What Exactly is Quantitative Easing 2?

American Monetary AssociationThe term Quantitative Easing 2, or QE 2, has been bandied about in financial and investing circles so much lately that we can’t pretend it doesn’t exist. We were hoping it would disappear from public consciousness, never actually happen, and we wouldn’t have to waste any more of our precious mental resources thinking about. If only life were really that simple. Apparently the dullards at the Federal Reserve intend to follow through with this massive round of bond buying called QE 2.

To backtrack slightly, we realize we’ve been inaccurately making the occasional disparaging comment about the individual and collective wisdom, or lack thereof, of those who make up the Federal Reserve. The truth is that they may or may not be intellectual giants but the real point is that the actions they take are intended to help their own handlers in the international banking cabal, while not killing the goose that lays the golden egg (the American taxpayer and borrower) in the process.

The reality is that QE 2 is more evidence that the Fed is not a group of financially illiterate country bumpkins; they know exactly what they’re doing and that is to milk every last dollar from the public that they can. If it creates a little inflation and deteriorates the general living standard for the rest of us at the same time, so be it. With QE 2, it’s all about the profit. Their profit.

Back to the original question, what is QE 2 exactly? This is the process by which the Federal Reserve prints money in order to buy long-term US Treasury Bonds from the federal government, creating more debt for the taxpayers in the process. The alleged point of this maneuver is to lower borrowing costs by pushing down interest rates at lending institutions who have their loans tied to US Treasury rates. Lower borrowing costs, it is believed by some, will allow more homeowners to refinance and also allow more business owners to qualify for loans.

One school of economic thought thinks borrowing is what makes the American economy go ’round.

What we at AMA see as the blatant problem in this recovery that isn’t, is that business owners are not looking to borrow no matter how low the interest rates go because they don’t trust the economy and they don’t trust it’s handlers – Geithner, Obama, and Bernanke, to be specific.

Sorry Fed. Infinite bond buying isn’t going to send this economy to any good place we can think of.

The American Monetary Association

American Monetary Association

Flickr / tiseb

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