The Fed’s QE2 Is Set to Go Down like The Titanic, and We’ll All Drown with It.

| November 14, 2010 | 2 Replies

Is the Federal Reserve’s ambitious Quantitative Easing 2 plan, wherein the Fed is going to dump at least 600 billion dollars it created from unicorn farts and Keynesian dreams into the economy to spur borrowing that no one wants and control inflation that doesn’t exist, a good thing? Does pushing inflation and consumer prices higher in the middle of a recession sound like a good thing to you?

No, it doesn’t sound good to me either but I’m not running the Federal Reserve. the guy who is, Ben Bernanke is today pinky-swearing that . he isn’t trying to push inflation up, which took me by a bit of a surprise since just last month, before the Fed met to cook up this big scheme, he complained that inflation was too low and that he wanted a “modestly positive inflation rate over the longer term”. From where I sit, it looks like he’s talking from both sides of his mouth, which is not exactly the sort of stable, well-reasoned, and honest action world markets want from the guy who has his hands firmly wrapped around the steering wheel of the largest economy in the world. Reaction from around the world has been less than supportive. One might even say that the world has wondered aloud whether the people we have in charge has the foggiest idea what they are doing.

I’m willing to call the Fed’s QE plan a bad thing, and not just because a round of QE that was almost three times as large didn’t work earlier this year. I can explain it with this simple video of two cartoon dogs explaining the situation in robotic voices (via Liberty Pundits). Here’s the argument in a nutshell: the Quantitative Easing is a bad thing because of the printing of the money by the Ben Bernanke and his nice beard who will buy the treasury bonds from his friends at the Goldman-Sachs who are the only ones likely to make out on the deal. The video isn’t perfect (it’s a little hard on the Fed which hasn’t been wrong about everything over the last twenty years), but it’s not all that far off.

If that didn’t work for you, here’s another video that explains the situation in a less robotic fashion. There is a white board involved.

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Category: The Economy and Your Money

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