Main Street

Brazil, China, World leaders call new US round of quantitative easing ‘clueless’

bernanke on explosive box

“Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.” ” — Matthews & Homan, Bloomberg news

Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.

$600 billion? Considering banks can “create” approximately 100 times their reserve currency in loans (and yes, they are also allowed by law to collect interest on those loans of imaginary money) this means that the US economy will be flooded with $60 trillion in additional dollars from these loans. Considering there’s only $10 trillion currently in the economy that means each dollar will be worth 1/6th of what it is today, that is, unless the US mysteriously starts producing 6 times it’s current GDP over the next few years (impossible).

fractional reserve banking spread chart

fractional reserve banking spread chart

Are you beginning to wonder if the Feds are too small to buy themselves out of this recession? Obama didn’t start this downward spiral but he’s certainly in the thick of it now. It is amusing with the simple assertion by some that say just stop spending as it would be like kicking the train off of the rails only with the global economy in the rail cars.

Did you know about Quantitative Easing before you read this article?

View Results

Loading ... Loading ...

What’s going on is not deflation but a correction to overstated prices for assets. The fact is several consumer consumables have not grown tremendously in price, but certain assets (including stocks) have, largely on speculation (This is baby boomers pushing to have it all and retire wealthy and part of the Myth of Wealth). Having downward pressure on consumer goods is only natural during this economic swing, people have less money to buy so vendors will have to be more competitive on price.

One issue pressing issue is oil since demand is still increasing and with winter coming diesel and furnace oil will only push the price of gasoline higher. This is going to eat up more of peoples disposable income and reduce further purchases, leading to further downward price pressure.

China’s exports to North America will suffer too, meaning they will have less money to buy US debt. It’ll be interesting to see what North America spent for Halloween as a precursor to Christmas. I think the belt tightening is only starting and we’ll be mirroring Japan’s recession but deeper. This recession hasn’t hit China and other exporting nations severely yet, watch for that to come.

Bernanke Defends Bond Purchases, Predicts Stronger Growth by Bloomberg

Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.

“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said yesterday in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”

Bernanke came under fire yesterday from officials in Germany, China, and Brazil, who said his plan to pump cash into the banking system may jar other economies and fail to fuel U.S. growth. Critics including Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, have said Fed policy is encouraging investors to take on too much risk and threatens to undermine the dollar.

“It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said.

Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.” Source: Bloomberg

So to sum up, we have:

• Rising commodity prices, the effects of which (because of hedging) will be felt most severely in the period January–March of 2011.

• A beggar-thy-neighbor race-to-the-bottom Currency War, that might well devolve into a Trade War, which would force up prices on imported goods.

• A Federal Reserve that does not seem to know what it is doing, as regards another round of Quantitative Easing, which is making the financial markets very nervous—nervous about the Fed’s ultimate responsibility, which is safeguarding the U.S. dollar.

• A U.S. economy that is weak to the point of collapse, where not even 0.25% interest rates are sparking investment and growth—and which therefore prohibits the Fed from raising interest rates, if need be.

• A U.S. fiscal deficit which is close to 10% of GDP annually, and which is therefore unsustainable—especially considering that the total U.S. fiscal debt is well over 100% of GDP. (These 4 points were gathered from Silver Bear Cafe).

These factors all point to one and the same thing: An imminent currency collapse.

One more step in the intentional collapse of the US economy, and the bringing down the the American middle class. The American middle class has to be brought to its knees in order for them to possibly accept global governance by these international bankers. (though I don’t think they will accept it as easily as they think)

Many people worry about different groups taking our freedoms away, but our freedom (and sovereignty) has been long gone to financial terrorists. Debtors are ALWAYS beholden to their creditors and countries are no different. The creditors of the countries are the ones making the decisions; like all this “free trade,” which only benefit their global aspirations.

This all because certain politicians sold their countries and people out to these international financial terrorists. Indeed, the one world government is the plan with a few self declared chosen running the show and you and I as serfs – if we survive.(maybe if we are self sufficient)

Have your say