QuantItative Easing: Elixir or Poison? - by Stephen Lendman
Ahead of the November 11 - 12 G-20 meeting in Seoul, South Korea, the Fed announced QE II, another $600 billion between now and end of June 2011, a flexible figure to be raised or lowered freely, the Fed saying it will:
"....regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability."
An additional $300 billion received from maturing securities will also be used. Easing, in fact, began around mid-year. Wall Street insiders knew it to take advantage, but not the public, QE being used to debauch the currency, harm the economy, and destroy, not create, jobs.
Market Ticker's Karl Denninger calls QE "the largest tax ever imposed on the American people in the history of the nation. It is more than fourteen times the Bush tax cuts....Goldman Sachs believes that Bernanke will impose a total tax through (QE) of more than four trillion dollars over the next two years, or more than fifty-seven times the Bush tax cuts."
How so? Because credit created is going into asset markets (stocks, bonds, commodities, etc.), not the economy. QE I's tax, in fact, diluted stimulus funds, an offsetting tax "directly into the bankers' pockets" for speculation, big salaries and bonuses.
Add to that inflation. According to James Grant of Grant's Interest Rate Observer, QE will create unsustainable asset bubbles and debase the dollar, making products and services more expensive, ending "everyday low prices." Bernanke wants inflation, a hidden tax. Devaluation is being used to get it, no matter the serious consequences.
Economist John Maynard Keynes in his 1920 book, "The Economic Consequences of the Peace," warned us, saying:
"Lenin....was certainly right. There is no subtler, no surer means of overturn the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not on man in a million is able to diagnose."
Denninger is just as blunt, saying unless public outrage stops this, "you're all going to be effectively dead economically.
Your assets will be stripped.
All of them.
Your savings....And, when the inevitable margin collapse comes in the corporate sector, your stock portfolio will detonate again and your pension funds, Medicare, Medicaid and Social Security will be" toast.
There's no middle ground, no place to hide. Either "stop this madness or we all get destroyed. Those are the only choices," or as Tom Lehrer's memorable 1950s lyrics put it, referring then to potential nuclear annihilation, "we'll all go together when we go." All today except bankers, of course.