As Predicted, Bernanke Launches QE3 to Help the Big Banks … Which Will Destroy the Economy

Baby Ben Bernanke
Image via Max Keiser

QE

We predicted last week that Bernanke would launch QE3 this week.

Today, the Fed announced that it will buy $40 billion dollars of mortgage-backed securities per monthindefinitely.

This is just another bailout for the big banks. (If the government had instead given money directly to the consumer, we would be out of this economic slump by now).

Bernanke claims that the main justification for QE3 is to boost employment.  This is slightly ironic, since Bernanke’s policies are largely responsible for creating high unemployment in the first place.

The real justification is to try to artificially prop up asset prices.  But that approach has been proven to be an absolute failure.

This is in addition to numerous other easing programs. As CNBC notes:

In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. It also will continue its policy of reinvesting principal payments from agency debt and mortgage-backed securities back into mortgages.

***

“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative,” the Fed statement said.

And the Fed isn’t stopping there:

“There’s strong hints that they’ll do Treasurys next,” Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London. “They’re pulling out all the stops to try to get this economy to gain some traction and, most important, to get unemployment down.”

This sounds nice … except that the experts say that quantitative easing destroys the economy and – despite widespread assumptionshurts the little guy.

As we said in 2008:  welcome to .

P.S. Yes … if you’re a homeowner, you will probably want to re-fi.

This entry was posted in Business / Economics, Politics / World News. Bookmark the permalink.
  • Forest_GS

    40 billion is nothing to laugh at. It would be nice if we could get some actual smart people into power. Sadly, it seems the USA is going to crumble. The base ideals of the USA are good, but it’s laws concerning politicians have gone off the deep end. Something whistleblowers could of prevented.

  • http://www.marijuanaparty.ca/article.php3?id_article=161 Blair T. Longley

    AH, AN UNLIMITED QUANTITATIVE EASING???

    The next question is whether the politics of Europe
    will enable them to really also do their QE-nfinity?

    The paradox is that as more and more fiat money
    is created out of nothing, at the same time, there
    will be even more fiat money destroyed to zero!

    The only constants shall be the extremely wealthy
    will become even more so, while many others sink.

    That is the most essential insanity of “creating” fiat money.

    Not only was it made out of noting, but it returns to nothing.

    The creation of money out of nothing appears comprehensible.

    However, destruction of money nothing is less understandable!

    THE STORY IS BOTH, WORKING THROUGH TOGETHER …

    They are bookends of continuous processes of FRAUDULENCE.

    The REAL economy is ALWAYS part of a bigger REAL ecology!

    The REAL economy was consistent with those various
    laws of energy, and the general systems theory reality.

    Fiat money was always runaway fraud and robbery,
    & unlimited fiat money is an unlimited fraudulence,
    which shall rob more and more and give it to those
    who set their system up to benefit from doing that.

    … BOTH work together, in their overall system. …

    More impoverishment of many will result in
    widespread destruction of money to nothing.

    That matches a creation of fiat nothing,
    to give away to those who first benefited.

    Around and around it goes, with
    more deflationary destruction,
    AND inflationary creations.

    In the end, those who were destroyed
    are sufficiently destroyed … until …
    they may not destroy more fiat money.

    However, meanwhile, the creations of
    more fiat money continues to runaway.

    Thus, wilder and wilder oscillations,
    which finally ends in hyperinflation,
    which triggers an overall world war,
    and martial law, to actually happen.

    (Presuming those systems were not
    already insane enough to start that.)

  • ZombieDawg
  • gozounlimited

    I guess buying worthless mortgage bonds wasn’t such a good idea after all ….

    QE3 Sparks U.S. Credit Ratings Downgrade From Egan-Jones

    Fearing the negative repercussions of the Federal Reserve’s latest easy-money program, ratings firm Egan-Jones once again slashed the U.S.’s credit rating on Friday.

    The latest downgrade brings the firm’s rating on the world’s largest economy down to “AA-,” which is three notches below the coveted “AAA” threshold.

    Egan-Jones said it believes the Fed’s third round of quantitative easing, which sent stock prices surging on Thursday, “will hurt the U.S. economy and, by extension, credit quality.”

    Read more: http://www.foxbusiness.com/government/2012/09/14/fearing-qe3-egan-jones-downgrades-us-again/
    ***********
    Moody’s downgrades life insurers as QE3 packs a punch

    Harder times for the U.S. life insurance industry, thanks in large part to the Federal Reserve, led Moody’s Investors Service on Thursday to cut its outlook for the group to negative, from stable.

    The carriers, already staggering under the weight of perpetually low interest rates, were dealt another blow that day when the Fed announced a third round of quantitative easing in an effort to boost job growth.

    The central bank said it plans to snap up $40 billion of agency mortgage-backed securities every month and keep the federal funds rate at between zero and 0.25% at least through mid-2015.

    That’s terrible news for life insurance companies, which already have seen returns on their huge fixed-income investments dry up.

    read more: http://www.investmentnews.com/article/20120914/FREE/120919952#

    • gozounlimited

      Peter Schiff On Bernanke’s Operation Screw

      “The Fed is trying desperately to blow another housing bubble…”

      The geniuses at the Federal Reserve have concocted a bold new plan to revive the U.S. economy — print a bunch of money, loan it to Americans at super low interest rates so they can speculate on rising real estate prices, extract the appreciated equity and spend it on consumer goods. In other words, build an economy of real estate, by real estate, and for real estate. The only problem is we’ve been there and done that. The last time it almost destroyed the U.S.economy. I guess almost isn’t quite good enough for the Fed, so now it’s determined to finish the job.

      See more: http://dailybail.com/home/peter-schiff-on-bernankes-operation-screw.html
      ***********
      Tyler Durden: QE3 Gets You High

      Trapped in a flying illusion of safety, we meet Tyler Durden: soap maker, connoisseur of explosives, and a great judge of briefcases.

      The illusion of safety.

      “Oxygen (QE3) gets you high. In a catastrophic emergency, you’re taking giant panicked breaths. Suddenly you become euphoric, docile. You accept your fate. It’s all right here. Emergency water landing – 600 miles an hour. Blank faces, calm as Hindu cows.”

      See here: http://dailybail.com/home/tyler-durden-qe3-gets-you-high.html
      ***********
      Fed President Jeffrey Lacker Tells Charlie Rose: ‘More QE Is NOT The Answer, Wall Street Bailouts Were Wrong’

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      Fed President Jeffrey Lacker Tells Charlie Rose: ‘More QE Is NOT The Answer, Wall Street Bailouts Were Wrong’

      UPDATE: Lacker is the only Fed president who voted ‘no’ on QE3 today.

      Do not skip this.

      Charlie Rose with Richmond Fed President Jeffrey Lacker – Aug. 24.

      Lacker has voted against Bernanke at all 6 FOMC meetings so far this year.

      Lacker quotes:

      “My sense is that monetary policy isn’t capable of having a material effect on growth, or employment, or unemployment at this point,” Lacker said in an interview on the “Charlie Rose” show broadcast today. “I’m in the camp of being a bit of a skeptic about more monetary stimulus at this time.”

      Lacker dissented from the committee’s Aug. 1 decision to reiterate a conditional commitment to keep the benchmark lending rate close to zero “at least through late 2014.”

      Mr. Lacker acknowledged the economic recovery has disappointed Fed officials.

      “It’s really trying our patience. The economy’s growing slowly,” he said.

      Lacker said the Fed’s 2010 asset purchase program “may have increased inflation a bit.”

      “Inflation’s in a good place right now though,” he said. “I don’t think we want to push it up any higher.”

      People may be expecting too much from central banks, which can’t heal all economic problems, the Richmond Fed chief said.

      “Central banks around the world are–have been asked to do too much,” Mr. Lacker said, when asked about the recent actions of the European Central Bank. “Expectations about central banks has gotten a little bit ahead of…reality.”

      The Richmond Fed chief dismissed the argument some economists have made to let inflation rise a bit above the Fed’s 2% goal to help bring down unemployment, saying such a move could imperil the Fed’s hard-fought credibility.

      “You don’t want to drift up to 3 [percent] and then have it be in question because it’ll be costly to get it back down again,” he said.

      Mr. Lacker praised former Fed Chairman Alan Greenspan for raising interest rates in 1994 at a time when inflation wasn’t rising.

      “That cemented our credibility, cemented the commitment the Fed had made to keeping inflation low and stable,” he said.

      Mr. Lacker said the Fed still had work to do making sure that the government is no longer expected to bail out failing firms and that banks don’t become so large and interconnected that one bank’s failure could imperil the whole financial system.

      See Interview: http://www.charlierose.com/view/interview/12518
      ***********
      How Much Does the Fed’s Plan Really Help Main Street?

      It seems as if the banks are an obstacle to the Fed’s latest efforts to generate economic growth. It’s almost impossible to imagine the Fed forcing banks to lower credit card rates, or take lower profits on their mortgage sales.

      Main Street may therefore have to wait a long time for the full effect of the Fed’s latest actions.

      Read more: http://dealbook.nytimes.com/2012/09/14/how-much-does-the-feds-plan-really-help-main-street/?ref=business
      ***********

      Investor euphoria as Federal Reserve launches QE3 risks turning sour

      Financial markets that rise on both good and bad news are not stable

      Markets that rise on both good and bad news are not stable markets. “Risk-off” episodes, in which investor sentiment sours, are likely to return if economic news worsens and confidence in policymakers’ effectiveness drops.

      Read more: http://www.guardian.co.uk/business/economics-blog/2012/sep/14/investors-federal-reserve-qe3-nouriel-roubini

      • gozounlimited

        Sorry ….. bad edit.

  • MissMyRepublic

    Duh. It’s amazing how successful our politicians have been at diverting from the REAL issues by making it about party, therefore dividing. Dividing the United States, pitting party against party, when the issue is so much bigger than that. The Fed needs to be ended now. I don’t support any “politician” that does not address this issue. They are just a contributor to this problem by their insatiable lust for greed and power. How many people have even considered the possibility of the true assassination of JFK within days of signing executive order 11,110? Now, even that is a small issue when it comes to the exponential infiltration of the NWO. Or should I say our governments involvement?….. The Fed has their own police force; the UN is too obvious, ya know. http://www.njspba385.org/?p=news Now, they have changed their website since I posted something on Facebook, just yesterday; omitting a LOT of information. Here is what I was able to save, direct from their website: For the purposes of this section, a law enforcement officer of the Amtrak Police Department, a law enforcement officer of the Federal Reserve, or a law enforcement or police officer of the executive branch of the Federal Government qualifies as an employee of a governmental agency who is authorized by law to engage in or supervise the prevention, detection, investigation, or prosecution of, or the incarceration of any person for, any violation of law, and has statutory powers of arrest.

  • Andrean Tantiono

    nice share and very useful keep up the good work guys. keren keles

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