There Was Never Any Recovery: Fed Restarts QE

Remember how the official story after the 2008 financial collapse and through the Obama administration was that bailing out the banks, holding interest rates near zero, and borrowing to buy t-bills was supposed to save the system and help the economy recover? Seems like they were either wrong or lying because they never really stopped bailing out the banks and zombie corporations, and they’re at it again. Except this time it’s “not QE.” It might be just like QE, but we don’t call it that.

The Federal Reserve Printing

The Fed Is Lying To Us

Chris Martenson October 18, 2019,

Remember, after a full decade of providing “emergency stimulus measures” the US Federal Reserve stopped its quantitative easing program (aka, printing money) a few years back.

Mission Accomplished, it declared. We’ve saved the system.

But that cessation was meaningless. Because the European Central Bank (ECB) stepped right in to take over the Fed’s stimulus baton and started aggressively growing its own balance sheet — keeping the global pool of new money growing.

During the years of ECB printing (and printing by other world central banks) stocks and bonds continued powering higher. That is, until the ECB slowed its efforts in late 2018, as the Federal Reserve was raising its federal funds rate.

You see, 2019 was supposed to be the year when the major central banks were supposed to start unwinding their massive balance sheets in earnest. And, in doing so, start to undo the massive market distortions caused by their prior actions.

And what happened in late 2018? The markets started rolling over fast and hard.

Panicked, the central banks have rushed back to “rescue” the system. And in the process, are showing that they’ll likely never “unwind” the $trillions they’ve been printing from thin air.

Fast forward to last week. When Jerome Powell tried to explain why the Fed is suddenly back in the business of printing $60 billion per month (out of thin air) to buy more US Treasury bills…

“I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis,” he said. “Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy.”

“In no sense, is this QE,” Powell said in a moderated discussion after delivering his speech.

(Source – Bloomberg)

Not QE?

Well, what about the fact that the Fed is conjuring $60 billion of new money into existence each month and shoving that into the banking system?

And what about the fact that these new Quantities of money are Easing financial conditions and expanding the Fed’s balance sheet again?

You mean other than those similarities, it’s definitely not QE, Jerome?

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The Founders Warned Us About Central Banking

The Coinage Act of 1792 then set specific ratios for gold and silver coinage, placing gold and silver in control rather than a central bank. This lasted until the passage of the Federal Reserve Act of 1913, which allowed for the formation of the Federal Reserve System just two decades before Pres. Franklin D. Roosevelt started to come after private ownership of gold and silver in the 1930s. In 1944, the Bretton Woods system made the US dollar the reserve currency of the world, when it was still partially backed by gold and silver.

Finally, in 1971, the Nixon Administration suspended wages, issued price controls, and canceled dollar-to-gold convertibility, completing the final step in ending the “gold standard.” This gave the central government planners — and the federal reserve — the power to print money without restraint. This is how the national debt has been able to reach the levels that it has. The only thing backing the US dollar today is public debt.

Remember when Coke was a nickel? In 1913 (the year the Fed was founded) a bottle of Coke cost five cents. Today, a bottle of Coca-Cola costs an average of $1.79. While there are many factors (like supply and demand, cost of goods, etc.) that help set prices, inflation plays a critical part. At an average inflation rate of 3.12% annually, inflation alone accounts for $1.30 of the actual cost of Coke.

The addition of more US dollars doesn’t mean that anyone is more wealthy; in fact, it means that the dollars you have are worthless. You will need a higher amount of dollars to buy the same goods and services. Hence, saving inflated dollars, in many cases, is losing value. Those who save money are being robbed.

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