Creating money out of thin air creates inflation. Even Bernanke admitted – questioned by Ron Paul – that inflation is a tax. So the government and the banksters want to tax you without you knowing it. They just want to keep the system afloat until ‘they are ready’ to let it fail. They are about to create the worst depression ever.
Putting more money into the system – or ‘quantitative easing’ – is a move that may be adopted by central banks across the world
KEEP up at the back. The new big thing to save the world economy is “quantitative easing”. Not an upmarket euphemism for a massage, but the latest and most desperate measure yet by central banks to stop a severe recession turning into depression. And it may soon be adopted in the UK.
Quantitative easing is the elegant, sanitised term for the process by which a central bank fends off the threat of deflation by effectively printing new money, or increasing its supply.
A simple model would work like this: the government issues bonds and sells them, directly or otherwise, to the central bank. The bank creates new money for this purpose and pays the government for those bonds. The money is then used by the government to stimulate the economy through public works and infrastructure projects.
Magic new money: have we really walked into this Last Chance Saloon? Yes, we have.
In an extraordinary statement on Tuesday evening, Ben Bernanke, chairman of the US Federal Reserve, announced he was cutting the Federal Funds rate, the bank’s key interest rate tool, to a record low of between zero and 0.25 per cent. That’s zero, as in nothing. Not even in the Great Depression were interest rates in the United States brought so low.
However, it was the accompanying statement that let the move to “quantitative easing” out of the bag. He said the Fed “will employ all available tools” and would buy “large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets”. (“Agency debt” is a bond, issued by a US government-sponsored agency, such as the Federal National Mortgage Association, or Fannie Mae.)
He also let fall that the Fed would consider buying “longer term Treasury securities” – the government’s own debt. This would enable the Fed to bring down the long-term cost of money, thus bringing down US mortgage rates, to put more money into circulation and, not least, to bail out the government by soaking up some of its exploding deficit.