Because it really is about the economy....Part 1, the Central Bank and Federal Reserve (Fed) and the QE (quantitative easement) Program. The Democrat super majority QE program(s) began in 2009 as a plan of recovery from the Great Bush Recession. The basic premises were that printing more new money and infusing it into the economy would stimulate recovery, stave off deflation and create jobs. In fact little if any of that occurred, and QE amounts to a basic subsidation of banks and investors....you know, that evil 1% Democrats are fond of railing against. Since inception of QE policy, the Fed has printed approximately $4 trillion in unsupported fiat dollars through 2013. That monopoly money has been used to buy back treasury bonds and purchase bad mortgages. In addition, more trillions of dollars were loaned out to banks in special auctions at near zero interest rates. We will never know the exact costs of the various buy backs, auctions, etc. because specific reports of transactions are not provided even to Congress, only an aggregate overview/summary. Costs estimates range between $10-15 trillion dollars to date (June 2014). QE-1: the argument was that the economy would be stimulated to sustain a full recovery, and there was an end date (though not maximum infusion). The recovery was not generated, and in fact weakened in 2010. FAIL. QE-2: the program was reinitiated, not canceled....but the argument was changed from [stimulate recovery] to [avoid deflation (price declines)].Okay, deflation can be a not-good occurrence because during periods of lowering prices: a) business doesnt invest because of the uncertainty of recouping investment or making a profit and b) consumers dont spend as the wait for prices to bottom out becomes the norm. This freeze can be seen in the housing market, for example. Prices fell, over a four year period, by about 40% {dont we wish our property taxes had trended downward with valuations!}. Not until summer of 2012 the that market begin to show signs of recovery, and the recovery has been bumping along the bottom since. QE-3: Ever willing to continue an unsuccessful program and pour good (so to speak) money after bad, only the amounts and excuse ..err, reason... changed (and the removal of any ending date). Sustained recovery did not result from QE 1 or 2, but.....another FAIL. This time the QE was supposed to support jobs creation and could be termed a success if the unemployment rate dropped. Oh, yes, the announced rate has dropped from 8.3 to 6.2 %, but those numbers are not valid. The fact is, the number of people working as a percentage of the available work force (the truest indicator) has dropped and is at lowest level since the 1970s. Jobs themselves have changed from (2008) 60% high pay (over $18./hour) full time with benefits to (end 2013) 58% being low pay (under $12./hour) part time, without benefits and temporary in nature. One of the current deterrents to economic growth is the waiting of business in the private sector to understand and plan financially for the ramifications of Obamacare (a separate issue). Part of the reasoning for QE was that the money would act as a trickle down positive effect on the economy, but rather than invest in business growth the banks and investors receiving the funds have used the monies for corporate bonuses, cash hoarding, stock dividends, and direct investing in and manipulation of commodities futures and the stock markets. FAIL. It is NOT coincidental that income inequality has accelerated since QE, removing any credence from wealth redistribution from the 1% policies rhetoric touted by the administration. At highest levels, QE infusion was $85 billion PER MONTH of worthless debt transfer paper. During 2014 the per month rate has gradually dropped to (most recently) only $35 billion per month.....(and the stock market in the past 2 days of trading gave back all gains since January 1st--coincidence?). None of the averred reasons for initiating or continuing QE policies have stood the test of time, but they have been in place long enough that the withdrawal needs to be protracted if we are not to be faced with sudden and severe inflation. Our debt legacy to our heirs has been greatly increased by the QE programs, and I see no benefits to the working class or the poor resulting from the programs.
Posted on: Mon, 04 Aug 2014 03:53:43 +0000