QE 3 : Zimbabwe Ben goes Full Retard

September 14, 2012

Now he’s done it. Not just the QE3 everybody expected, but an open-ended commitment to keep printing money as long as it takes.

Straight from the Dirty Fed:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.

Translation: we will print $40 billion a month out of thin air because, despite the experience of the past three years, we still believe that printing money fixes the economy.

If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.

Translation: we will keep printing, and maybe even start printing faster, as long as the employment market sucks.

It’s going to be a LONG time before the outlook for the labor market improves “substantially.” Inflation will be a problem long before that. We’ll have $5 gasoline long before we have 5% unemployment and normal labor force participation rates.

Printing money doesn’t create jobs. So Bernanke has just committed to giving us stagflation for as long as he can until inflation gets too out of control.

The 1% thank Zimbabwe Ben for jamming their stocks, gold, and silver higher.

The 99% will have to be content with food and energy inflation.

My friends the SLOBs are going off on Zimbabwe Ben and the Damn Dirty Fed:

The Liberator Today: The Most Dangerous Easing Yet
Doo Doo Economics: FED Commits to Devalue the Dollar by $40 Billion Per Month
The Scratching Post: A Trillion Bottles of Beer on the Wall

And one of my favorite leftie blogs, Naked Capitalism, has a post on QE∞ that sounds positively like something you’d read at the WCV, The Fed’s QE3: No Exit.

The Fed’s launch of QE3 looks more than a tad desperate. If you believe the central premise of the Fed’s action, that propping up asset price gains would have enough effect on consumption to lift the economy out of stall speed, it would seem logical to sit back a bit and let the recent stock market rally and the (supposed) housing market recovery do their trick.


But another big issue is that the Fed looks to have painted itself in a corner. Is the US going to have 3.5% mortgage interest rates forever? If the central banks does manage to create a bit more inflation, how does it think it will exit? A mere 1% increase in interest rates, from 3.5% to 4.5%, increases mortgage payments on a 30 year fixed rate mortgage payments by 13%. That will translate into a meaningful dent in housing prices. And where does the Fed go if a financial crisis or other shock occurs?

The Fed failed to see the crisis coming, failed to push for restructuring of consumer, particularly mortgage, debt, and is now in full bore “if the only tool you have is a hammer, every problem looks like a nail” mode.

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9 Responses to QE 3 : Zimbabwe Ben goes Full Retard

  1. satted on September 14, 2012 at 6:36 am

    I believe this… along with the debates with secure Obama another four years as our President. While I understand the need to “rally” the troops and keep momentum moving… Romney has failed to inspire the base… which is clearly captured in his inablity to “brake-out”. Come Novemember people’s retirement accounts with apprear to be “booming” (the stock market is only adjusting to the new levels of inflation). But come January when pricing starts to normalize to the new M1 volumes while incomes remain flat… pain again for the working man. Expect the marginal people to move more to government subsities.

  2. NEPA Neocon on September 14, 2012 at 6:41 am

    It’s over. Obama won. Let’s start vetting Republicans for 2016 to run against Hillary. Ben Bernake is making sure the economy stays afloat, and the media is making sure no one knows what a failure Obama’s foriegn policy is.

    • Aaron on September 14, 2012 at 1:52 pm

      Nobody wrings their hands quite as nervously as you do NEPA.

      Relax dude, Øbama is done. Listen to us old koot for a change and trust that we know what we’re talking about as we’ve seen this EXACT scenario play out many times.

      Trust me, Øbama is toast.

      • Shoulda Went with Paul on September 14, 2012 at 2:20 pm

        NEPA has good reason to be concerned. Martin Armstong (see link) confirms it as well as people like Gerald Celente. The rest of you sheeple need to wake up. Even Romney, if he really has the balls to do something about the Fed (he’s talked about it trying to steal some of Paul’s thunder … but I doubt he’ll do it, he’s famous for just giving ‘hot air’ to such subjects), has the Fed’s attention. Their pumping of QE3 ensures the economy doesn’t crash until sometime after the election. With their 401k’s and stocks going up and the Fed/Banks artifically creating housing bottoms in the distressed housing markets, most sheeple — especially those who are Dems and Dem leaning Independents — will vote for Obama in November because their ‘reality’ is that the economy isn’t so bad and seems to be improving. The Fed, which is the ‘non Federal’, non electable shadow part of our Government that has the real power, knows this and will wait until they get Obama in before letting things slide and having the sheeple’s ‘reality’ give way to a ‘fading mirage of broken dreams’. http://www.martinarmstrong.org/files/QE3%20Confirms%20the%20Economic%20Implosion%2009-13-2012.pdf .

        • Shoulda Went with Paul on September 14, 2012 at 2:24 pm

          I have a strong feeling, with the way the RNC Convention played out, that Mitt Romney is the 2012 RNC’s version of Gerald Ford and Ron Paul is the 2012 RNC’s version of Ronald Reagan. Romney, like Ford, will likely go down in flames in November. And Unfortunately, Ron Paul is leaving and won’t run in 2016. Who will fill the void as the GOP catharsis continues?

  3. Frodo on September 14, 2012 at 6:42 am

    Drudge shows that Ras has Romney up again. It’s over. Benghazi has turned the electorate against Dufus McSandtrap. Enjoy Hawaii Obozo.

  4. Carl on September 14, 2012 at 6:51 am

    That is the greatest headline I have ever read!

  5. RedStateGal on September 14, 2012 at 6:54 am

    People are upset about government debt; poll after poll shows this. Oil per barrel prices are going higher which means higher everything else. Also fewer manufacturing jobs because manufacturing requires ENERGY so it affects bottom lines at factories. Yes, stocks go higher but most people with enough sense to have a 401-k are freaked by this latest Fed move.

    So, maybe this does help Obama. It is clear that Ben B. thinks it does. But, again, I don’t see it.

  6. tom bombadil on September 14, 2012 at 8:10 am

    NEPA Neocon: worst-concern-troll-ever