I am deeply concerned for our country.

The quantitative easing, so called QE1, QE2 and QE3, have caused some great concerns on my part. QE3 concerns me especially for two reasons.

1. These actions, buying long-term bonds using money printed from thin air, may stimulate the economy temporarily, but it appears likely, at least to me, that we have pushed it too far with QE3. We have greatly increased our money supply and it seems that the specter of severe inflation is looming on the horizon.

2. The timing of QE3 appears to be aligned for a short-term boost in the economy to coincide with the presidential election. Are the powers that be attempting to give the economy a boost to enable the current administration look good at just the right time? Is this an attempt to keep their jobs at the cost of our future? Are Americans really that naive? (We already know the answer to that last one)

Economist, David Wiedemer, and others, suggest that we are in for terrible inflation and severe economic difficulties that will make the recent recession look like the good old days. I tend to agree. This will be due to our irresponsible national spending habits.

Our nation is like an individual who is living by charging up credit cards and going deeper into debt each month. That kind of living is not sustainable. At some point, our nation will no longer be able to successfully print or borrow any more money and things will collapse quickly. Our national debt and printing money to pay for it, is operating in a bubble that is similar to other economic bubbles, and when it pops, things are going to get bad really quickly. The problem is that these kinds of bubbles are easy to rationalize and ignore, that is, until they pop.

There are a number of top economists that support these concerns. The problem is that few Americans are willing to listen. It is impossible to predict when it will all come down, but I want to be ready when it does. Even though I do not like Obama or Romney, I am especially concerned if the current administration continues in office, and I believe that is likely. The current fiscal irresponsibility must end.
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ALL money is from "thin air."

The economics of a nation are far different from the economics of a household. National debt does not work like a personal credit card. At all.

Inflation is a risk, but that's offset by an economy stuck in a rut, and a Republican Party determined to keep it there. And a little inflation that accompanies growth won't hurt very much.

The country still has a capacity for even more debt related to GDP.

The stimulus prevent a depression, but much, much more stimulus spending is necessary to break us out of this rut, along with monetary policies that encourage movement in the economy.

The people with the money are just sitting on it. It does no one else any good that way.

 

We'll see. I hope you are right and I am wrong. I fear that's not the case.


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That's about it.

Abner

 

Surf I am also very very concerned.
Ask a Democrat how much debt is too much and you won't get a straight answer.
Not that it is all his fault but during Obama's reign there our debt has increased about 5 trillion. It increased 3 trillion in the country's first 200 years. So Obama wins an award for that.
Lets say it goes up another 5 trillion if he gets another term. Meanwhile he keeps unemployment at a miserable 8%. People will cheer him as a great president but we will then be at 21 trillion dollars. Of course that will all be Bush's fault.

 

And QE1, QE2, QE3 are?

 

Those are the big government buyouts where they print up more money and do things to attempt to get the economy going again. Things like buying up long-term bonds. It works to some extent, but the consequences could be rampant inflation.


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Yes. Fiscal irresponsibility, plain and simple.

 

I agree. The repercussions are also a problem that is likely too late to stop.

 

As long as Obama is not to blame for the 5 trillion in debt we racked up under his 3.5 years then by that logic Bush is not to blame for the 3 trillion or so he racked up over 8 years. Congress was fully under Democrat control for many years and they were obstructionist in implementing Bush's policies.

Lets not forget that Congress was in Republican control when "Clinton balanced the budget".

These rounds of QE are very inflationary. The fact that we have high unemployment and low GDP growth while the Fed is printing money and lending it at zero interest rates is troubling. The only thing keeping inflation in check is the bad unemployment numbers which are actually worse when you consider all the people who left the workforce.

 

The world will keep turning...I promise.

 

Oh, I feel so much better now! :smile:

 

Yes! The fed is depending on the quantitative easing to work so they can recoup some of the money. If it doesn't, there will be issues. The problem is that the fundamentals are not in place for the economy to actually recover. It's like pouring gasoline on a campfire that has no more wood, the gas will cause a flash, but there is not enough long-term fuel to make it do any good. Wiedemer and others are saying that the QE's will create a flash, but the only long-term result will be severe inflation.

 

Your answer exemplifies another problem. It appears that the only responses to these kinds of concerns is partisan finger-pointing. "It's those Democrats" or "It's those Republicans." What we need is an administration that will rise above all of that, see the deep trouble the USA is in and take action. Something like that would require widespread cooperation across political lines. I'm sad to say that I don't believe there is anyone like that out there.


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The President doesn't drive up the debt by increasing spending or decreasing taxes. Congress does that.

Unless, of course, the President conducts two wars "off book." But Obama didn't do that.

 

Actually, he is. The wars in Iraq and Afghanistan were done "off book." Bush, in the budget requests he submitted to Congress, didn't account for these. Congress went along. These contributed mightily to the debt.

BTW, the debt isn't the big deal being made here. The economy being stimulated into growth is the real issue. The debt is not having any impact on the economy. But people who don't understand macroeconomics are easily scared by it.

 

I am annoyed by what QE3 represents as much as I am about the notion of continual "paper-printing."

QE3 was done to assuage special interests and appear to help the public just as elections are on the horizons. I suspect the banks had the government over a barrel in some fashion or another, and it was "QE3 or else". For all we know, election funding for the Democrats could have been in danger of drying up had this not been approved.

Credit is not as tight as it was a few years ago, so the excuse of buying up mortgage securities to free up credit doesn't hold water. The real story is that the banks want yet another quiet way to take bad mortgages off their books. This not only helps them appear solvent, but also helps them keep housing prices artificially high so they can make more money.

I think the timing is suspect, and I am annoyed at how the party that is supposedly the most opposed to special interests is beholding to . . . wait for it. . . special interests, namely the banking cartel.

 

Very good insight. I agree, the timing is suspect.