"Stealth QE3" Comes to Fruition – Soaring Inflation is Next

As Bernanke came out of his 2 day meeting yesterday and with the end of the QE2 to expired at the end of this month we are now to enter a time in the US history that has not been seen in decades, Soaring inflations with the QE3 plan, higher taxes in order to curb the deficit.

U.S. Federal Reserve Chairman Ben Bernanke did what most everyone expected yesterday (Wednesday) at the culmination of the Federal Open Market Committee's (FOMC) two-day meeting – he left average Americans vulnerable to the pangs of higher prices and soaring inflation.

Will be facing higher unemployment numbers also.

And citing weaker than expected economic growth, the FOMC vowed to remain in an "accommodative stance" by retaining its huge $2.832 trillion portfolio of securities and loans.

The Fed will do this by using the money from maturing bonds and principal payments from its securities holdings to buy more bonds "according to a distribution that is nearly identical to that executed under the Treasury purchase program," according to the New York Fed statement – an extension of the quantitative easing (QE2) program in all but name.

moneymorning.com...

The fed will stop printing money and will allow the debt to mature that will mean more returns for the fed in the long term but not so good for the economy and the national debt, this will prompt the government and congress to find other ways to reduce the spending, that is where taxes increases will come.

Marg6043, I am possibly completely off track here, but as an outsider looking in (with that largest proportion of my family being in America) I can not help but feel that you guys are already enduring (in all but name) harsh austerity measures.. all I hear from my family are cuts, cuts, cuts.. So with a stealth QE3, won't those cuts be even harsher and hurt America even more! it just seems to me (an idiot of a layperson) utter insanity.

Sorry, probably completely off topic.. but I get confused with measures that seem so counter productive and almost inciting the response they are meant to prevent.

reply to post by thoughtsfull


I apologized for some misspellings on the opening I fix that, the QE 2 was the bailout money from November that was used as the "economic stimulus" the fed was printing money like crazy and pumping the economy "financial institutions" with it, this money was to expired eventually and without more stimulus (printing more money) the economy is going to fall flat again but this time with inflation, the stimulus was holding that inflation at bay.

Now the fed is tired of printing money so they are to sit back and wait letting the old debt mature so they can have their returns.

See we have two problems around, the Euro volatility and the Greek problem that even when Bernanke is trying to downplay it is link to the US economy as much as the EU, China and Japan are stuck with the dollars they have on the US debt so US pretty much can do anything they want with the debt and they can not do anything about it but complain.

The only problem with all this is that if we are in deep trouble with inflation and unemployment is going to get worst in the months ahead, the government will be forced to take the strictest methods to control spending.

Ultimately we NEED to stop printing more money.. creating artificial currency backed by nothing only helps deflate the value of the dollar more .. it doesn't FIX anything.. it just delays and enhances a future problem..

another big problem is:::::::

Post office suspends retirement contributions

WASHINGTON — The financially troubled Postal Service is suspending its contributions to its employees' pension fund.

The agency said Wednesday it is acting to conserve cash as it continues to lose money. The post office was $8 billion in the red last year because of the combined effects of the recession and the switch of much mail business to the Internet. It faces the possibility of running short of money by the end of this fiscal year in September.

Sen. Tom Carper, D-Del., called the announcement "the canary in the coal mine moment for the Postal Service."

"If we don't heed this warning and act quickly, the Postal Service as we know it will cease to exist in the very near future," said Carper, chairman of the Senate subcommittee with jurisdiction over the agency.

look for more bailout.

print more to give more ?

this is all over the place.

PostOffice$

reply to post by miniatus


Exactly but this will means the government will have to do more cuts, taxes will be center stage and as the 600 billions of the November bailout starts to pour into the economy (is been held by the banks so far) the inflation will soar, everything will become expensive, small businesses will no be able to pay their employees and unemployment will start to soar again.

See the most of the bailout money that was given to the banks has not been released into circulation, but now it will.

reply to post by xuenchen


And obama is to bring 33,000 troops from Afghanistan in the first round of troops withdraw. You are going to see more of this type of news as the Government is starting to get the wake up call from the fed and start to find ways to save money.

Companies will be doing the same just keep track of the news and you will see the pattern, they are getting ready for the inflation tsunami.

Originally posted by marg6043
reply to post by miniatus

 

Exactly but this will means the government will have to do more cuts, taxes will be center state and as the 600 billions of the November bailout starts to pour into the economy (is been held by the banks so far) the inflation will soar, everything will become expensive, small businesses will no be able to pay their employees and unemployment will start to soar again.

See the most of the bailout money that was given to the banks has not been released into circulation, but now it will.

A big problem with our economy has always been that we bleed money.. With all of the imported items, we print the money here and spend it elsewhere.. on top of that, with offshoring we take the work outside.. we buy more but produce less as time goes on and that's a no win situation.. the more money we print to buy more imported goods continues to deflate our currency..

I realize this is only part of the problem, there are many issues but the issue above is one that's been on my mind for years as being a future thorn in our side..

I explained to a friend this way:

Say we have a group of four people, I print 4 $1.00 bills for us to trade back and fourth for whatever.. but if one of us gives their dollar to someone out of our group .. the value goes from 1/4 of the total printed to to 1/5 because I have to print another .. it will shrink in value each and every time I introduce another.

reply to post by xuenchen


When this businesses start to feel the pinch Is not going to be bailout, because the fed will not print more money, so they are on their own, Banks will have to start releasing that bailout money they have been holding dear too, the debt will soar again on small loans and people will start losing homes again and their livelihood.

No a pretty picture.

Govmint should stop printing money and sell 80-90% of our Military weapons and other assets, especially all of that land they are hoarding. They also need to cut spending, balance the budget, then default.

/fixed the U.S.

Originally posted by Rockdisjoint
Govmint should stop printing money and sell 80-90% of our Military weapons and other assets, especially all of that land they are hoarding. They also need to cut spending.

I'm all for selling the land .. or using the land for something that will stimulate the economy.. not so sure I want to see us selling off 80-90% of our arms to other countries with us having such a low standing to many.. It might be like disarming myself and handing my defenses over to someone who wants me dead.

We can do with not expanding our military.. stop spending into it for new things, maintain what we have, perhaps sell 10-20% to our allies.

Originally posted by Rockdisjoint
Govmint should stop printing money and sell 80-90% of our Military weapons and other assets, especially all of that land they are hoarding. They also need to cut spending, balance the budget, then default.

/fixed the U.S.

edit on 23-6-2011 by Rockdisjoint because: (no reason given)

well just WHO would buy all that military weapons ??

and just WHAt would they do with all of it ??



would YOU feel safer ?

reply to post by xuenchen

well just WHO would buy all that military weapons ??

Many countries would buy our weapons, China, Russia, etc. It doesn't matter who we sell the crap to as long as they pay for it.

and just WHAt would they do with all of it ??

I'm not too sure.

would YOU feel safer ?

Indeed I would.

reply to post by miniatus

It might be like disarming myself and handing my defenses over to someone who wants me dead.

Desperate times call for desperate measures, but we could always manufacture new weapons you know.

Originally posted by Rockdisjoint
reply to post by miniatus

 

It might be like disarming myself and handing my defenses over to someone who wants me dead.

Desperate times call for desperate measures, but we could always manufacture new weapons you know.

Yes we could but they'd already have a huge lead on us by then and when we start bulk manufacturing weapons it would look like a potential act of aggression, much for the same reason everyone is eying china right now.

We can agree to disagree, I'm all for dropping military spending and not putting more weapons into production but I'm not for selling them to people like Russia or China.. or even Israel .. a lot of the weapons we've sold in the middle east have been responsible for killing our own soldiers.

reply to post by marg6043


Admittedly I really am a layperson, I'm a PM and I specialise in fixing broken corporates, but I know next to nothing about economics, all I know is how to make things work in the real world

(so please accept my apologies if I have completely misunderstood what is going on)

When I trawl through historical precedents, it seems to me the consensus is that money printing is one of the ways to debauch ones currency, and that debauching ones currency inevitably leads to inflation.. and as such was deemed a sure fire way to remove stability while overturning the existing rules of society.

(I understand, tho do not know the truth of the source, that Lenin is meant to have said something along the lines of the best way to destroy the capitalist system was to get them to debauch their currencies)

If that is true then the US is debauching it's currency via money printing (like the UK) while the Eurozone is debauching their currency via Greek etc bailouts and China debauching her currency by pegging it to the USD

(this is my simplistic understanding of what China is doing)

All these appear very dangerous methods with huge known risks and yet we seem to be stridently running with these risks as looming on the horizon is QE3, new Greek Bailouts while the Yuan keeps pegged to the mess..

and it seems each of these in their own right presents sure fire ways to ensure we are, as a world, stuffed. But we as a world have 3 of them running together at the same time, which appears to me utterly disastrous.

I do wonder how much more the American, European or even the Chinese peoples can take of this brinkmanship (as that is what I feel it to be) does it really matter which of the 3 will crack first? since it appears we'll all go down together whatever happens...

reply to post by miniatus

Yes we could but they'd already have a huge lead on us by then and when we start bulk manufacturing weapons it would look like a potential act of aggression, much for the same reason everyone is eying china right now.

As long as we keep trade barriers down, no one will come looking for war.

We can agree to disagree, I'm all for dropping military spending and not putting more weapons into production but I'm not for selling them to people like Russia or China.. or even Israel .. a lot of the weapons we've sold in the middle east have been responsible for killing our own soldiers.

Solution: Get our soldiers out of the Middle east.

Originally posted by Rockdisjoint
reply to post by xuenchen
Many countries would buy our weapons, China, Russia, etc. It doesn't matter who we sell the crap to as long as they pay for it.

No, they're not. They just want the blueprints. Or if they can't get that just copy a prototype. American weapons are probably overpriced, anyway.

QE3 actually came in the form of a globally synchronized release of oil from national petroleum reserves when we didn't need it. A sudden (brief) oversupply causes prices to fall, and a drop in energy costs is like a tax cut. It's a government stimulus. It has the side effect of scaring out oil speculators as an artificial intervention by government throws off natural economic predictions.

This will have a brief impact, so expect additional releases.

Government discovered commodity manipulation using reserve releases. At first they only thought of massive injections of the dollar into the economy, then discovered they can do the same with oil. Now what other commodities will they consider, and are they the same as the commodities you've invested in?

reply to post by Dbriefed

QE3 actually came in the form of a globally synchronized release of oil from national petroleum reserves when we didn't need it.

QE1 and QE2 were blatant bailout and monetary easing. I think you are right that lower fuel prices will stimulate the economy over the long run, it's kind of a bailout to the drivers and transportation industry. A little different than monetary easing, the stock market usually drops in tandem with falling oil prices. The investors weren't expecting the release obviously, but it will get priced in fairly quickly.

The tone of Obama's speech the other night concerning reducing the military presence seemed to hint at an austerity budget for the US. The US may be waiting to see what happens in Europe with the Greek bailouts before giving us any details about a QE3.