Federal Reserve

Fed Considers QE3?

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According to The Washington Post, officials at the Federal Reserve have suggested that it may soon be time to pursue additional monetary stimulus through a third round of quantitative easing. 

At a June 21-22 meeting, some leaders of the central bank argued that if there were no progress reducing unemployment, the Fed should consider further expanding the money supply — which in practice would mean a third round of "quantitative easing," or buying hundreds of billions of dollars in Treasury bonds.

"Some participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate," and if inflation pressures dissipated, "it would be appropriate to provide additional monetary policy accommodation," said minutes from the Federal Open Market Committee meeting released Tuesday afternoon.

That was the most clear acknowledgment to date that at least some Fed policymakers are discussing such a possibility. If anything, the latest economic data — particularly a very weak report on job creation in June that came out last Friday — would tend to make the Fed more open-minded about new steps to bolster growth.

The last round of quantitative easing was an unprecedented experiment that the Federal Reserve took on despite limited potential upsides. In April, a report in The New York Times looked at expert opinion on the success of the program and found that the benefits were "surprisingly small." So it wasn't the disaster that some critics warned of, but it was hardly a resounding success either. Given the risk and the likely backlash, as well as the potential for politicization, it's not clear why the Fed would pursue yet another round of a policy that so far has not done much good. 

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  1. “a policy that so far has done rather little good”

    Was rather disapointed?

    1. Marc Faber already predicted QE3 back in March 2011.

      Start watching at 3:45.

      http://www.youtube.com/watch?v=QB5Wn8u83aY

  2. Wanna know why economic growth is bad? Just look to government.

    Georgia Power wants to shut down three power plant units within the next two years, an official from its parent, Southern Co., said Monday.

    The decision to shutter the coal-fired units is based on the pending Environmental Protection Agency rules that would require the utility to install equipment to meet stricter environmental controls, the company has said. It would be too costly to upgrade the Plant Branch units, which started operating in 1965 and 1967.

    http://www.ajc.com/business/ge…..10625.html

    So what does this come out to when measuring jobs destroyed and lost?

    1. I for one am looking forward to the coming blackouts so that way I’ll have a legit reason to burn hippies for firewood!

      Fuck if they don’t stink when you do that, though…

      1. Don’t breath in the smoke! It’s laced with all kinds of dangerous chemicals.

        1. NOW you fucking tell me!

          It does explain why my cat suddenly started talking in my ex-girlfriend’s voice!

  3. If we keep trying the same thing over and over again, we’re bound to get a different result at some point, right?

    1. It’s like my mom told me back in high school after my fourth girlfriend:

      “The only consist factor in all of your fuckups is you!”

      1. The other one is that they were all women…

        //I wish I could go gay…

    2. Bernanke is like a broken digital clock: He’s right 0 times a day.

  4. as well as the potential for politicization

    …and the potential for bears shitting in the woods
    …and the potential for the Pope being Catholic

    1. What about when a Pope Bear shits in the woods?

  5. What is it called when you do the same thing over and over and expect a different result?

    1. Winning the future.

      1. (a.k.a., WTF)

    2. Montani Semper Liberi|7.13.11 @ 11:43AM|#
      What is it called when you do the same thing over and over and expect a different result?

      Politics?

      1. MASTURBATION!

        1. Sometimes it winds up in different places.

  6. it’s not clear why the Fed would pursue yet another round of a policy that so far has done rather little good

    Because if they aren’t seen “doing something”, their political enemies can attack them for not “doing something”. That’s the whole reason. Their reelections.

    1. Their reelections

      Their reappointments by retards who need to win reelections.

      Pretty much the same thing, only technically correct – the best kind of correct.

      1. +1 space conga line

    2. it’s not clear why the Fed would pursue yet another round of a policy that so far has not done much good.

      Could it be that there are soon to be T-Bills on the market to fund yet more govt borrowing and Timmay! and The Bernank are worried that no one with a brain will want to buy them?

  7. It didn’t succeed because it wasn’t big enough.

    When this one fails it will be because it wasn’t big enough.
    When the next one fails it will be because it wasn’t big enough.
    When the one after that fails it will be because it wasn’t big enough.

    By then you’ll need a wheel barrow full of Benjamins to buy a loaf of bread because the stimulus wasn’t big enough.

    1. And then: 1 New Benjamin = 1,000 Old Benjamins.

      1. Really, the only way to solve the debt problem is to make the entire debt something an ordinary citizen could pay off with the money in his wallet.

        1. Wallet – Wheelbarrow.
          Whatever.

          1. No, no, it is possible to make bills of any conceivable denomination. For instance, if we go really mad, we can print a googolplex bill.

            1. Copyright infringement?

              1. First, that would be trademark infringement.

                Second, it’s googol, not Google.

                Third, googol and googolplex are numbers that predate the Google trademark by quite some time and can still be used as numbers despite anything Google might want to say about the matter.

                Finally, the government can do anything it wants–Preamble!

                1. “Finally, the government can do anything it wants–Preamble!”

                  You had me at “We”.

                  1. That’s “statist”, BTW.

                    1. “Statiest” would also work.

        2. As an exercise in the lunacy of our current debt:

          In 1913, the richest man in America could write a personal check and retire the national debt.

          Today, the richest man in America could not pay the interest on the national debt for a month with all his net worth.

          1. That’s only because that richest man isn’t paying his fair share!

          2. If only that selfish bastard had done his duty back then we would never be in this situation!

  8. I’m sure that in a few months they’ll be announcing that prices are unexpectedly going up. They’ll claim that they are completely surprised by this unexpected phenomenon of course. The news media, of course, will swallow that BS hook, line and sinker

    1. They’ll reassure us that prices are only rising on oil, food, education and medicine. Yarn prices will remain steady.

      1. Not if it’s cotton yarn.

      2. But… but… but…. COMPUTERZ!1!!!!!!

    2. There hasn’t been a lot of inflation yet, and I believe it’s mainly b/c of the new loan regulations instituted. If newly created money just sits in a vault somewhere, it’s not going to result in increased prices.

      1. Oops. As Gilmore points out downthread, stocks & commodities have been going crazy.

        1. Commodity inflation isn’t a result of fed policy (as you note above–it can’t cause inflation if it’s not being lent out), but various other world circumstances (Middle East turmoil and bad harvests etc.)

          1. Tony, can you do the world a favor and *not* talk about things which you don’t have the first fucking clue?

            Someone even dumber than you might be harmed.

            1. And try Googling “Weak dollar drives commodity prices higher”, and notice it has been the headline in every article covering that asset class since, oh, 2008?

              In case pictures help you…

              $ go down…

              http://www.bloomberg.com/apps/quote?ticker=DXY:IND

              Food, energy, metals, etc… go up!

              http://www.bloomberg.com/apps/…..r=PCRIX:US

              1. So what you’re saying is that a program that created no new money somehow led to commodity price inflation?

                1. So what you’re saying is that a program that created no new money somehow led to commodity price inflation?

                  Actually, yes: QE leads to expectations of future inflation and to current low interest rates, which leads investors into commodities (and stocks). But, as you say up-thread, uncertainty of supply is also a factor, as is the prospect of economic recovery.

                  1. But the inflation in commodities (tied as it is to actual economic events) is not showing up in other consumer prices, and it’s certainly not showing up in wages. We’re talking about runaway inflation here, not inflation for specific things.

                    1. But the inflation in commodities (tied as it is to actual economic events) is not showing up in other consumer prices, and it’s certainly not showing up in wages. We’re talking about runaway inflation here, not inflation for specific things.

                      True, but runaway inflation is a different beast than the conventional push/pull model we learned in Econ 101. It’s more like the bursting of an asset bubble, only the asset in question is the currency itself. We may not get any more warning than we did during the other bubbles.

                      What I see is our government borrowing massively, and our central bank turning that debt into dollars. The fact that most of those dollars are currently stuck in the pipeline doesn’t convince me that we are going to escape the well-documented fate of all nations who debase their currencies.

                    2. The fact that most of those dollars are currently stuck in the pipeline doesn’t convince me that we are going to escape the well-documented fate of all nations who debase their currencies.

                      This time it’s different.

                2. So what you’re saying is that a program that created no new money somehow led to commodity price inflation?

                  So now Tony has to resort to making up things and claiming people said them when they in fact did not, just so he can argue.

                  It’s about as masturbatory as quantitative easing, I suppose.

          2. You are clueless.

          3. You’re right, QE2 wasn’t lending out money, it was giving away money.

      2. So what you’re saying is that a program that created no new money somehow led to commodity price inflation? ~~ Tony |7.13.11 @ 1:40PM

        Do you not understand pictures when you look at them, Tony?

        http://research.stlouisfed.org…..RNS?cid=25

        Money in circulation has grown since peak credit hit 2008-09-30 at $2,576.2 Billion.

        On 2009-09-28, the sum of Fed Res bank notes and U.S. token coins outside banks equaled $856.1. On 2011-06-27, that sum increased to $964.3.

        In short, money in circulation has grown 11.2%. Check your food prices, which have gone up by about that amount.

        The payment method for some goods hinges on non-revolving credit, e.g., houses, college tuition. The payment method for some goods hinges on revolving credit, typically casual wear clothing, meals eaten out at sit down restaurants, tickets to attend sporting events, airline tickets. The payment method for some goods hinges on money (cash) or credit that clears so amazingly fast that in all essence seems to function like cash. Such credit instruments are ATM debit cards and less so, checks drawn on checking accounts. The typical goods with prices dependent on cash include gasoline, groceries, cigarettes, booze, beer, wine, condoms, movie tickets.

        So you need to look at these classes of goods to see the effects of increased money, decreased credit and the like.

        Added money into circulation reflects money accretion (an increase in cash held in hand from ATM and bank teller withdrawals) and not necessarily inflation (growth in credit instruments sold by commercial banks).

        Why do you insist on chattering away Tony when you do not get at all, all things money, credit, commercial banking and central banking?

    3. As unexpected as recent jobs reports, eh?

  9. “…it’s not clear why the Fed would pursue yet another round of a policy that so far has not done much good.”

    When all you have is a hammer, every problem looks like a nail.

    1. Hammer ready jobs!

  10. Stimulus = failure
    QE1 = failure
    QE2 = failure
    QE3 = ?

    Anyone noticing a trend here?

    1. It wasn’t big enough.

      1. You sound like my ex-wife.

    2. Government = Failure

    3. Stimulus = failure
      QE1 = failure
      QE2 = failure
      QE3 = ?

      QE4 = PROFIT!

    4. I just suddenly had a vision of Lady Liberty get railed from behind by Uncle Sam and she’s screaming the whole time “It’s still not big enough!”

  11. “a policy that so far has done rather little good”

    stocks, bonds, commodities beg to differ.

    all that extra cash has had to find someplace to go (it aint like they’re sending checks to *me*)…and the place it goes first is somewhere where it will offset the inevitable decline in value of the $… a la commodities, *gold*… basically anything ‘not cash’. All the QE efforts by the Fed have done diddly and squat for the economy, but have subsidized a 30-35% growth in asset prices since November…

    So maybe cap that last sentence with, “…for the broader economy”

    Certainly hasnt affected jobs, housing, etc.

    Anyone has noticed the key themes of this week?

    Europe facing domino-effect of broad debt crisis…

    …US watches, says, “Yeah… let’s do everything we can to replicate *that!*”

    I have not seen a single news story pointing out the blatant irony. On one hand… europe, oooh! bad and scary! US raising the debt limit? Why, it’s the only responsible thing to do!

    1. Quantitative Easing of course has next to nothing to do with improving the economy. It has practically everything to do with the fact that non-Fed investors can’t fund the insatiable spending appetite of our insane, out of control government by themselves without interest rates going up through the roof.

      And interest rates going up through the roof is the absolute last thing that our insane, out of control government can afford to let happen. In other words, unless TEA Party republicans stick to their guns and force real spending cuts, expect Quantitative Easing to go on forever, or until our currency is destroyed, whichever comes first.

      1. AWOOO! Capital Wasteland, here I come!

  12. Krugman want more paper for his money hole! Krugman have Nobel Price! KRUGMAN SMASH PUNY LIBERTARIANS!

    1. I have faith that Hercule will destroy him and all his false works. Krugman delenda est.

  13. http://www.garynorth.com.

    We are in a Keynesian-induced productivity trap. The government is absorbing capital on an unprecedented scale for peacetime. There is no light at the end of this tunnel. The government is becoming the borrower of last resort. Businessmen see the future. The future is marked by slow increases in the productivity of capital, high unemployment, and lethargic demand. The so-called wealth effect of rising home prices is now operating in reverse.

    The American housing market has lost at least seven trillion dollars since 2006. Zillow, a private firm that specializes in monitoring residential real estate prices, puts the loss at $9 trillion.

    This much is sure: most people feel poorer whose homes were their major capital asset. People who were in debt for their homes were leveraged. They have seen their equity fall like a stone. This has harmed 80% of the 20% of the nation who are the main investors. The super-rich are not feeling much pain, since they were not in debt. The average investor does feel the pain. The middle class has been decimated. Its hoped-for capital reserves are gone.

    As growth slows and unemployment rises, two years after the recovery officially began, there are signs that 2012 will be worse. Business opinion is pessimistic.

    Economic growth is the supposed source of salvation ? deliverance ? from debt. The optimists recite the mantra, “deficits don’t matter,” because they have faith in the ability of economic growth to enable the government to meet its interest payments. Even if it can’t, the Federal Reserve will be the lender of last resort. So we are assured by the experts.

    This theory is being sorely tested in full public view for the first time since 1944. The economists who shrugged off a deficit of 2% of GDP are finding it hard to shrug off a deficit of 10% of GDP. But they are doing it. They have risen to the challenge. There is no hue and cry from economists to balance the budget. Only the Austrian School has opposed Federal deficits as a matter of economic analysis. All other schools of opinion call for deficits in recessions. But today’s economy is said not to be a recession. This makes it more difficult for economists to stay quiet in the face of today’s 10% of GDP deficit ? not impossible, of course, just more difficult.

    The effect of a series of trillion-dollar Federal deficits for the next decade is obvious: reduced economic growth. So, the system’s savior is growing weak. Atlas looks like he will shrug at today’s interest rates whenever the demand for capital rises. He will demand higher rates of interest to persuade him not to shrug.

    Investors search for lower risk. They buy Treasury debt. But this guarantees reduced economic growth. This threatens to produce a permanent deficit. If things ever do get better for the prospects of businesses, the result will be higher rates for the government. The only thing keeping Treasury rates low is the rotten economy.

    To attract more loans, the Treasury will have to raise rates. The return of optimism will assure this result. There will be competition for funds. But this will create a nightmare for Washington. The increase of the debt, when facing 5% or higher rates, will lead to a worse deficit. The interest component of the debt will rise. This is the Keynesian productivity trap.

    The total payments by the government in 2011 are about $400 billion. This is in the range of 10% of the budget, This comparatively low percentage creates no sense of fear in Washington or on Wall Street. But if this percentage doubles in response to higher interest rates, the extra payments will have to come from somewhere. Where?

    The political pressure to cut spending is minimal. The media are opposed to a deficit freeze. So is the economics profession. So are the politicians. Most college-educated voters have adopted some version of Keynesianism. The politicians cannot ignore the tea party, but they need not take unpopular stands. A fringe group of voters is up in arms over spending, but that is because the promoters of a freeze on the debt ceiling have not identified where the spending cuts must come from.

  14. Hat tip to myself for breaking the news, and another tip of the cap to myself for calling this inevitable outcome months ago.

    1. Don’t forget my hat tip! I’ll go ahead and predict QE 4 and QE 5 while I’m hot.

  15. If some of the goings-on in Silicon Valley these days are any indication, those excess reserves from QE1 and QE2 aren’t quite as reserved as they used to be. Tons of easy cash + well-connected VCs = soaring SF office rents and engineer salaries.

    1. Soaring engineer salaries? Tell me more!

      1. He means software “engineers.” Not the real kind.

  16. “…the Fed should consider further expanding the money supply ? which in practice would mean a third round of “quantitative easing,” or buying hundreds of billions of dollars in Treasury bonds.”

    I can’t wait for the future announcement of our new currency…

    The American Peso

    It will have pictures of kittens and unicorns instead of dead presidents.

  17. Without QE1 QE2 QE3 QE4 … QEN unemployment will go to 50%, 90% of economists predicted this, the same 90% who predicted the financial collapse in the first place.

    1. One iron law of economics: The prettier a currency is, the less stable it is.

      1. Which probably explains why we want to put holograms on the new C-Notes!

    2. Outstanding, especially the use of definite articles when referring to people (“the Ben Bernake”).

      1. A Bernanke will one day take the place of a Rusty Venture.

        http://www.youtube.com/watch?v=f60xokC84jY

        1. Oh, unforgettable.

          http://www.youtube.com/watch?v…..re=related

  18. But wait – I thought that “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism.” or is that only when people who are not government employees do that?

    http://www.zerohedge.com/artic…..-faces-15-

    1. Duh, When the gummint does it, it isn’t terrorism. Haven’t you learned anything from our Great War?

  19. Look on the bright side: this is good news for gold and silver hoarders. Gold’s up $25/oz and silver’s up 7% since 9AM.

    1. You rang?

      Seriously, the Fed is trapped at this point.

      If it doesn’t pump liquidity, the credit markets will lock up, from the Treasury market on down.

      Interest rates will start to go up, which at the federal level will eat the pathetic spending cuts being discussed in Congress before breakfast.

      There’s more, but I’m too depressed. Or I would be, if I wasn’t being smug about my gold and silver exposure.

      1. Yep.

        Say, where is that d-bag Shrike? I’ll bet he never shows up on this thread.

        1. Or he’ll say that Obama is the savior of Capitalism based on the increase in equities since he took office, as if that isnt explained by a) the overreaction that depressed equities well below their reasonable value following the credit crunch of 10/2008 and b) the fact that the increase in equities prices is, exactly as was pointed out upthread, a hedging reaction by investors smart enough to shit themselves when they see money being created out of thin air at a rate that would make Mugabe blush.

      2. Is it me or do metals always seem to take a dive at around 10:30 AM if they make huge gains in the morning?

        Timmy and Ben must be late sleepers. Or maybe they need to eat breakfast and go for a walk before dumping govt metal into the market to keep the price down.

    2. Is this good news for the hoarders or just not bad news for them?

      Is silver up 7% of is the dollar down 7%?

      1. If you go to kitco.com, they have a feature that disaggregates currency moves and predominant buying/selling. Today’s action is mostly currency, it looks like.

      2. Good news in relative terms, I guess. This is bad news for pretty much everyone I know personally other than myself.

        Most metal hoarders were never in a position to be bank execs or govt bureaucrats, so this is the best they can possibly do.

    3. Been getting paid in Euros for the last 6 months or so. Considering the hell the Euro has been through in that time, the fact that I’m significantly ahead (about 7.5%) speaks volumes about the $. I was ahead by more a few days ago though.

      It’s getting very hard to not worry.

  20. QE2 (a misnomer since there wasn’t money being lent out) wasn’t a failure. It did pretty much what was intended, it just wasn’t nearly as strong enough of a tool to make significant progress on growth.

    If you guys want to judge every economic policy on whether it creates a substantially better world, then why not let them try things that are actually capable of that?

    1. Is that you Krugabe? Please tell me you’re a sockpuppet for the bearded wonder of the NYT.

      1. relax. Tony hates poor people. He likes stealing their money. But it’s okay. Because they’re in debt, and will pay it off in lower real trems.

  21. To clarify, this is not credit expansion, this is straight up currency debasement? The kind that can’t be walked back?

    1. You understand perfectly.

    2. The dollar (as measured by the DXY) is stronger now than in early 2008.

      QE had not “debased the dollar” no matter how many times Paultards say it.

      1. The USDX is down close to the low it hit in early 2008, at the depths of the contraction/credit crisis.

        And that is a success?

        Pull the other one, shrike. Its got bells on.

        1. The Fed’s balance sheet is around $2.8 trillion which is dwarfed by much larger losses in the broad money supply. It may have hit $5-6 trillion temporarily in q4 of 2008 as the Fed replaced the entire CP market.

          The markets failed – the Fed averted a Depression. You Paultards will never get it.

          1. shrike is right that the balance sheet is dwarfed by larger losses in private debt. That a contraction in that “averts a depression” is stupid. What it means is we will be buying less stupid broken shit from the chinese and quit screwing over the poor.

          2. Which money supply figure dropped? M3 did but it certainly never dropped 2.8T. If you’re including credit in your definition of money supply then “dwarfed” may fit in that sentence.

            The markets were not allowed to fail. The depression was delayed and/or lengthened rather than averted. Debt mechanics are a bitch.

        2. Imagine for a moment where we in America would be right now if it weren’t for the fact that half of Europe is imploding!

          The E.U. going down like the Titanic is about the only real thing that’s allowing us to stay above the waterline for this long.

          1. That also explains the post-WWII economy of the U.S. With half of Europe and lots of Asia going full commie from 1945-1985 it reduced a lot of competition.

      2. Pay no attention to the Euro behind the curtain!

      3. Fucking moron. The objection is to the creation of a situation that will directly lead to an implosion in the value of the dollar, whether it happens months from now or years from now.

        Right now it looks like it’s still a couple of years out, but when inflation comes, it will be swift and unstoppable. All because the cowards in control do not want to deal with the ramifications of the situation that has been created.

        1. So we should take on the very real risk of recession in order to protect against the probably imaginary threat of runaway inflation? There’s not just one type of economic hardship, you know.

          1. Runaway inflation is a far greater catastrophe than a recession. And the “very real” vs. “probably imaginary” statuses of the two risks is a creation of your own mind.

            1. Hey, Glenn Beck! There are no factors present or on the horizon for “runaway inflation” for decades.

              Look at the 10yr Treasury yields.

              1. Hey, Glenn Beck! There are no factors present or on the horizon for “runaway inflation” for decades.

                Hey, Paul Krugman! Back in 2005, no respectable economist saw factors present or on the horizon for decades for the housing market collapsing.

              2. “Hey, Glenn Beck! There are no factors present or on the horizon for “runaway inflation” for decades.”

                I’m sure that’s what the economists in weimar republic, yugoslavia, and zimbabwe said.

            2. Perhaps, but there is nothing to indicate that runaway inflation is a threat–everything points in the opposite direction.

              We need the dollar to be devalued a little bit to stimulate demand.

              As usual you guys manage to be on the exact wrong side of everything. How can that possibly be the case every single time?

              1. They have the Potter Syndrome from that 30’s movie.

                If everyone else declares bankruptcy they can buy the whole fucking town with their gold doubloons.

              2. So you see? Massive Deflation is a Good Thing!

                So every goldbug in the country is whacking off thinking about no central bank as emergency lender.

                1. The only way to avoid deflation in the long term is to destroy the currency. Central bank and government efforts to avoid any deflation at any cost have put us all at risk of hyperinflation.

                  By the way, goldbugs are the first to lose in a deflationary environment. Goldbugs need the Fed to print, print, print.

              3. We need the dollar to be devalued a little bit to stimulate demand.

                Nice attitude. “Buy a new car or your savings account gets it!”

                The problem is that the demand that’s being stimulated is for safe but unproductive investments like metals and government bonds.

              4. “As usual you guys manage to be on the exact wrong side of everything. How can that possibly be the case every single time?”

                Hm. Let’s see. I bought Palladium at $150/oz in February of ’09 and Sold at $600/oz earlier this year. That’s a lot of money says I wasn’t on the wrong side of things.

                1. *last year, to cover my expenses during unemployment (my employer didn’t pay into unemployment insurance). My, how time flies

                  1. Perhaps, but there is nothing to indicate that runaway inflation is a threat–everything points in the opposite direction.

                    Tell that to the Europeans. Interest rates are prices – and they are going up fast.

          2. It all depends on how imaginary you perceive it to be. I don’t find it that imaginary.

          3. forget runaway inflation. If you support ANY inflation, you are for screwing the poor. Why do you hate the poor, Tony?

            1. chirping

            2. What are you talking about? Are you suggesting that contraction is good for the poor? Their few dollars might be worth more but their government won’t be able to afford a safety net and they won’t be able to find a job.

              1. They aren’t able to find a job anyway, dumbass.

                1. OK. I’ll try to be a little bit more intelligent. Don’t hurt your head, Tony. Your model of employment fixates on this monolithic belief that low employment is caused because the real cost of labor is too high. What if that’s not the case?

                  What if it’s because the population’s skillset is misaligned with demand? Then inflating will make retooling too expensive.

                  What if the high cost of commodities makes the cost of business in general too high? Then inflating will push the available funds away from labor and you could make the situation worse.

                  What if nobody wants to hire because they know their idiot employees won’t actually get any work done but just sit at their computer typing away at reason or viewing facebook instead? How does inflation fix this problem? Sure, the marginal cost of employment goes down, but hiring two dumbassess instead of one, incurs other costs too (HR paperwork, compliance, OSHA, insurance costs) that make the “doubling of labor” more expensive than you think.

                  1. A safety net is fun until the promised funds buy very little, and you realize you’ve been shafted at the tip of a gun. Mutual aid societies are far more efficient than the guvmint dole. Have you ever been in a social security office? My god, the overhead for that must be incredible, not to mention the additional costs incurred by employing incompetents instead of skilled people.

                  2. What if it’s because the population’s skillset is misaligned with demand?

                    That’s likely a real problem, but it isn’t exclusive of an underlying demand problem. We didn’t suddenly become misaligned in the last 3 years.

                    Commodities prices will always be an issue. Hey I know one good thing we could do for business certainty–stop being dependent on certain commodities sold by certain Middle Eastern monarchies!

                    But you seem to be forgetting that inflation isn’t just a response to a crisis, it’s the norm in growth times. In the current crisis we just need to inflate a little more than normal growth in order to make up for the employment hole.

                    1. “But you seem to be forgetting that inflation isn’t just a response to a crisis, it’s the norm in growth times.”

                      Come again? The dollar deflated between 1860 and 1900 and I think you would be hard-pressed to argue the US didn’t grow during that era.

        2. The broad money supply is contracting, idiot.

          The Fed apologized to Milton Friedman for doing all the wrong things in 1930-32. They tightened and the credit crisis of that time grew worse. And we did not have another credit crisis until 2008.

          1. The money supply is contracting but the monetary base is not. (The money supply reflects lending more than anything else and we all know the banks are lending right now.) The monetary base is up 169% since 2008. Combine that with the ongoing deficits and the Fed’s purchasing of government debt and confidence will continue to erode in the dollar.

            When foreign investors start dumping dollar-denominated assets because they’re afraid of the devaluation of the dollar, the shit will hit the fan.

            The problem with fiat currencies is that it’s a confidence game. Once confidence begins to decline, it builds on itself and it’s a rush to the exits. Kind of like a bank run, but with far, far more serious ramifications.

            1. …the banks are not lending….

          2. “The broad money supply is contracting, idiot.”

            True. So what? People are saving. This is a great thing, unless you’re a rich corporate fatcat.

      4. The components of the DXY Index are (by weighting): Euro (57.6%), Japanese Yen (13.6%), Great Britain- Pounds Sterling (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%).

        So the dollar, as mostly measured against the Euro, has not been debased. Does the ECB do QE? I’m thinking the ECB is leaning toward that central banking tool..

        1. A race to the bottom between the US and the EU. Right now, I think the EU is winning.

          1. Like I said, I started getting paid by Euros in November and I’m ahead right now.

  22. I, for one, wish they would pass another QE package and another stimulus package just so we can watch them fail and hopefully never have to consider such measures again.

    (Emphasis on the “hopefully”)

  23. QE2 (a misnomer since there wasn’t money being lent out) wasn’t a failure.

    Unemployment is up, growth is declining, and it wasn’t a failure? What was it supposed to accomplish?

    QE2 consisted of the Fed buying Treasuries. I suppose it succeeded in suppressing yields. Of course, by doing so it flat out robbed anyone holding Treasuries.

    Really, it was as close to monetizing the debt as you will get under our system. The cash that went out to buy those Treasuries is now out in the wild. Looks like currency debasement to me. But I could be wrong.

    1. It wasn’t a failure in the sense that you can’t blame the president or the government for anything, because it’s never ever ever never their fault.

    2. Unemployment would have been upper and growth would have been declininger without it.

      Or something.

    3. Unemployment is up, growth is declining, and it wasn’t a failure? What was it supposed to accomplish?

      Lower interest rates on long-term AAA-rated bonds. This is estimated to have been resulted in raising GDP about 0.75% (or 700,000 jobs).

      1. It’s amazing what you can accomplish when the passive voice is used.

      2. why that’s only $850,000 per job!

        1. Actually it’s $0 per job, since no money was spent.

          1. it’s so free, lets print some more.

            1. You will get the usual Tony silence, the guy is thick, but not that thick to realise that if what he says is correct, governments can create full employment at no cost, using accounting tricks.

              1. There’s only so much that monetary policy can do to stimulate consumer demand, which is exactly what I said above. It’s a measure we’ve taken because real stimulative policy has been elusive given political reality.

                1. I like this collective “we’ve”, and the notion that any policy is divorced from “political reality”. We must keep the second foundation underground! Lest it devolve into some sort of godelian-self-contradictory-diagonalization!

          2. Your Jedi mind tricks have no effect on me.

      3. “Lower interest rates on long-term AAA-rated bonds. This is estimated to have been resulted in raising GDP about 0.75% (or 700,000 jobs).”

        Estimated by the same sort of kool-aid drinkers who claimed the stimulus plan “worked”.

        1. Source: Chung, Laforte, Reifschneider, and Williams (San Francisco Fed): “Estimating the Macroeconomic Effects of the Fed’s Asset Purchases.”

          1. Source: Tophat, monocle, ivory tower. Hey why don’t you source the homeless guy on the street. Ask him how rising prices are affecting him?

            1. Tony hates the poor, remember?

  24. Ron Paul just got his long sought Chair on Monetary Policy and is now retiring?

    If you missed it, RP made a fool of himself in his big Fed hearing in June.

    http://www.dailypaul.com/16640…..-6-1-200pm

    Don’t believe me? Look at the comments from his fan club.

  25. You gotta be shitting me. /continues to spend money like it’ll soon be worth less than its weight in clean copy paper.

  26. Typical government appatchcick mindset:

    When you’ve dug yourself into a hole, the solution is to keep on digging.

  27. Hey, I’ve got an idea. If we’re gonna do QE3, let’s just mail every adult $3000 and call the $600B well spent.

    1. You can’t do that! The people will use the money to pay off debt! That will cause deflation!

      1. not to mention it will disproportionately help the poor, a policy the liberals are 100% opposed to.

  28. Bernanke: The US dollar isn’t money.

    1. Here’s the video of Paul vs. Bernanke this morning.

      Unbelievable.

    2. Note that BB says they didn’t lose any money because they got assets like T-bills in return for the dollars they gave out.

      A few minutes later he argues that gold isn’t money, and as a reductio he points out that no one considers assets like T-bills to be money.

      Bonus points to the person who sees the contradiction.

      1. The Bernanke is just a buffoon, just like the rest of this administration. I’d be okay with evil bastards, but these people are too goddamned incompetent to be even half-assed villains.

        1. You know, I have one simple request. And that is to have sharks with frickin’ laser beams attached to their heads!

          1. Dr Evil, if you were truly evil you’d campaign to have Tony become the next Fed Chairman. And shrike as the Treasury Secretary.

      2. He could have said “just like feldspar isn’t money.” Bernanke was perfectly cogent, and admittedly RP was in good form for RP.

  29. This is what US Liberals have been saying all along.

    MONEY is completely made up, you can print more whenever there is a crisis.

    So, why all the human suffering?

    Why not pay for healthcare for the people that get sick?

    Why? because of inflation? When inflation comes…just have Q.E.207,345,2123

    1. Because the government can’t print out doctors? Money doesn’t alleviate suffering, the things that people can get for money do, and provision of those things requires wise deployment of finite resources, including human time and effort. They aren’t simply conjured into existence because you drew a dead dude on a piece of paper.

      Money, especially modern fiat currency, is just a unit of measurement. You can legally double the number of inches in a foot, but women will still laugh at your pecker. Likewise, if you double the number of dollars, people will catch on pretty quickly and most things will double in price. Of course, unless you double the minimum wage, you will effectively cut the real minimum wage (in terms of what minimum wage earners can buy) in half, which will boost employment and productivity but drive wages down for the poorest of the working poor.

  30. Quantitative easing = default.

    Default has been the U.S. policy, and the policy of every country on the planet, since 1913.

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