Federal Reserve Poised to Self Destruct

Federal ReserveYou can”t really be blamed if you thought that QE 2 still referred to the Cunard cruise ship Queen Elizabeth 2, but that ocean majesty retired in 2008 and we”re left with a new version of QE 2. This time around QE 2, or Quantitative Easing as it is called in Federal Reserve-speak, is code for a plan hatched by the minions of Ben Bernanke and Barack Obama in a desperate attempt to buy our way out of the economic mess we”ve wandered into as a nation. This predictably spineless reaction by our leaders only reinforces either:

1. How clueless they are
2. How evil they are

Right now it”s a coin flip to decide which, though sometimes we”re inclined to go with another option – that they”re clueless and evil, a truly hideous prospect to contemplate. Stock markets around the world reacted with a global yawn, which leads us to believe that they really don”t get it either.

Bernanke”s big plan is to buy $600 billion (with a B) worth of US bonds to stimulate the moribund economy. Nearest we can figure, the Federal government doesn”t have two pennies to rub together that it didn”t pilfer from a taxpayer, so how are they going to pony up the cash for this prodigious expense? Same way they always do – print more money. Our esteemed Federal Reserve chairman is bound and determined to create money until it causes economic growth. The only problem with that line of thinking is that it has never been proven that growth is the natural consequence of dumping more fiat currency into the system.

Perhaps none can speak to the near future effect of this mindless mayhem than Ron Paul:

“I think the Fed will self-destruct. People will desert the dollar. I think the Chinese are hinting that already. They are not wanting our dollars as much as raw materials. This is a deeply flawed monetary system. Here we have a small group of people who can create $600 billion with the stroke of a pen… I don”t know where people are coming from to think that this can work. What really astounds me me is how tolerant the people are, the people in Congress and the financial market, where did this authority come from? Now somebody outside of the government can spend trillions of dollars and not think anything about it. It doesn”t work, it”s a failure. And next year it will be more. Bernanke is very clear on what he is going to do – he is going to create money until he gets economic growth and there is no evidence to show that just creating money causes economic growth.”

We”d like to say Mr. Paul is vastly overstating the ramifications but he”s not. We hope you”ve been taking our advice about buying income producing properties because that is the only thing that will have real value after the Federal Reserve dies.

The American Monetary Team

American Monetary Association

Flickr / agitprop

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