QEternity Does Not Help The American People

The Federal Reserve announced almost a month ago what people incorrectly refer to as QE3 (in should be called QE5).  In reality it should be called QEternity, as there is no target amount of duration for the monthly LSAP (large scale asset purchases).  Their reasoning for this new stimulus was to help the American job market/economy.  Unfortunately, nothing the Fed does is aimed at helping the average American.

QEternity will soon be injecting $85 billion/month directly into the very banks that caused the financial crisis in 2008. To put it into perspective, $85 billion would support approximately 2,975,000 full time minimum wage jobs PER YEAR.  This money is unsterilized meaning it is newly created (printed out of thin air so to speak).  The money is given to the banks who can do one of two things.  They can deposit it with the Federal Reserve and receive interest on their excess reserves (the Fed PAYS the banks NOT to lend out this money) or they can gamble it in the financial market.  If and when the banks ever begin using their excess reserves to buy physical assets (oil, land, mortgages, commodities, etc) or lends it out, it’ll create a tidal wave of inflation that will make $5 gas look cheap.

As a reminder, both Obama and Romney support the Federal Reserve and the its current monetary policies. Keep telling yourself that either candidate serves the American people.


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