, Jeff Fisher?  He claimed to me, down in Disney, that all debts have successfully been paid off and he, being a democrat, is going to be President of the US with Ron Paul being VP.  It has to be true, he told me and I danced. 

http://www.youtube.com/watch?v=SvxqUEUL84o

Too many scotches in the morning for me while on vacation apparently.

BKbroiler's picture

 

Which candidate for President do I have to vote for to make that happen?

right?  how has this not been anyone's platform?  For all the dumb shit Dubya did it sure was nice getting $600 in the mail.  For $94,000 I'd vote for aliens intent on destroying the earth.  Couldn't be much worse.

 

odatruf's picture

Don't blame me, I voted for Kodos!

mobtown's picture

 For all the dumb shit Dubya did it sure was nice getting $600 in the mail.

 That's when I was sure we were in trouble.

pods's picture

The system is functioning exactly as designed.  Preserve the banks so that they may live another day to create credit money and loan it out to the debt serfs at interest.

Sure it takes a lot of big words to obfuscate this design, but there are a lot of smart people involved in banking.

Dire Straits is the favorite band of the banksters.  

Money for Nuthin.

pods

 

Ignatius's picture

Once one gets past the thought of politicians sitting about saying "How can we make things better for the common Joe?" a whole other world opens up.  The world of entrenched interests sculpting a system for themselves where 'they' win and you are a mere cipher.

Any system that can be gamed, will be gamed.

Shortages are few yet scarcity is everywhere.

The schools are shitty because people who can think clearly and act with a level of personal sovereignty are a threat to the existing order.

Clashfan's picture

Agreed. If you can read, you can read excerpts from a diary. The State Dept is not happy w/CNN this week, for example:

http://xfinity.comcast.net/articles/news-national/20120923/US.CNN.Steven...

asteroids's picture

You could pave Arizona over with solar and put massive geothermal plants in strategic places. Build space elevators and cure a lot of medical problems after rebuilding Universities. Nah, it's bettor for society to bail out bankers instead.

GetZeeGold's picture

 

 

Dude....we can't even build a fence there.

 

Hobbleknee's picture

I read some years ago (at least 5 years ago) that to meet the current needs of the US(at the time), you would have to cover the entire state of Texas with a solar panel.  No sun for you!

Heyoka Bianco's picture

And the drawback to this plan is . . . ?

MisterMousePotato's picture

Green arrow for droll humor. Bon mot. But I do not wish anyone to think that I agree that Texas or its people deserve to be destroyed. I do not.

 

As long as I'm posting, I will also say that I take exception to the following (from the article): "Yes, yes, I know we need a massive energy storage system for any solar-powered grid ... ."

Why? What's wrong with an energy system that runs only when the sun is out and people need energy to run their air conditioners?

I mean, yeah, sure. Obviously there will need to be something to supplement energy needs at night, but it'll sure be a heck of a lot less than what we've got now.

Foir example, suppose I came up with a device that powered one's automobile 100%, but only during the day. At night, you'd have to run the engine.

Does anyone think I couldn't sell a few of those?

I've never understood this canard that for an alternative energy source to be useful, it has to replace - one hundred percent - what we are already using. Suppose I came up with a device that let one use, say, 99 or 75% water to run one's car, but still needed 1 or 25% gasoline? That would be bad because?

Dead Canary's picture

How many iPhones is that?

 

HungryPorkChop's picture

We could had paid off or paid down everyone's mortgage in the U.S.

Then all of this extra consumer money would be flowing into economy creating economic growth instead of paying interest every month to the Big Banks which we bailed out. 

Dr. Richard Head's picture

I've read quotes where total mortgage and credit card debt of US debt serf was about $12 Trillion in 2008.  Good to see we paid off the banksters in order to foreclose on those deadbeats and puts liens on them for credit card debt - both moneys created from the arse of Bernanke and fractional reserve banking.  Those deadbeats need to be taught a lesson, as they voluneteered for that debt.  /sarc

pods's picture

The deeper you think about it, the more absurd it gets.  Everyone was overleveraged in 08.  Government of, by, and for the people step in with a plan to recapitalize the banks at the people's expense so the banks can now afford to take the writedowns on the property they retake from defaulters.

So the people are paying for the banks to foreclose on our own property.

And they wonder why people all over are losing it.

If more than 1 in 10000 started to really understand this, we would have that "tanks in the streets" moment that was threatened back in 08.

pods

LeisureSmith's picture

......will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. Yep, sounds about right.

Clashfan's picture

My problem w/just writedowns or debt jubilee is that money does not go to the folks who were responsible, like me, and have no debt but are poor.

If we were to bail out the public, EVERYONE should get some money, period. That would have fixed the problem and been fine with everyone, I'm sure--everyone except for the banksters, that is.

Who's yer daddy?

insanelysane's picture

Completely agree. People need to learn about moral hazard but the TBTF banksters don't need that lesson.

Drachma's picture

No thank you. As a productive taxpayer who lives within his means, I'd like my portion of the bailout money back in my hands, not used to payoff the mortgage of others. Let them and the banks have at it amongst themselves, and let the chips fall where they may.

BurningFuld's picture

If China would have thought for one second the trillion dollars they were lending the US was going to go for anything other than further enslaving the population they never would have loaned the US the money.

Ying-Yang's picture

Ahhhh very clever these central banks... a bait and switch. A crab rangoon with limberger cheese inside

q99x2's picture

I could have bought my dog shep organic dogfood and fed the goldfish on time.

Bluntly Put's picture

Yes, it can be argued that some of these projects may be a "waste of money." Once again I ask: what did we get for $16 trillion?

Or how about just legislating that local jurisdictions and private utility companies create a living database of all their infrastructure assets and then using those databases to depreciate their assets for tax and accounting purposes. From that database, continual operatinos and maintenance plans could be easily developed and funding provided to raise the utility level of services to an acceptable level across the board.

What a useful program, I wonder why it wasn't proposed?

Oh wait it was, and then it was canned and the entire idea was put under the rubicon of the world bank, placing the "ownership" and operation of the program in the hands of globalist beaurocrats and central planners who are seemingly waiting for some "crisis" to implement the takeover, er I mean management, of all public and private utility services.

icanhasbailout's picture

We could have one of our trademark coke-fueled benders at least two nights a week for the next year with that money!

toady's picture

I always turn this question around. Now the question is 'how much must we pay for this money?'

Think everything you thought we could have had plus interest.

shovelhead's picture

Haha,

Pay back?

Dude, that is so 20th century...Nobody pays back anymore...Can't be done.

They pretend it's money and we pretend it's a loan. Simple.

 

toady's picture

That is, of course, the only answer.

The next question becomes 'who are the grocery clerks that will send an errand boy to collect the bill?'

zerozulu's picture

You can pay back with Ctrl-P.

 

Its called perpetual payback

JustObserving's picture

$1 trillion will be wasted trying to hold down the price of gold and silver eventually transferring those funds to China, India, Russia.

optimator's picture

16 trillion would be a bargain if it finally got the FED off our backs and out of the country!

WhiteNight123129's picture

Can anyone guess why the 2%+ 20 % fee structure would result in higher wages and higher commodities prices?

 

 

Jason T's picture

America does have the most productive large economy in the world per capita..

 

but that's gonna change probably in 10 year as China will be kicking our asses I'm afraid.

shovelhead's picture

Refund SETI to find Krugman's aliens.

insanelysane's picture

President O says The president faulted Romney for advancing a top-down economic approach that ‘‘never works.’’ ‘‘The country doesn’t succeed when only the folks at the very top are doing well,’’ he said. ‘‘We succeed when the middle class is doing well.’’

 

yet his FED's whole strategy is to feed the top.

 

Just listen to what we say, pay no attention to what we do.

yogibear's picture

Bernanke and the Fed can print money and issue it to consumers so they buy more Chinese garbage to boost spending and get into even more debt. 

Call it:

Consumer Recovery Assistance Program (CRAP).

To the Federal Reserve Banksters more debt is good.  

 

ebworthen's picture

They could have paid off everyone's mortgage.

toomanyfakeconservatives's picture

Handcuffs, blindfolds, and last meals are inexpensive. We could buy a whole lot of them for the traitors and perpetrators. Does anyone remember the ending scene of Boiler Room when the paddy wagons and prison buses pull up to the JTMarlin headquarters to arrest everyone? When the MASS ARRESTS occur and the Federal Reserve Note is replaced with real money, it's gonna be one hell of a party... http://tinyurl.com/cd5cyjo/

Flakmeister's picture

Twenty Nine trillion could have paid for the bulk of a new energy infrastructure for the US and coreespondingly provided a fuck load of pretty good jobs....

Diplodicus Rex's picture

I cannot believe I just read the above article on ZH of all places. ZH is well known for its Libertarian leaning and here we have an article about a Marxist utopia where SH believes that he has the right answer and all we have to do it tax and borrow to achieve it.

 

Given the mathematical model of the existing, debt-based, fiat, fractional reserve banking system where only the principle is ever printed and therefore when P+I are repaid a massive wealth transfer takes place, SH not only doesn't mention changing it he decides to use it to allow communities to 'borrow'. I've got news for you SH. When you walk out of a bank thinking you have just been made a loan and therefore you have just borrowed something you have just made the single largest error of your life. You never 'borrowed' anything. Youl were never 'lent' anything. It is an out and out lie.

"In economic terms we need at least 100 public state of the art CAM (computer aided manufacturing) centres"

Spoken like a true central planner. How on earth do you know that's what's required. If you're so certain, why not put your own capital at risk by giving it a try rather than mine which you intend to take from me by force?

"as the objects that surround us also define us, then they are not of our own designs and making."

You didn't make that.............outstanding. Given the context of that statement in respect of a certain O'bummer it is incredulous that you would use it in your defence.

 

"It is the task of governments at local and national levels to be the facilitators of such movements."

Really? How about another plan. Get your hands out of my pockets and let me spend my hard earned wealth the way I see fit.

 

 

Hedgetard55's picture

+55.

 

Better SH spend our money for us, rather than the FED/Federal Government, is the message.

philosophers bone's picture

It's not too late to monetize all of the debt, but do it now.  Is it really so hard? 

Yours truly, PK