by Michael Snyder
September 14, 2012
Ready or not, QE3 is here, and the long-term
effects of this reckless money printing by
Federal Reserve are going to be absolutely nightmarish.
The Federal Reserve is hoping that buying $40
billion worth of mortgage-backed securities per month will spur more lending
and more economic activity. But that didn't happen with either
QE1 or QE2. Both times the banks just sat
on most of the extra money.
As I pointed out
the other day, U.S. banks are already sitting on $1.6
trillion in excess reserves.
So will pumping them up with more cash suddenly
make them decide to start lending? Of course not. In addition,
QE3 is not likely to produce many
As I showed in a
previous article, the employment level did not jump up as a result of
either QE1 or QE2. So why will this time be different? But what did happen
under both QE1 and QE2 is that a lot of the money ended up pumping up the
So once again we should see stock prices go up
(at least in the short-term) and commodities such as gold, silver, food and
oil should also rise. But that also means that average American families
will be paying more for the basic necessities that they buy on a regular
The most dangerous aspect of QE3, however, is
what it is going to do to the U.S. dollar. Most of the rest of the world
uses the U.S. dollar to conduct international trade, and by choosing to
recklessly print money Ben Bernanke is severely damaging
international confidence in our currency.
If at some point the rest of the world rejects
the dollar and no longer wants to use it as a reserve currency we are going
to be facing a crisis unlike anything we have ever seen before.
The real debate about QE3 should not be about
whether or not it will help the economy a little bit in the short-term.
Rather, everyone should be talking about the long-term implications and
about how QE3 is going to accelerate the destruction of the dollar.
The following are 10 shocking quotes about what
QE3 is going to do to America...
"It means we are weakening the dollar.
We are trying to liquidate our debt through inflation. The
consequence of what the Fed is doing is a lot more than just CPI. It
has to do with malinvestment and people doing the wrong things at
the wrong time.
Believe me, there is plenty of that. The
one thing that Bernanke has not achieved and it frustrates him, I
can tell - is he gets no economic growth. He doesnít do anything
with the unemployment numbers.
I think the country should have panicked
over what the Fed is saying that we have lost control and the only
thing we have left is massively creating new money out of thin air,
which has not worked before, and is not going to work this time."
Peter Schiff, CEO Of Euro Pacific Capital
"This is a disastrous monetary policy;
itís kamikaze monetary policy"
Michael Pento, The Founder Of Pento Portfolio
"This is the nuclear option for them.
This is a never-ending weapon that is being fired at the middle
"People like me will benefit from this."
Economist Anthony Randazzo
"Quantitative easing - a fancy term for
the Federal Reserve buying securities from predefined financial
institutions, such as their investments in federal debt or mortgages
- is fundamentally a regressive redistribution program that
has been boosting wealth for those already engaged in the financial
sector or those who already own homes, but passing little along to
the rest of the economy.
It is a primary driver of income
inequality formed by crony capitalism. And it is hurting prospects
for economic growth down the road by promoting malinvestments in the
John Williams Of Shadowstats.com
"Thatís absolutely nonsense. The Fed is
just propping up the banks."
"I happen to believe that eventually we
will have a systemic crisis and everything will collapse. But the
question is really between here and then. Will everything collapse
with Dow Jones 20,000 or 50,000 or 10 million?
Mr. Bernanke is a money printer and,
believe me, if Mr. Romney wins the election the next Fed chairman
will also be a money printer. And so it will go on. The Europeans
will print money. The Chinese will print money.
Everybody will print money and the
purchasing power of paper money will go down."
Mesirow Financial Chief Economist Diane Swonk
"I think this will end up being a
trillion-dollar commitment by the Fed"
Federal Reserve Chairman Ben Bernanke
"I want to be clear - While I think we
can make a meaningful and significant contribution to reducing this
problem, we canít solve it. We donít have tools that are strong
enough to solve the unemployment problem"
Credit Rating Agency Egan-Jones
"[T]he FEDís QE3 will stoke the stock
market and commodity prices, but in our opinion will hurt the US
economy and, by extension, credit quality.
Issuing additional currency and
depressing interest rates via the purchasing of MBS does little to
raise the real GDP of the US, but does reduce the value of the
dollar (because of the increase in money supply), and in turn
increase the cost of commodities (see the recent rise in the prices
of energy, gold, and other commodities).
The increased cost of commodities will
pressure profitability of businesses, and increase the costs of
consumers thereby reducing consumer purchasing power. Hence, in our
opinion QE3 will be detrimental to credit quality for the USÖ"
We have reached a major turning point in the
financial history of the United States.
It would be hard to overstate how much damage
that QE3 could potentially do to our financial system. If the rest of the
world decides at some point that they no longer have confidence in our
dollars and our debt then we are finished.
the mainstream media does not seem to
understand this, and most Americans gleefully believe whatever the
mainstream media tells them.