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The Fed’s $40 billion A Month Plan To Help Obama

We have been warning conservatives about Federal Reserve Chairman Ben Bernanke’s taxpayer-funded Super PAC that has so-far pumped something like $2 trillion into the economy to help re-elect President Obama.

Yesterday, the Fed doubled down on this failed strategy and announced an unprecedented plan for an open-ended round of Quantitative Easing (QE3) and extended the period for which it will keep interest rates between 0 and 1/4% to mid-2015.

What this means is that the Fed will print money at a projected “burn rate” of $40 billion a month until… forever.

Here is one of the key paragraphs from the Fed’s Open Market Committee statement from yesterday, Thursday, September 13, 2012:

"....The Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions...should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

As finance writer Jeff Macke pointed out in a column on the FOMC announcement, “Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.”

Not HiringThe Fed tied the end of the program to a substantially improved “outlook for the labor market.”

Given the job creation results Obamanomics has achieved so far, “until further notice” could be a very long time.

On average, Obama’s so-called recovery is adding less than 66,000 jobs a month -- or about half of what’s needed just to keep up with population growth. And, despite some growth in manufacturing employment, we are still a half a million jobs down from our pre-Obama mark in that key metric.

To keep up with population growth and get 23 million unemployed and under-employed people back to full employment would take a staggering level of economic growth. The American economy would have to create better than 600,000 jobs a month over the four years of a second Obama term.

As Jeff Macke said in his column on the Fed’s announcement, “There's a certain willful spunkiness to the plan, but in terms of economics it's little short of bizarre.”

It is bizarre unless your goal is to re-elect President Obama.

Pumping something like $3 trillion into the economy through the Fed’s three quantitative easing programs -- on top of Obama’s $5 trillion in federal deficit spending -- has managed to inflate the value of all kinds of assets: oil, gold, the stock market, commodities in general...

This inflation looks like growth to the Obama apologists in the establishment media, but it hasn’t put real people on Main Street back to work.

The good news in all of this is that Governor Mitt Romney spoke against Bernanke’s inflationary strategy and has vowed to replace Bernanke if he is elected. As we have said before, and will keep repeating until the polls close on Election Day, we should all work hard to make sure Romney gets the chance to make good on that vow.

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Conservatives down through history

 I find it interesting that conservatives, who always espouse smaller government, and cutting taxes, have never actually done it..ever. Even when there have been Conservatives in every branch of government, spending has increased, and government has gotten larger. So, for all of your silly paranoid like fear that Bernanke is in the tank for Obama, what has it accomplished?   Recovery from the abyss that GW created will take more than 8 years. It make take more than 10 years. Any student of the depression will tell you that the road to full employment , after what happened Sept. 15, 2008, will not happen overnight. It will certainly not happen by putting more tax money into the hands of the so called "job creators", and supply side economics as a policy is a fairy tale. But I will tell you that every Republican President since Reagan has cut taxes and given refunds on the back of larger and larger deficits. Borrowing billions from China to pay tax refunds, is what you want. And what has the outcome been. More employment? Oh, but wait, that's because we have to do even more cutting in order to get to near a balanced budget, something conservatives know nothing about, except in theoretical blogs like this one.

Incorrect view of conservatives

The response by harschwarz is full of inaccuracies.  His first statement, however, is correct.  Conservatives have simply not done enough to shrink the size of government.  Even Ronald Reagan only slowed its growth.  But under the "conservative" G. W. Bush, government spending grew as though Lyndon Johnson were in office.  Surely, the Republicans can spend as well as the Democrats.  That is precisely why there is a Tea Party. 

Fed Chairman Bernanke's moves will clearly help President Obama, whether or not he is intending to.  Near-zero interest rates will push money into the markets and out of savings accounts, amking the economy look stronger than it is.  Further, the lack of interest will hurt seniors and others who have money in banks, as they will be harmed by inflation and receive little interest to recover the loses in purchasing power.  It is hard to believe Bernanke doesn't know his moves will help Obama, and since Mitt Romney has stated that he would not reappoint Bennanke, why would Bernanke not want Obama re-elected?

Harschwarz also suggests that the deficit--and borrowing from China--hurts, but he doesn't call out President Obama for borrowing trillions and for the FDR-like explosion in government debt.  He is right when he criticizes "putting more tax money into the hands of "job creators."  Solyndra is a prime example of that. 

I don't recall any Tea Party conservatives calling for increased government spending, bailouts to companies, or crony capitalism.  Criticize President Bush all you want, Mr. Schwarz.  I doubt anyone reading your post disagrees.  But be consistent, criticize all those who want to try to spend our way out of this economy.  It won't work regardless of who does it.

New Banker Bailout Diisguised as QE3


New Banker Bailout Disguised As QE3

Latest move represents huge transfer of wealth from the middle class to the elite

Alex Jones & Paul Joseph Watson
Friday, September 14, 2012

While Ben Bernanke’s announcement that the Federal Reserve will embark on an open ended scheme to purchase $40 billion in mortgage-backed securities each month has been touted by the establishment media as the beginning of “QE3″ it is in fact nothing less than another banker bailout in disguise.

While many have rightly attacked the Fed’s policy of printing money as a band aid that does little to solve the economy in the long term, this new move isn’t even about that. The policy announced yesterday will merely see the Fed use taxpayer money to purchase more bad debt in the form of junk mortgage-backed derivative based securities that have been sold over and over again.

This has nothing to do with getting the economy going again and will only serve as yet another huge wealth transfer from the middle class to the elite.

While the fed claims the move will facilitate more lending it will do nothing of the sort. As the China Securities Journal reports today, “QE3 is not likely to result in more loans.”

“The truth is that it isn’t as if banks are hurting for cash to loan out,” writes Michael Snyder. “In fact, right now banks are already sitting on $1.6 trillion in excess reserves. Just like with the first two rounds of quantitative easing, a lot of the money from QE3 will likely end up being put on the shelf.”

Indeed, after the TARP bailout back in 2008, the Federal Reserve paid the big banks to withhold loans, because the bailouts are not about reinvigorating the real economy, they are about propping up the stock market for the rich while the real economy goes to the dogs.


QE1 and QE2 both did absolutely nothing to rescue the economy. Despite a massive injection of quantitative easing over the last four years, the unemployment rate in the United States has barely improved.

In addition, the “wealth gap” between rich and poor has vastly increased. This again illustrates how actions such as the one announced yesterday have nothing to do with helping the little guy get back on his feet and everything to do with the concentration of financial power into fewer hands.

As George Washington’s Blog points out, “This is just another bailout for the big banks. (If the government had instead given money directly to the consumer, we would be out of this economic slump by now).”

“Bernanke claims that the main justification for QE3 is to boost employment. This is slightly ironic, since Bernanke’s policies are largely responsible for creating high unemployment in the first place. The real justification is to try to artificially prop up asset prices. But that approach has been proven to be an absolute failure.”

Indeed, the Federal Reserve admits that its new program will do little to alleviate the suffering of jobless Americans.

“I want to be clear — While I think we can make a meaningful and significant contribution to reducing this problem, we can’t solve it. We don’t have tools that are strong enough to solve the unemployment problem,” Bernanke said yesterday.

The fact that we haven’t seen massive inflation since the start of the Fed’s so-called quantitative easing policies illustrates how the money is not even being pumped back into the economy. The only real inflation has been in the luxury sector because the rich are getting richer and spending more while the poor continue to live on or below the poverty line.

QE3 is merely another massive wealth transfer and a tool of waging economic warfare on the poor and middle class, another manifestation of neo-feudalism to destroy America and have the global bankers pose as the saviors.

The economy is being destroyed by design so that the elite can exploit the fear and chaos caused by the collapse in order to centralize power and control. This can also be seen over in Europe where Jose Manuel Barroso is exploiting the crisis in a bid to turn the EU into a “federation”.

Bernanke’s latest move is merely a continuation of the engineered takeover of the U.S. economy and will achieve nothing aside from enriching the wealthy to an even greater degree while ensuring the rest of us continue to see outliving standards decline on the path to economic serfdom.