A Buck here and a Buck there.

'Quantative Easing' is a damn interesting topic and one I think most people do not fully understand - myself included, I would love it if we could have a really robust conversation on this subject and try and gain a weight of opinion as to the merits, negatives and associated conspiracy theories.

I'd like to put a few thoughts and opinions out there but first will explain what 'quantative easing' is according to wiki:

Quantitative easing (QE) is a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system, generally through buying of the central government's own bonds to stabilize or raise their prices and thereby lower long-term interest rates. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

I will describe it in my own words : a government authorises the country's central bank to print more currency that is backed by no tangible resource such as gold or anything else of any value, to increase the supply of money into a country.

Since the global recession we have seen several countries use this tactic for reasons we will discuss later, the ones I know most about (would love to hear about other countries too please) are the UK who have printed £200 billion worth of paper currency. The other is the USA who have printed $1.7 trillion worth of paper currency.

This activity has caused masses of differing opinions across the globe and comparisons with the activities of post World War Germany (Weimar Republic)who printed money in an attempt to meet their 'reparation' payments to the Allies and caused hyperinflation to occur. It's result being a time when people would carry currency in wheelbarrows such was the lack of value and prices could rise on a bread in the time it took to walk into a bakers pick up a loaf of bread and go to pay for it. Now we are not experiencing 'hyperinflation' in the Us or UK yet but the historic lesson is there to be learned. Most recently and somewhat ironically prior to the dawning of modern day money printing by the Western world I used to take the piss out of Mugabe in Zimbabwe who also took to printing money in an attempt to create wealth and money supply who caused hyperinflation in his country and scenes reminiscent of the Weimar Republic. Oh how silly I felt when my so called educated governers in the UK started to print billions of pounds.

But (I hate when people start a sentence with but!) I could see some sense in controlled and measured attempts to increase money supply to kick start the economy. A bit like CPR, the heart of the economy needed (needs?) a little massage sometimes to get it going when it stalls.

then our politicians announced more QE was needed and printed more money, then more again. today there is a suggestion to print even more! The Telegraph 19/11/2010 and not only the UK but the states as well:

its recent programme of quantitative easing, the Bank has printed an extra £200 billion – and is tempted to keep going. Across the Atlantic, the enthusiasm for QE is even greater. This month, the Federal Reserve created another $600 billion

I was dumbfounded. We are all living through the era of 'austerity' measures when governments are telling us massive cuts in spending are imperative to balance the books and here they are just printing more money to get themselves out of a hole. I decided to look deeper at the reasons ehind why they think this will work and have discovered it is all to do with creating inflation. True they do not want hyper inflation they want inflation so that interest rates can be increased which as followers of many other NWO threads is in essence an invention of bankers used to increase their wealth.

The article linked above however approached this topic from a different slant and put the government into the same bracket as money counterfeiters and alluded to criminal activity which I think is a fair point, please do read as it is an interesting perspective.

One of the comments left by readers UK_Debt_Slave leapt out to me and I thought it would be good to look at in full:

Wouldn't you just loved to have been in that committee meeting at the Bank of England when 'the thieves' got together to decide how to sell counterfeitting to the people, eh? Once upon a time, when bankers clipped gold and silver coins and they got caught, they were executed. The US Constitution includes the Coinage Act 1792 in which counterfeitting was a CAPITAL OFFENSE. .........DEATH Once upon a time, bankers and economists got together and decided tey had to create a nice neutral word to describe their THEFT and FRAUD and they came up with the word INFLATION. They duped people into the belief that inflation is 'rising prices' but they never explained that rising prices are a consequence of monetary debasement. When bankers 'print' money, it is no diferent from the bankers of olden times clipping coins. It is the state sanctioned debasement of money and it is THEFT, pure and simple. So when this engineered crisis broke in 2008, they must have known already that they would have to find a new way to sell THEFT to the people. So those lovely charming bankers all got together and while they quaffed port and smoked cigars, some wretched piece of garbage dreamed up QUANTATITIVE EASING as the 'new sales pitch' to fleece the people. How they must laugh whilst they # in our open mouths. They should be strung up, every damned one of them.

www.telegraph.co.uk...-content

It got me to thinking about the conspiracy aspect of QE, previously I just thought the government was at best being stupid and at worst effectively gambling our immediate futures all on red.

There are plenty of anti QE thinkers out there who can explain the economic reasons against QE such as this chap speaking on Bloomberg today - Julian Robertson CEO of Tiger Management LLC (an investment 'legend' according to many sources - whose opinions are well trackable over the last few years by searching on Youtube)JR video

Before I lose the last few of you who have ploughed through my writing so far, I will stop to allow you to take a breath and start the discussion.

A few questions:
1. Are we in danger of hyperinflation any time soon?
2. Is $2.3 trillion of extra cash going to affect the economy detrimentally in the states? Is £200 billion pounds extra going to screw the UK with too much extra cash?
3. How is this money filtered directly into the economy?
4. Does the man in the street benefit really or is this to move economic indicators that will benefit the economy in the long term?
5. Who is really benefiting here? What is the conspiracy if any...???

Your help appreciated in educating me and others. Lets get to the bottom of the real reasons why QE is being used bearing in mind the hideous historic consequences we have seen with governments printing money!

A little outdated but an interesting article that gives a good look at the amount of currency in circulation in the USA,

article: Value of the dollar

Here's a relative nice little vid on the subject:
www.abovetopsecret.com...

I too was surprised at this procedure and it is no wonder why Ron Paul is so adamant about exposing and addressing the Fed Res.
Where is the logic in this situation?

Nice post,
spec

I love that video spec, thanks for posting.

Best quote, 'because the printing money is the last economic refuge of failed empires and banana republics' which sums up a lot of what I was trying to say really.

Deflation is bad for governments and by association bankers who have bought government debt then. The beginning of the conspiracy?

Their ultimate goal is to devalue the dollar by about 20%. Then the government will have less debt. I've never seen a bigger bunch of idiots at the Fed. The dollar has gone down quite a bit in my lifetime. When I was a kid I could buy a candy bar for a nickel, now they're a buck. Usually I could get two penny candies for a penny. Today it's two for a quarter. When I started smoking, a pack was thirty four cents, it can be 20 times or more today. Can't do much with thirty four cents today. What bothers me the most about quantitative easing is that the people who will benefit are in a much better position to weather a financial storm, than say, the man on the street. Buy precious metals, they'd be a good hedge against what's coming.

[Removed unnecessary quote of entire previous post]


Interesting points, when you say devalue the dollar by 20% to result in less debt, as a foreigner I do not see a real devaluation of the dollar. against the pound just three years ago it was 2 bucks for 1 pound recently it went as low as 1.4 to 1 pound. Now its sitting at the 1.55 area again which over the last ten years or so has been its mean (going from memory here). Of course this could have a lot to do with the UK QE program and it has devalued significantly against other currencies. I have also been aware of stuff in the media relating to the Chinese currency being pegged against the dollar at what is considered to be an 'unfair' rate. In addition I remember the Chinese government dumping lots of dollars to alter their foreign currency portfolio balance. None of that seems to have had a severe devaluation effect from the outside.

I do not see how devaluing the dollar reduces the debt of the government - perhaps I am being thick!

Secondly what did you earn in relation to now when smokes were 34 cents a pack has your income kept up with price inflation?

Originally posted by spacedonk
Of course this could have a lot to do with the UK QE program and it has devalued significantly against other currencies.

I meant here 'and maybe the dollar has devalued significantly against'. Missed the 4 hour edit cut off.

Anyhow! No one got any theories on the reason for QE?