Saturday, September 15, 2012

QE to Infinity is Open Lawlessness

Printing To Infinity and Beyond! Bernake announces QE3.

By now the news is out that the Federal Reserve has committed to creating 40 billion new dollars per month (almost half a trillion dollars a year) to buy toxic "assets" from the big banks.  Fed Chairman Ben Bernake has said he will do this indefinitely!   So Bernake will print to infinity and beyond to save the global banks from their reckless gambling and over leveraging. 

The money he is printing to save them is backed by the future earnings of you and your children.  Every dollar he creates to overpay his banker friends for their failed securities also creates a debt instrument which we citizens are expected to make good.   The bankers get the money, and we get the debt used to create the money (along with a bunch of failed "security" instruments).   In a debt-based fiat currency system, the citizens are the collateral.

By degrees the citizens have been conditioned to accept this legalized looting as something acceptable, or in some misguided minds even desirable.    But stripped to its essence its pure fraud.   They have found a way to write checks that wind up being paid from our accounts in the form of higher prices for food, fuel, medical care, and foreign goods.     

The banks who run the fed are colluding with them to trade what is (for now) good money in exchange for failed securities for which there is no market.   If they were not colluding to get an artificially high price for the "securities" then there would be no need for the fed to buy them- the banks could sell them for the same amount on the open market.    The only reason the fed is buying these things is that the banks can't sell them in the free market for anything like what the fed is going to pay for them.   This shows that what we have now is not capitalism.  It's cronyism misrepresenting itself as capitalism.

The big banks have found a no-lose way to gamble all day long.   The winning  bets, they keep.   The losing bets are taken to the fed window where Bernake will now buy them as if they could still be winning  bets.  This activity is called a "moral hazard."  That is, something which actually rewards and encourages more bad behavior by protecting bad actors from the consequences of their mistakes.    The reason credit on main street is drying up, that banks have little to no interest in loaning money, is that the big ones can now make  more money trading little pieces of paper around.     

For those of us who understand what is happening, this is clearly open fraud on an epic scale.    It's a government aided and abetted unjust wealth transfer from the American middle class to the global financial elites.     And we seem to have no choice because both parties appeared to be captured by the people who have control of this "magic money machine."   The political parties see who has control of this machine and that's who they serve- not us.

Bernake is doing this under Obama's watch, but Romney's biggest backers are the same banks who will benefit from this program of selling us their trash for inflated prices (such inflation to come back in inflated prices for just about everything).      Our choices are bleak as both candidates appear to be locked into this policy, which amounts to a sort of Social Darwinism since it justifies government acting with the most powerful in plundering the earnings and wealth of the middle class.    

Our only current choice is how much Socialism (which plunders the middle class ostensibly in behalf of the poor) we want with our Social Darwinism.  Of course, we could still wake up and put an end to the fraud by taking back our government, outside the two-party system.   But of course that would be a lot of work.   It would require facing up to how deep the rot runs.   Perhaps many would prefer to believe that all they have to do is vote for one letter or another and all will be well.   That's a more comforting thought, but it does have one slight drawback- it's no longer true.


Blogger Mark Moore (Moderator) said...

This appears to be the biggest fraud in history, directed against the American middle class.

9:07 AM, September 15, 2012  
Blogger Mark Moore (Moderator) said...

If the government had a program where they would buy all my old lottery tickets at face value then the obvious thing for me to do is take all the capital I would have invested in productive resources and instead use it buying lottery tickets. I would keep the winners and sell the losing tickets to the government.

Substitute "Securities" backed by various credit instruments for lottery tickets, and you understand why more bailouts don't inject more money into the real economy, but rather HURT it as it only encourages more misallocation of resources.

9:23 AM, September 15, 2012  
Blogger Christian Happs said...

Ahh, you took my comment before I could post it! Yes, allow me to cash in my losing lottery tickets for full face value. Theft and corruption of the worst kind in my humble opinion. Good article, Mark. I will be sharing it.

9:39 AM, September 15, 2012  
Blogger Mark Moore (Moderator) said...

Thank you. Perhaps I got the lottery ticket idea from you originally. Did you use it at the meeting the other night?

7:35 AM, September 17, 2012  

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