I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.Read the whole thing.
[When the Wall Street Journal publishes an Op Ed that could easily have been published by Mother Jones, you know something's up...]
BTW, in case folks have lost their PTB seekrit decoder ring:
ReplyDelete"Quantitative Easing" = printing money.
I was going to do some quantitative easing in the basement but Fay said "No."
ReplyDeleteI read yesterday that there is more money printed daily for Monopoly games than by the US Treasury.
ReplyDeleteMy response was "And, due to Quantitative Easing, the Monopoly money is actually worth more."
If any other nation did this, it would be known as currency manipulation.
What the US is doing is widely regarded as currency manipulation by the rest of the world.
DeleteQE definitely is currency manipulation. Worse, it violates the ole saw about "when one is in a hole, stop digging." What do they do with all the new ink barely dry (euphemism) money...why they use it to hire General Dynamics to operate the Obamacare Call Centers among myriad other things. All the "new money" is kept well within preferred circles, I assure you, they all have incestuous relationships inside the beltway. Like CGI-Federal, wholly owned by CGI Group, Canada, that acquired a long time Arlington, VA, defense contractor named Stanley, Inc.,...and voilà' instant Obama health-care database experts. Lots of sink holes to sink the new stuff in to, and you can print new fiat money right up until no one will take it as a currency of exchange. Then...whoops.
DeleteWell, yeah.
DeleteI should have said, "If any other nation did this, it would be called currency manipulation by the US government."
I should add that Lewy v-e-r-y patiently tried to explain "Bitcoin" to me off line. It is a form of new currency. It may or may not become viable depedning upon who will accept it as a medium of exchange. Lewy knows what it is, I am still mostly puzzled as my maths skill has long ago faded away...other than rudimentary statistics & probability. However, in the Bitcoin world I am lead to believe that there is an arbitrary cap of 21 Million Bitcoins that is a funciton of the mathematics that create Bitcoins in the first place. Imagine a financial world where limits can't be raised and money must be what it is in purchasing power, where what debt exists (always will exist as an engine of free enterprise) is contained within limits set by mathematics, not politicians?
ReplyDeleteOr maybe I still don't understand any of it. It's 50/50 on that.
I do know that when a government published CPI shows 1% to 3% increase, but my actual calculated purchasing power (adjusted), dollar for dollar, is reduced by roughly 20+% over the past 3 years that somebody is lying to me again.
I don't understand the Bitcoin currency either. Maybe our lewy would honor us all by writing a post about it, in layman's terms of course!
DeleteSeconded lady red. I have no clue how it works either.
DeleteThis is what I sent Ari a while back:
DeleteBitcoin "miners" are calculating hash functions... actually reverse hash functions; numbers that, when hashed, equal some value Y. ("Hash" function: think "glorified checksum on steroids". A building block used in crypto applications.)
Now Y = Hash(X) is easy to calculate. But given Y, try to calculate X... it's just brute force search. Guess an X, calculate the hash, if wrong, guess again. Very slow.
The hash calculation actually validates the global ledger for previous Bitcoin transactions; it's a very interesting technical / social construct: creating a financial incentive to do the calculations which create the non-repudiation factor which makes the currency viable in the first place.
https://blockchain.info/wallet/bitcoin-faq
Hahahahahahahahahahahahahah....I think that lewy wrote that in English but I have clue zero what it do mean.
DeleteI don't do math. Math are hard.
I'll remain a bitcoin ignoramus.
Oh, I get it! It's a food equation Fay! Y = Hash(X) where Y is left-over corned beef.
DeleteIt's simple, really.
/staring blankly into space, while cross-eyed and a little twitchy
That's actually closer to the truth than you might expect.
DeleteMathematicians chose the word "hash" for a reason.
Imagine you had a meat grinder which worked very, very precisely, and worked exactly the same way every time.
Given a piece of corned beef take a picture. Make hash. Take a picture of the hash.
Does the picture of the hash allow you to create the picture of the corned beef? No. You'd have to grind a zillion pieces of corned beef to find one which where the picture of the resulting hash matched up.
It's hard to "unhash" a hash and produce the corned beef.
Mining bit-coin is akin to unhashing a hash to find a particular piece of corned beef. It's brute-force trial and error; makes it hard to simply "print" bitcoin. Hence the attraction.
Part of that decrease in buying power is due to the large increases in the cost of foods & fuels, which are considered 'too volatile' to be counted as part of the CPI.
ReplyDeleteThis, of course, keeps the parts of family budgets that have the most painful, out of the accounting, and allows the FED to claim success in their battle against inflation, so they can continue to bail out bank and big business, while patting the rest of us on the head and telling us our decreased purchasing power is all imaginary.
The article was interesting but perplexing. Is he clearing his conscience? He's admitting to being complicit in destruction of the American (and by extension, the world) economy.
ReplyDeleteReading his words gave me the "fun house effect". Smoke and mirrors. Lots and lots of mirrors.
lr, I think his position is actually the same as mine: it seemed like a reasonable thing to do at the time. Unpopular as it was, I thought that TARP and the first QE were sensible policy at the time.
DeleteWhat was wrong was not the emergency response. When the building's on fire, you roll the trucks.
The problem comes when the landlord continues to rent the property to arsonists and facilitate their deliveries of gasoline.
By the second QE, everybody knew what the game was about. That it continues is unconscionable.
But hey, record stock prices. Boom time. What, me worry?
I think the economics are very new, and the dynamics will only be clear to future scientists.
ReplyDeleteThe markets shows signs of addiction to it.
It seems to aggravate the inequities of income in the country.
The only thing that interests me is where I and my family will be when the bubble bursts, the dam overflows, and the piper scampers in to demand payment.