Sen. Jim DeMint
We really ought to quit calling the Federal Reserve’s latest round of quantitative easing “QE3.”
Federal Reserve Chairman Ben Bernanke’s third round of quantitative easing is to go on indefinitely, institutionalizing his money-pumping policies. The Fed will buy mortgage securities, at a rate of $40 billion per month, until he feels better about the state of the labor market — an immeasurable standard subject to the political whims and pressures of the day.
This “quantitative” easing is unquantifiable.
Bernanke skipped right over QE3 and went straight to QE4-ever. After four years of aggressive interventions, there is still no discernible strategy for the Fed to extract itself from the market, prevent inflation, or address the high costs of financing our ever-increasing deficit.
If the first two rounds of easing were supposed to be a “shot in the arm” for the economy, now the Fed is shoving an intravenous drip into it — action that’s sure to foment a nasty dependency on cheap and constant cash.
Our printing press is a dangerously addictive painkiller. The Fed has dumped more than $2.3 trillion into the economy since 2008. Yet, all this cash hasn’t healed the economy, it’s just given it an insatiable craving for more. A recent New York Fed study showed that over half the last decade’s stock market gains, according to one major index, are due simply to expectations the central bank will act.
Under the Fed’s policy, the big will get bigger as large banks make hefty fees off the massive purchases that easing requires.
And failing big-government programs also win. Since the housing meltdown, Fannie Mae and Freddie Mac have dominated the mortgage-securities market.
And the Fed will necessarily have to buy mortgage securities from the housing giants, creating an artificially high demand for those assets and inflating the prices for them.
Even worse, the central bank is deliberately repeating the mistakes that created the financial crisis in the first place — easy money and a distorted housing market.
Unfortunately, these policies are devastating America’s savers, costing them more than $1 trillion in lost personal interest income since 2008.
If QE1 or QE2 had boosted the economy or created the jobs promised, the Fed wouldn’t need to do anything more. QE4-ever is an admission that Bernanke’s preferred prescription doesn’t work.
And now his answer is to give the nation an overdose of bad medicine.
Remember, America’s credit rating was downgraded for the first time in 2011 and the Egan-Jones Ratings Co. downgraded the U.S.’ credit again last week over concerns that QE3 does little to raise GDP, further reduces the value of the dollar and raises the price of commodities.
But these credit downgrades should surprise no one when the Fed’s money-printing is largely helping increase, rather than reduce, our deficit. The Fed — which controls the money supply — is now the single largest holder of government debt. In fiscal year 2011, the Fed purchased 77% of new debt issued by Treasury.
Today, our country is more than $16 trillion in debt. That crushing burden threatens the American way of life, makes us beholden to the nations we borrow from, and shackles our children with bills we’re not paying ourselves.
Congress should move quickly to return the Fed’s sole focus to preserving a stable value for our currency and curtail the broad discretion given to the Fed in favor of more predictable, rules-based authority.
Chairman Bernanke doesn’t need more power; he should have less. Our central bank should not be our economy’s central planner.
- Sen. DeMint: Ben Bernanke’s QE3 Is Actually ‘QE4-Ever’ | THE JEENYUS CORNER (jeenyuscorner.com)
- Romney Claims to Oppose Fed’s Latest QE | THE JEENYUS CORNER (jeenyuscorner.com)
- Fed’s dual mandate on the table in wake of QE3 | THE JEENYUS CORNER (jeenyuscorner.com)
- Dollar Collapse Could Be Imminent: Federal Reserve Expected To Announce QE3 Today | THE JEENYUS CORNER (jeenyuscorner.com)
- Bad Omen: Egan-Jones Slashes U.S. Credit Rating in Response to Fed’s QE3 | THE JEENYUS CORNER (jeenyuscorner.com)
- Gold Sees Surge as Fed Announces ‘Unlimited QE’ | THE JEENYUS CORNER (jeenyuscorner.com)
- Ron Paul Says QE3 Will Lead to a Worse Economic Crash Than What We Saw in 2008 | THE JEENYUS CORNER (jeenyuscorner.com)
- QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar (sgtreport.com)
- (QE 1)+(QE 2) +(QE 3) = ??? Do Three Negatives Make A Positive? (conservativesonfire.wordpress.com)
- GUEST OPINION: Wall Street wins, America loses with the Fed’s QE3 (tauntongazette.com)