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The Recession Spectator
The Fed’s Ticking Inflation Bomb
What next in this “recovery”? Obama throwing dollars from Air Force One as fast as Bernanke can print them?
Larry Kudlow, as usual, said it best. Writing in Investor’s Business Daily on September 14, he said:
About 30 years ago, Paul Volcker launched a monumental monetary effort to bring down inflation. As Fed Chairman, he sold bonds, removed cash from the economy, and cared not one whit about rising interest rates.
And it worked. Gold plunged. King Dollar soared, and the drop-off in bank reserves and money extinguished high inflation — and actually launched a multi-decade period of very high inflation.”
This week, current Fed Chairman Ben Bernanke embarked on an absolute reversal of Volcker’s policy. He is launching a monumental effort to buy bonds and inject new money into the economy in order to reignite economic growth and job creation.
It is like history repeating itself, but in reverse. Gold is soaring, the dollar is falling. Something’s wrong with this picture.
QE3
Kudlow is talking about the Fed’s new
policy of QE3, announced last Thursday. Under QE3, the Fed will buy
$40 billion of additional mortgage securities each month with money
it prints out of thin air. QE stands for “quantitative easing,”
which means in English printing new money. It is called QE3 because
this is the third time the Fed has pursued a policy of aggressive
new money creation since the financial crisis.
But as the Wall Street Journal editorialized on Friday, “the difference this time is that Ben [Fed Chairman Bernanke] is unbounded.” By that they mean that the Fed’s policy is to continue the $40 billion a month magic money creation until the job market improves and the recovery takes hold. Or as the Journal further editorialized, “The Fed has declared that it is going all in to cut the jobless rate, no matter what it takes.”
That echoes the recent announcement of the European Central Bank (ECB) that it will pump up the supply of euros there to “whatever it takes” to forestall the European sovereign debt crisis. What we are witnessing is a global trashing of major paper currencies.
The Fed is effectively in a panic now because it knows what the party controlled so-called mainstream press is so carefully keeping from the voters in swing states — real, effective, unemployment is much worse than 8.1%, somewhere between 11.4% and 19% depending on how many of the disoriented, working-age Americans bouncing around out there without a real job are counted in the workforce. And that double-digit unemployment has now continued for the longest time since the Great Depression, with no relief in sight.
Under the Fed’s QE policies, the Fed’s balance sheet of its asset holdings has tripled from about $800 billion to $2.5 trillion. With QE3, that will now “go to $3 trillion, or $4 trillion, or who knows how high?” Kudlow says. Moreover, bank reserve balances at the Fed, created out of thin air by Fed electronic deposits, have exploded from $8 billion in September 2008 to $1.5 trillion today, an increase of almost 200 times.
And make no mistake about, this Fed policy is Obama Administration policy, backed by the Administration and the President himself.
It Won’t Work
The idea behind
quantitative easing is that the new money will increase spending,
investment, exports, and consequently jobs, resulting in the long
overdue recovery at last. The new money will also support the Fed’s
rock bottom interest rates, which is also supposed to spur
investment, the foundation for job creation.
It’s standard Keynesian monetary economics. But it won’t work. Quite to the contrary, it will be counterproductive. With the collapse of communism, Keynesian economics is now the second most destructive doctrine in the world, right behind Islamism.
Printing up new dollars and dropping them from helicopters is not going to make America any richer or more prosperous. That is all that QE is. It doesn’t mean any increased real wealth, income, or production. You can’t trick the real economy into producing more just by running the printing presses.
The new money supply just ends up increasing prices, as there is more money out there bidding for the available real goods and services, which are not increased by money manipulation. That is what Milton Friedman finally prevailed in teaching over 30 years ago. But in this new Obama/MSNBC world, civilization is hurtling backwards, losing learning and advancement, just like Europe after the collapse of the Roman Empire. The only question is how long it will take for market prices to catch up to the new money supply. That short-term period can be extended by economic downturn and recession. But as the 1970s showed, Keynesian economics can produce the miracle of inflation and recession at the same time.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (57) | Leave a comment
More Articles by Peter Ferrara
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http://spectator.org/archives/2012/09/19/the-feds-ticking-inflation-bom
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TLP| 9.19.12 @ 6:48AM
Where do ya start?
Weimar Republic? Zimbabwe? My wallet?
Let's start in my wallet.
According to Bernenke (and, don't the two of them look Cute in their matching outfits?) when, my Master Card Bill comes in the Mail, and it's a Big One? Instead of Cutting back on my Drunken Sailor ways, and my impersonation of A Fool and His Money? I should take out my Visa Card, and pay off my Master Card. Yeah, the interest rate is more, but hey. My Master Card Deficit is gone. And, now I can run it up, again. Sweeeeeeeeet.
"You're so Stupid. You're just gonna get another bill, next Month from Visa, plus whatever you're doing with your Master Card."
Yeah, yeah. "Be Frugal. Live within your means. Get a Job." Blah blah blah.
This is why I'm smart, and you're so Stupid.
I take out my American Express Card, idiot. And, I pay off both of the other Cards. I get just One Bill in the Mail, and I'm left with a Zero Visa/MasterCard Bill.
Can you say - Chaaaaaaaaaaaaaarge it!?
TLP| 9.19.12 @ 7:01AM
"You do realize that your DEBT just keeps getting higher, right?"
What's wrong with you? Always with the Mr. Rain on the Parade attitude. Enjoy the Party. It's not like this is MY MONEY. It's free.
Here. Have some King Crab. King Crab for everybody!
I take out my Credit Card, and I spend what I want. I buy stuff for people so that they'll like me. You can't have too many friends, ya know.
Smart, right?
When one Bill comes in? I pay it with another Card. And so on, and so on and so on. The Party never Stops.
"And, what are you gonna do when you run out of Cards, and the Final Bill comes due?
That's easy. Nothing.
I'll be long gone, by then, and the next guy can deal with it.
Life is good.
Grzmlyk| 9.19.12 @ 9:40AM
Now Paul Krugman would have no problem with the scenario you just painted. Like the quack vet who prescribed ever-larger doses of arsenic until the horse died - and concluded the death was cause by too-small doses, the Keynesians, led by their Garden Gnome Pied Piper, will surely conclude when the sh*t hits the fan that we just hadn't done enough QE because timid conservatives (i.e., the grown-ups in the room) balked.
This is utter insanity - Keynesianism works great for politicians; it's the fiscal equivalent of the perpetual motion machine - but in reality it is a fatal game of "kick the can down the road."
I disagree with Ferrara's guarded optimism that if we reverse policy we can right the ship - we've taken on far more water than we did in the 80s. The future of this ship of state is Davey Jones's locker - regardless of who is at the helm.
I have also become increasingly contemptuous of those, like Bill O'Reilly and Rich Galen, who ascribe beneficent motives to Obama and his ilk. These are malevolent, evil people who are deliberately destroying this country - abetted by legions of utter fools and sheep.
Von Mises Jr| 9.19.12 @ 10:45AM
Actually, the socialist lie about Keynesian economics just as they lie about everything else. Keynes was wrong on his demand-side theory, but he never promoted the increase of taxes during a downturn.
Moreover, the economic nonsense you hear from neophyte Obama must be put in context. Top Federal Spending as a share of GDP was 12% under FDR. We now have 25% and the socialist want to send it skyrocketing upward.
The Laffer Curve only deals with taxes, not spending. So educated conservatives do want lower taxes, but they are more concerned about the higher spending.
Socialist like Obama want to talk about taxing the rich, but it is their spending that is bankrupting the country.
Grzmlyk| 9.19.12 @ 12:55PM
Yes, the bottom line is that Keynes is the "intellectual" father of the welfare state; the mention of his name gives carte blanche to politicians to spend through the roof; I believe he also rejected his own "Keynesianism" later in his life.
But spending is indeed the problem (taxes wouldn't have to go up if government-authored demand-side economics didn't rule the day). One of my issues with Arthur Laffer and the place that the "Laffer Curve" has in supply side debate is the assumption that increased revenue is a GOOD thing; that if you keep taxes at the ideal level - I think it's about 33% - revenues will continue to pour into government's coffers, and revenues are always good.
But we know that new revenues are always gobbled up - and then dwarfed - by new spending.
The problem is that Keynesianism - bastardized though it may be (and wrong in its original assumptions in any case) provides the central tent pole that holds up justification for the ever-burgeoning welfare state. The ever-burgeoning welfare state leads, inevitably, to more demand - demand for taxpayer dollars.
Von Mises Jr| 9.19.12 @ 2:08PM
I believe that you are correct that Keynes realized his errors late in life.
Perhaps we should be clear why Keynesian economics or demand-side is nonsense. Here are the premises:
- Too little demand causes unemployment and low GDP Growth
- Too much demand causes inflation
- So one is due to low demand and the other to high demand, so they cannot occur simultaneously
Problem: Jimma Carters Stagflation and the Misery Index at 22%. How could we have too much demand (inflation) and too little demand (unemployment) at the same time, both in the 10-12% ranges?
Answer: the theory is false and Socialist using Keynesian Economics are full of shit.
Grzmlyk| 9.19.12 @ 2:46PM
Good point, and it's back to the future for America, except this time there won't be the perception of a happy ending.
And, sad to say, Reaganomics, with Carter appointee Volcker at the Fed, did not slay the Keynesian dragon, but further institutionalized it, puting the reckoning off. While I believe Reagan was well-intentioned, he, too, was a deficit-raising, big-government Keynesian (hence my disdain for using the Laffer Curve in a vacuum). Once the monetarists were shorn of their influence and Donald Regan was replaced at Treasury by Keynesian James Baker, Big Government was enshrined as the American life. Sure, revenues poured in and GDP went up. But a bigger portion of that was Govt spending.
The difference is that now the deficit are so big, and the dollar is so weak - and we have run out of international good will. The two strands that are keeping us from plunging into the abyss are the relative weakness of the Euro and the dollar's inertial momentum a the world's reserve currency.
Once the world wakes up to the reality of the U.S. dollar, it's adios, America.
Von Mises Jr| 9.19.12 @ 3:13PM
The only credit I would give the GOP Establishment is that they are the stupid Party, and did not necessarily embrace statism with the evil intentions of the Liberals, Progressives, whatever they call themselves today. Socialist or statist does fine.
But there seems to be passion and dedication among the GOP rank and file for "Real Change." This cannot be said of the Democrats that are unified in their socialism.
They are getting “Obama” change now and it sucks. High unemployment, low GDP, no investment, devalued dollars isn't reflecting well on their socialism.
TLP| 9.19.12 @ 7:08PM
I agree with your conclusions on Keynesiism. (is that even a word?) It's Bernie Madoff in Hyperspace.
I disagree with your assertion that this is Unreconsiable. (that's a word, right?)
And, in my opinion, it's really not that hard to fix.
First, we get rid of Hamas' Deliveror.
Next, we open up EVERYWHERE for Drilling. That's a Million Jobs, Directly, and Ancillary.
More taxes to the Treasury.
We put Glass Steagel back in place.
We Shut Down Fannie and Freddie.
We Repeal every new Regulation, put in place by President No Jobs.
We open up the Mountains in the West, for Mining.
We eliminate Dodd Frank, and we put in place a Flat Tax.
We Repeal Magic Negro Care, and open up the Health Insurance Industry, so that anyone can buy Health Insurance from anywhere they can get it, like every other form of Insurance.
We shut off all Foreign Aid to the Arab World, Restart NASA, and Rebuild our Military.
That took 5 Minutes.
I'm sure that if I had 5 more, I could name you lots more.
I Cut Grass for a living, and I know this Shit.
Aristocat| 9.20.12 @ 4:07AM
There's some kind of typo here:
"And it worked. Gold plunged. King Dollar soared, and the drop-off in bank reserves and money extinguished high inflation -- and actually launched a multi-decade period of very high inflation." If he extinguished high inflation, he didn't launch high inflation. I think you may have wanted to say very "high interest rates", but I don't want to put words in your mouth.
Pecos Pete| 9.19.12 @ 8:44AM
Tim: Very good comments. You must be talking about Congress and their budget processes. Right?
TLP| 9.19.12 @ 6:48PM
Contest on Friday.
Look for it.
BE THERE!
C. Vernon Crisler | 9.19.12 @ 12:13PM
Would that the Fed would just drop money from a helicopter. Then everyone would receive it at once and no problems. However, as Mises pointed out, inflation is insidious because the new money does not go to everyone at the same time. It's the politically favored who get the new money first who experience the "boom" but those who don't get it, those who aren't politcally favored, have to suffer a loss in their purchasing power (rise in prices).
aware| 9.19.12 @ 3:14PM
Exactly right. The banking class has never seen a boom like this.
But Ferrara is completely wrong about 2 things. To try to blame Obama for Fed policy is to blame Bush too since the same damn thing was happening under Bush. It also conflates who runs whom.
But even worse, either he doesn't understand economics in general or he is purposely being partisan by calling current Fed policy "Keynesianism". Bernacke is a Friedmanite and is applying monetarist "fix" just as he promised at Friedman's 90th birthday.
See speech text here:http://www.federalreserve.gov/boarddocs/speeches/2002/20021108/default.htm
What Bernacke is doing is fighting the last war with what Friedman said should have been done. And it's all he knows how to do. Friedman also, like all monetarists, was a big believer in government "stimulus", just as Keynes was.
Monetarists ARE NOT true free market believers. Quite the contrary. They are as guilty of central planner's mentality as Keynesians. The difference between the 2 is theoretical but in application they are the same.
C. Vernon Crisler | 9.19.12 @ 4:31PM
Dittos....
TLP| 9.19.12 @ 7:13PM
Think about it.
If Bojangles had just given US, all of the money that he's given his buddies at the UAW, the Public Employees Unions, and his Big Donour's Bogus Green Energy "Front Companies"?
This Economy would be roaring like a Chinese Rocket to the Moon.
Alan Obama Fan Brooks | 9.19.12 @ 5:26PM
If economics is so important, why do Rightwingers waste so much time with marginal issues such as abortion, guns, and gays? The effect they have on your lives are miniscule.
Alan Obama Fan Brooks | 9.19.12 @ 5:29PM
Sorry, IS miniscule.
With all the fiscal bad news, you fret about chicken-scratch issues?
If every gay, every gun, every abortion disappeared, your lives would differ little; you guys can't tell the wheat from the chaff.
TLP| 9.19.12 @ 6:50PM
We get it.
Your Penis is Miniscule.
We get it.
That doesn't make you a woman.
I'm just sayin.
Stan Redmond| 9.20.12 @ 3:12AM
WOW. That is so clever.
Aristocat| 9.20.12 @ 4:06AM
There's some kind of typo here:
"And it worked. Gold plunged. King Dollar soared, and the drop-off in bank reserves and money extinguished high inflation -- and actually launched a multi-decade period of very high inflation." If he extinguished high inflation, he didn't launch high inflation. I think you may have wanted to say very "high interest rates", but I don't want to put words in your mouth.
rjh| 9.19.12 @ 7:41AM
Reference the picture: Don't these guys look so cool without their ties? They cannot even bother to dress properly for the job.
Pecos Pete| 9.19.12 @ 8:46AM
rjh: It must be Bush's fault that they look so cool and presidential and chairmanish. Actually, they look like what they are: clowns intent on bankrupting the USA.
Cobalt| 9.19.12 @ 9:05AM
Another picture.....
http://www.usagold.com/images/hyperinflation.jpeg
Someone should ask Benny and Barry if they think they are smart enough to guarantee that we won't have hyperinflation. Also, find out what these two clowns know about the velocity of money.
sockmonkey| 9.19.12 @ 7:44AM
In your articles opening quote from the Larry Kudlow article you stated that Volker's policy extinguished high inflation and actually launched a multi decade period of very HIGH inflation. Should that actually be a multi decade period of very LOW inflation??
Hardcard| 9.19.12 @ 7:56AM
I think I smell a soros.
Ryan| 9.19.12 @ 8:18AM
FWIW, it's a VERY good time to refinance a mortgage. I'm dropping from 5.5% to 3.6%, and saving about $100/month (that will get eaten by inflation).
Also, after the 1982 shock, inflation was VERY low during Reagan's term...
Von Mises Jr| 9.19.12 @ 10:51AM
It depends on where you are in your mortgage Ryan. The amortization schedule for mortgages loads all the interest up front and pay down the principal at the end.
Check the amount you are paying in interest versus principal each month before you commit to paying all interest in your current payments.
You also need to figure out if you will stay put. You may pay fees and all interest if you refinance, and if you move sooner rather than later, you will be out the fees and forgo paying down the remaining principal balance.
Then you need to look at the total payout over time.
Ryan| 9.19.12 @ 11:50AM
I mostly did. 25 years left, fixed rate, so I definitely will pay less (and all the fees rolled in) - plan on being in the house for a while. $20k-$25k saved over the life of the loan.
And, I need the cash flow from the savings.
Von Mises Jr| 9.19.12 @ 3:14PM
Good deal, my friend. You did your homework.
Pecos Pete| 9.19.12 @ 8:48AM
Hyper inflation on the way. I wonder of the Social Security inflation adjustment will be higher than, oh, say 1%?
OP4| 9.19.12 @ 9:12AM
I agree with all in the article except the "ticking" part. Inflation is already exploding. I filled my tank with $4 gas and shopped for expensive food last weekend. Inflation is here now.
Look at new car prices - sticker shock is what I get when I see average sedans and SUV in the mid-30's. Everything seems to be going up, including my taxes next year. The exceptions are the value of my house and my salary.
buckeyeman| 9.19.12 @ 9:30AM
None of this high falutin' talk about fiscal policy, monetary policy, Fed policy, banking policy, or whatever, will have any meaning or effect until we change SOCIAL policy. We cannot pay people not to work. We cannot feed people who do not work. We cannot provide shelter to people who do not work. We cannot supply cell phones and free minutes to people who do not work. All these crazy government gyrations have one evil cause: the welfare state.
Cobalt| 9.19.12 @ 10:31AM
You be racist!
TeaPartyNow| 9.19.12 @ 11:10AM
Something that Mitt Romney will grow, the nanny state. He can't convince anyone to take responsibility. & he won't pick up the ball & run with it either. Nice of you to throw it out there though.
Romney is a social liberal, hence his being labled "moderate". Moderate literally means someone who will not fight for social conservatism. & if you listen to what he said on the video, you'd know he is also completely ignorant of the reality of what America is living through. 47% are not citizens. The biggest drain on America are government workers. What do you think marxism is?
FBX1999| 9.19.12 @ 10:20AM
James Wesley Rawles wrote a very scary novel about this very thing - hyperinflation caused by runaway quantitative easing. It is called "Patriots -Surviving the Coming Collapse." Well worth reading, it will wake you up to the ugly realities of a real "collapse." Since "Patriots" he has written two other books on the same event, with the most recent one available for pre-order. Amazon has them all.
Stkman| 9.19.12 @ 10:21AM
Is everyone really that blind? Doesn't anyone want to say what is really going on?
This is nothing more than those in control stealing from the treasury.
Question, where is this stimulus money going? Is it going to the citizens? No. It's going to the corporations and even worse, to the banks. Corporations that don't make a thing in the U.S. and banks that do nothing but manipulate the economy and the citizenry.
Thats all this is. There is no more money for the politicians and elite to steal so they are just going to print it. And just like all the other stimulus and bailout packages before it, in three months the money will mysteriously disapear and no one will be able to figure out where it went.
So the politicians and the elite will then buy gold for themselves knowing they have sold out the country. They don't care that its all going to collapse. They'll have gold that they can cash in in any country they decide to go live in.
We should all wake up. If angry Mulsims can do what they did over a stupid videao, then whay aren't Americans at least having huge marches on Washington to put a stop to this? We are a disgrace to our forefathers and worse, our children.
TeaPartyNow| 9.19.12 @ 11:02AM
The American People have been removed from self government for so long that we literally don't know how to do it anymore. We believe that we are all helpless victims who have no choice but to go along with every thing that government does. No one in America has any idea what any of their governments are doing now & they haven't for a good solid 30 years.
& the right enforces the American Peoples' helplessness by putting forth biased stories like this one, to make us all believe that the answer is better leadership, i.e., more government.
America will decline until the American People realize that we can trust no one. No medias, no governments. We must do the work ourselves. & as soon as it starts getting bad enough to make Americans act, something will happen. Until then, we dwell in la la land.
TeaPartyNow| 9.19.12 @ 11:19AM
Americas' culture today is marxist, almost purely. Our families, lives & medias have been destroyed so much that we believe that we can't watch our governments & control them anymore.
Perhaps through wide spread poverty, we will finally be forced into doing what it takes. Then, & sadly only then most likely will we the people rise again. We can return to self government.
But no one has any idea how much work FROM THE AMERICAN PEOPLE! it will take to get American one nation, under god, indivisible, with liberty & justice for all.
What we have today is miles & miles of despotism burying our lives. We must remove it ourselves or it, will remain. Do you understand?
TLP| 9.19.12 @ 7:15PM
Think about it, Stkman.
If Bojangles had just given US, all of the money that he's given his buddies at the UAW, the Public Employees Unions, and his Big Donour's Bogus Green Energy "Front Companies"?
This Economy would be roaring like a Chinese Rocket to the Moon.
Bill8472| 9.19.12 @ 10:23AM
Forty billion dollars a month? That's $480 billion a year, half a trillion dollars. Well, I'm no economist, but that's a hell of a lot of dollars, with nothing backing them, floating around.
The crash back around 2000 was harmful to my savings for my old age. Then the 2008 crash did more harm, and the ensuing recession has pretty much wiped me out.
Now my Social Security will disappear as I discover that my utilities now cost $1000 a month, and a gallon of milk costs $25. Well, I DID need to lose weight. Just not so much I'll starve to death. But what the hell, I'm old, so maybe I should just get out of the way.
dsapp| 9.22.12 @ 10:34AM
Obama considers you expendable and will ease you out with his rationing of health care.
JP| 9.19.12 @ 10:24AM
The Fed doesn't publish or track the M3 money supply anymore. But, the average Joe can track just a few commodities to see where we are headed. Look at oil, gold, and wheat prices (copper and steel as well). Hedge Fund managers are always on the look out for inflation hedges. We now see money managers in Hong King buying corn, soybean and oil fututes; investors in Frankfurt are now interested in wheat and cotton supplies. A run on commodities is a sure sign of currency weakness. The downside effect is more fuel for food inflation.
There are reasons why the Fed would use QE. But, those reasons are narrow. And QE usually lasts only a few months to half a year. The collapse in the mortgage security market was so severe that even banking giant JP Morgan had reason to fear that it hadn't enough cash to keep its operations flowing. QE allows banks to re-liquidify until the credit and cash markets recover. But, Bernecke has used QE as a political tool to keep Obama's political career going. If ever the was a reason to repeal the 1978 Humphrey Hawkins Law, which gave the Fed a dual mandate of price stability and encouraging full employment, now is the time.
Von Mises Jr| 9.19.12 @ 11:04AM
Generally, what QE does is devalue the dollar and transfer wealth and real income from those who earned it to those who get the new money. So it has a redistribution feature as well as a misallocation of resources. Peter Ferrara hints at this misallocation in that investment is no longer used efficiently, but misdirected since the pricing mechanism is perverted. So the innovative and productive are stolen from to pay for the welfare state.
What appears to be happening is that Ben "the Bank" Bernanke is creating a government bubble that will burst like nothing we have seen before. Government is inefficient, wasteful and corrupt. But the Fed keeps buying Treasuries at 3% Coupon while business and individuals are shut out due to the specific risk of private lending during a financial collapse.
JP| 9.19.12 @ 11:17AM
True. But what is really worrisome is that QE is also going on in Europe, and probably even in China. For the firstime in modern history, we're seeing currency inflation on a massive scale.
Von Mises Jr| 9.19.12 @ 11:44AM
True, JP. Your comments were excellent and your point well taken. I like to read the economics tomes and just adding some theory to your fine examples.
I am sure you have done as I have in buying gold, silver, guns and ammo, and lots of food. This may get ugly, especially if we embark on another four years with the Marxist.
If you simply apply the pre-Bush tax rates to a family income of $70K AGI, that family will pay $400 more a month in taxes.
When you take all the tax ramifications into consideration, I have seen estimates of closer to $6K in taxes on a family earning $50K that I am sure includes ObamaCare taxes to employers and self-employed. And then we will be denied care or at least subject to long waiting lines.
Indy| 9.19.12 @ 7:44PM
Yep, debt on a global scale like we have never seen before, not just government debt but consumer debt and then global currency devaluation...just another Soros play.
dsapp| 9.22.12 @ 10:36AM
When will the bubble burst? Will you make a prediction?
Bill8472| 9.19.12 @ 10:27AM
We always DID wonder how the society would hold up under all those Baby Boomers reaching retirement age and consuming all that Social Security money that isn't there.
Now we know: most of them are going to starve to death by the time they're 70. The economy will be saved and the Boomers will disappear as a problem.
TeaPartyNow| 9.19.12 @ 10:55AM
Still no specifics on the Romney/Ryan plan. You are very good at pointing out what is broken. Too bad Romney/Ryan will make Americas' financial situation very much worse, than if we had just kept Obama.
Did Reagan promise to start several, wars & massive spending on military like Romney does? Oh, you forgot that Romney was going to add several trillions for his fanatical blood lust. How careless of you.
You will lie cheat & steal to get Romney into the Presidency. & perpetrate horrible dishonest & biased stories like this. In 2012, the right wing media is far more biases & dishonest than the left. & that could be easily proven.
Oh wait, grandma & grandpa are going to opt out of medicare to pay for this new debt right? Don't count on in Romney lap dogs.
fmm| 9.19.12 @ 11:05AM
You are remarkable, and your name has nothing whatsoever to do with the Tea Party.
fmm| 9.19.12 @ 11:04AM
Wonderfully clear article as usual. So do the dems really not understand this stuff or do they have an alternative goal, based on such as Cloward-Piven to completely remake this world in their own image? Now that would be an abomination.
Stan Redmond| 9.19.12 @ 2:02PM
The sheeple have been convinced that the end all be all of economic success is the stock price of the Dow Jones Industrial average. Just keep pumping it up and everything looks just great. Look what Obama has done the stock market is over 10,000. I dare you to ask any liberal what this means and you'll get the canned "Obama saved the economy."
And we go back to the old broken window theory. Obama and Bernanke are the window shop owners with an army of brick throwers. Just look at how great business is for Obama's window shop. Just make sure to ignore the fact that the neighborhood looks like detroit. Everythings fine folks.
LindaF | 9.19.12 @ 2:05PM
This reminds me of a time early in my marriage - we didn't have children, and were prone to stupid things.
We drank heavily on Monday. On Tuesday, we felt so awful that we had a "hair of the dog" before lunch. By the end of Tuesday, we were well oiled.
This continued on throughout the week - each day, we would wake up more impaired by hangovers than the day before. And we chose to solve the problem with a "wee dram" - which led to more imbibing.
By Saturday morning, I'd had enough. I laid around all day, sick as a stupid dog (which I was). I alternately watched the room spin around and hung on to the porcelain, fully emptying all contents.
But, by Sunday, I was on the mend. My husband didn't start sobering up until that day, so it took another day longer to feel human. He was still green on Monday.
The moral of the story?
Sooner or later, you've got to get off that indulgent bender. When you do, it's gonna hurt. The only difference between sooner and later is, the longer you wait to begin, the worse you're gonna feel, and the longer it will take to recover.
cicero| 9.19.12 @ 5:52PM
These guys are all very clever. They have figured out how to borrow money from themselves, and make it look like fiscal policy. You have to follow the bouncing debt. The QEs have been used to buy bock existing bonds that are held by banks and union pension funds. The new bonds are held by the Fed - which is to say, the government. When the ultmate occurs, and the government defaults on the most recent batch of bonds, guess who is left holding the empty bag. Thats right - the middle class taxpayer. The same goat that always is left holding the bag. Those guys that sold all of those old bonds for cash have, by then, used the cash to buy gold, or some other commodity that has real worth. This is the same old game. The idea is to keep the spin going just long enough so that the unaware taxpayer is left with the bill.
WaffenSS| 9.20.12 @ 3:07AM
What you are discribing is financial masterbating.
dsapp| 9.22.12 @ 10:31AM
This is exactly the Obamacare plan: ration the seniors' care because they are expendable.