An additional round of “quantitative easing” by the Federal Reserve, or QE2, has been debated by the news media, financial analysts, economists, Sunday morning talking heads, and even Federal Reserve District Presidents. Would it be good or bad? Is it necessary? Will it prevent deflation or lead to hyperinflation?
The main point that should be emphasized is that this is all part of central bankers around the world substituting their beggar-thy-neighbor policies for outright outright protectionists measures by legislatures. The central bankers are all trying to drive down the exchange rates of their currencies in order to boost exports and economic growth. If this continues QE2 may someday be known as Smoot-Hawley 2 after the disastrous Tariff Bill of 1930 which made the Great Depression much worse.
The attacks on Chinese monetary policy could lead to disastrous results.
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Fomenting wars is perhaps the real intention rather than boosting exports because these same economic numbskulls believe that war will bring about economic growth!
Might QE2 actually be a good thing for the country in the long run? It would cause significant inflation, which would make inflation a major issue in the 2012 presidential election. That would likely benefit Ron Paul (if he runs and is allowed to participate in the debates), as that is his signature issue. The timing of the inflation could be October or November 2011, which would be perfect for a last-minute Ron Paul surge leading to victories in the early primaries.
This time around, Dr. Paul already polls around 10%. He was polling at virtually 0 4 years ago. The libertarian movement has already proven our ability to provide Dr. Paul with the money he needs to be competitive via moneybombs. If Obama starts a war, it will be recognized by everybody as Obama’s war and registered Republicans will probably be split on the war. Many people who voted for Obama expecting an end to the wars will be looking for an alternative, which could only strengthen Ron Paul.
I think the result of a significant inflation would be a groundswell of public anger. Yes, there will be economically ignorant people who blame the inflation on business and call for price controls, but if Ron Paul is on TV pointing out how the Federal Reserve intentionally caused the inflation (Ben Bernanke admits that the purpose of QE2 is to cause inflation), I think that message would resonate with most people. The Keynesians who claim that printing money does not cause inflation (including Paul Krugman) will be laughed at, since even Bernanke admits that it does and that he intended to create inflation.
If these policies help Ron Paul get elected and get a FDR-esque mandate to fix our country, then I think they will be a good thing, even if they are obviously economically disastrous. I think unemployment is already due to skyrocket, due to the Obama Tax Increases (none of the Bush tax cuts will be extended, as Obama will veto them when John Boehner’s Congress passes them, and the ObamaCare taxes take effect next year). Combine that with heavy inflation and possibly a canceled NFL season (due to the lockout that is almost certain to happen) and you have the necessary preconditions for revolutionary changes in this country. Libertarians need to make sure that the once-in-a-lifetime crisis that the ruling class is about to create does not go to waste.
It was a popular argument among libertarians a long time ago that public schools being horrible is a GOOD thing, because when people see how terrible the Government-run schools are, they will wake up and want to see change. I think we all know how this has all worked out.
Hyperinflation won’t spark a libertarian fire through the hearts of the people. It will wipe out savings and deliver hardship to millions. These people who have been destroyed aren’t going to go to a political rally and march on Washington: They’re going to desperately try to fend for their lives. Revenge will be the last thing on their minds, and if they consider it at all, it will be against the Wall Street Fat Cats who screwed them over, just like their public school teachers told them.
“if they consider it at all, it will be against the Wall Street Fat Cats who screwed them over, just like their public school teachers told them.”
It’s not like this hasn’t happened before.
Some strong-man politician will step up and declare how he can “save them” from their hardship, and the United States will follow in the footsteps of so many states before it into dictatorship.
“Banksters” will provide a convenient scapegoat. There always has to be a scapegoat.
War – boom – recession – war – boom – recession.
Some idiots actually think that way.
I agree that the QE2 could have a basis in a protectionist Smoot Hawley worldview, but it could also be that the Fed is just trying to inflate out of the gigantic amount of debt thats about to come due?
The chart here shows a large spike in debt that has to be paid next year.
http://www.businessinsider.com/rolling-over-maturing-us-debt-2010-10#ixzz13BmyBXB0
Either way, this is all negative and current policy isn’t going to be helping anybody but the government, central banks, and their associated interests.
“The chart here shows a large spike in debt that has to be paid next year.”
They will also have to borrow another $1.4 trillion to finance the 2010-2011 fiscal year budget deficit.
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