From Forbes:
(This ties in very nicely to the QE3 story below)
In what can be viewed as a desperate effort to bail out the failed economic policies of the Obama Administration, the Federal Reserve this week committed to purchasing $40 billion a month of mortgage backed securities for an unlimited time and to keep interest rates artificially low until at least mid 2015. By so doing, the Fed has embarked upon a course that invites higher inflation, falling living standards, and a global financial crisis.
The Federal Open Market Committee’s (FOMC) official statement, released Thursday after the conclusion of its meeting, pays lip service to price stability, which it defines as an increase in the price level of 2% a year, or a 33% devaluation of the dollar over the next 20 years. However, the Fed also left little doubt that for the foreseeable future, it will print money in an effort “to support a stronger economic recovery.”
FYI: Mitt Romney Paid 30%, Not 13% In Federal Income Taxes Charles Kadlec Contributor
The fundamental problem is the Fed’s policy stance is internally incoherent. Stabilizing the value of the dollar would require the Fed to provide as much, or as little, money as the world demands at a stable price level. In other words, price stability requires the quantity of money to be the variable.
However, the Fed has chosen the opposite policy. Now, the quantity of money will increase at a fixed, $40 billion a month, which, by necessity means any change in the demand for dollars that does not precisely match the increase in the dollar’s supply will produce a change in the price of the dollar. In other words, the Fed’s new policy will lead to unstable prices.
Hey, Ben! Q1 & Q2 didn’t work, so what makes you think Q3 will? Or did Obumble give your marching orders in order to possibly get a couple of more votes?
Better start working on your resume, because I don’t think you’re going to remain in your current job very much longer . . .
J Soden: You’re right of course and this reminds me the phrase that “doing the same thing over and over and expecting different results is a mark of insanity.” But, what is far worse is we have a man that is so self assured, so confident, so arrogant, that HE is must be right and that HE must make this work, that HE is willing to risk the stability of this nation’s currency and all that could follow if it implodes in inflation just so HE can vindicate himself and be re-elected. You can’t violate the basic rules of supply and demand. If we dump too much money into the system where there is no demand for it we’re headed for serious inflation.
One of Obama’s biggest failures right from the start was keeping Bush people in place. Bernanke had this job under George Bush and we all know how that worked out for us. What does Obama do? Keep the same guy in place and he is doing the same crack job. UNBELIEVABLE.