The horizon is not so far as we can see, but as far as we can imagine

QE 3

The Fed has announced its third quantitative easing program.  To state what should be obvious, the effect on the economy for ordinary people will be minimal, as with QE1 and 2.  It will help banks, financial firms most, other large corporations will also benefit.  If you work at the executive level in one of those organizations, it will help you and raise your salary or bonuses.  It will not significantly raise demand for goods and services and will not do much for the rest of the economy.  Remember, 93% of the gains of the Obama recovery went to the rich, and that was not by mistake.

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19 Comments

  1. joe marchal

    Central banks are not new, The printing and giving money by them to ones cronies is not new. England, France Spain. Ancient greece, Athens and lydia the birthplace of the coin as device of exchange backed by the government, 350 b.c. they all did the same thing. Their currency crashed and they had to returning to the gold standard. It has all happened before, many times. I recommend the book, history of money by Jack Weathaford.
    Bernankie knows all this but he and his fellow agents just pose as fixers of this new unexpected problem. It’s theater an act, they know what their doing and were supposed to be thankful. I wish people could understand this.

  2. Morocco Bama

    .

    How many QE’s does it take to get to the center of a Tootsie Roll Tootsie POP????

    .

  3. Deckard

    US TIPS have gone parabolic on the news – expected inflation is moving up. Brent Sea Oil is over US$115 a barrel – and with the free money given to the financial class the prices will be driven higher through excessive bet taking (in order to get yield due to the low rates). With drought over large parts of the US and other parts of the world, global food prices are going up. And giving the boyz money to play with in the commodities markets (free yield!) at this

    It is absolutely amazing how people don’t/won’t see QE for what it is – a backdoor bailout which in the short term fucks the economy due to inflation/commodity speculation, in the medium term leaves the middle and poor classes much worse off/living even more precariously and in the long term will lead to some new type of surfdom.

  4. Ian Welsh

    Excellent comment Deckard. I should have mentioned the effect on commodity prices. Nice article in the FT recently on how when banks entered the aluminum market prices spiked.

    We have to end speculation in commodities.

  5. Radical Livre

    With drought over large parts of the US and other parts of the world, global food prices are going up. And giving the boyz money to play with in the commodities markets (free yield!) at this

    That’s one often forgotten effect of the American policy of dollar devaluation. During QE1 and 2, oil (and, therefore, food) prices spiked worldwide, and world hunger increased for the first time in years.

    The US wants all the benefits of controlling the world supply of money, and none of the responsibilities.

  6. BC Nurse Prof

    National Fisheries Disasters Declared in U.S.

    With the declaration Thursday of a national fishery disaster, American food producers are now facing catastrophes on two fronts.

    Severely low stocks of key groundfish species such as cod and flounder spurred the declaration by the Commerce Department, after a two-year campaign by members of the region’s congressional delegation. The move clears the way for disaster aid to be allocated to coastal communities.

    Fishery disasters were also declared in Alaska, because of low returns of Chinook salmon in some key regions, and Mississippi, where flooding in the spring of 2011 damaged some of the state’s oyster and blue crab fisheries.

    At the same time, hot and dry conditions continue to plague large parts of the U.S. Plains and southern states as the worst U.S. drought in more than five decades expands its grip on some key farming states.

    At least “moderate” levels of drought have now enveloped more than 64 per cent of the contiguous United States, up from 63.39 per cent the week before, according to the Drought Monitor, a weekly compilation of data gathered by federal and academic scientists.

    “This is the greatest extent of drought we’ve seen all summer,” said Brian Fuchs, a climatologist at the National Drought Mitigation Center at the University of Nebraska-Lincoln. “The drought is easing in the east, but we’re seeing more of it expand in the Central Plains, Rockies and Dakotas.”

    The drought has been exacerbated by long stretches of high temperatures.

    “That has been the kicker all summer, how hot it has been,” said Mr. Fuchs.

    Kansas, in particular, remained almost entirely parched, with more than 60 per cent of the state in exceptional drought and more than 88 per cent in extreme drought.

    Thursday’s fishery disaster declaration is “a huge win” for the region’s fishermen, said U.S. Senator John Kerry of Massachusetts, a Democrat. “Our fishermen are the farmers of the sea and today our fishermen are facing exactly what farmers in the Midwest are facing – a drought,” Mr. Kerry said. “They need our help to get through it.”

    In a statement, acting U.S. Secretary of Commerce Rebecca Blank said she was “deeply concerned” about the potential impact to the northeast fishing industry of lower catch limits.

    “Fishermen in the Northeast are facing financial hardships because of the unexpectedly slow rebuilding of fish stocks that have limited their ability to catch enough to make ends meet,” Ms. Blank said.

    Mr. Kerry and other Massachusetts lawmakers have requested $100-million (U.S.) in economic disaster assistance.

    The crux of the problem for the fishing industry is that despite reduced catch limits in recent years, several key fish stocks in the formerly teeming waters of the Gulf of Maine and on the Georges Bank off the New England coast are not rebuilding, Ms. Blank said.

    That will potentially force catch limits to be even lower for the 2013 fishing season, which starts May 1.

    The Northeast Seafood Coalition, an industry group, welcomed Thursday’s declaration but said regulations are still needed that better account for “natural cycles of complex ecosystems” rather than making fishermen what it said were scapegoats.

    Conditions in Texas, Oklahoma, Kansas, Nebraska, Colorado, and Iowa grew more dire, according to the Drought Monitor.

    _____________________________

    From the Globe and Mail (attributed to Reuters)

    http://www.theglobeandmail.com/report-on-business/international-business/us-business/us-fishery-disaster-adds-to-drought-woes/article4542732/

  7. Doc

    Can you expand a little more on the comment “Remember, 93% of the gains of the Obama recovery went to the rich, and that was not by mistake”? (I’m as ignorant as an apple on the economy, trying to get a wider understanding– good stuff here. Learning a bit.) Thanks

  8. Jtuck

    DOC – This and a little googling may help, in addition to other answers

    http://www.huffingtonpost.com/2012/03/05/1-percent-income-inequality_n_1321008.html

  9. Also you can compare the Obama years with other recent periods of American history here:

    http://www.nakedcapitalism.com/2012/04/growth-of-income-inequality-is-worse-under-obama-than-bush.html

  10. Celsius 233

    Thanks Ben, you dick! I’m getting slaughtered by the exchange rate as the dollar goes to hell against the baht.
    Thai exports are also getting hit by increase in prices and the baht strengthens.
    Not a happy camper; one of the expat pit falls, oh well…

  11. Bernanke subscribes to the theory that wealth can be spent, saying that as people see their 401k’s health improving and their homes gaining value they will spend more money. Wealth cannont be spent, income is what can be spent and increased value in ones assets does not increase one’s spendable income.

    Of course he may actually be right, since Americans did spend the increased value of homes by taking out an equal and offsetting debt, thereby discarding their wealth. So Bernanke is saying, in effect, that people will feel so much better about their increased wealth that they will promptly discard it. Genius.

  12. “How many QE’s does it take to get to the center of a Tootsie Roll Tootsie POP????”

    The world may never know.

  13. Celsius 233

    BC Nurse Prof PERMALINK
    September 14, 2012

    National Fisheries Disasters Declared in U.S.
    ~~~~~~~~~~~~~~~~~~~~
    I was crew on a salmon trawler in 1977; many of the salmon we caught, while barely legal, were ready to spawn at around 3 or 4 years old. My skipper, a very wise and ahead of his time environmentalist, was disgusted with this for a very good reason. These were hatchery raised fish cross breeding with wild stock.
    And they were fucking up the wild Chinook with this cross breeding.
    This was 35 years ago! How fucked up is that?
    Bottom line for me is this; we’re our own worst enemy; and I can’t help but remember the Matrix; the scene where Morpheus is a prisoner of the Matrix guys and the main goon (can’t remember his name) was explaining his view of us humans.
    He considered us a virus that needed to be extinguished; in my brighter moments, I concur.
    We’ll never get it right. So, good riddance! EOM.

  14. This was 35 years ago!

    Well, that was about when the wave crested, as Dr. Thompson might have put it, for the only true environmental movement – right before it was coopted and de-fanged by Corporate Internationale. A Spring made Silent.

  15. Celsius 233

    right before it was coopted and de-fanged by Corporate Internationale. A Spring made Silent.
    ~~~~~~~~~~~~~~~~~~~~~~~~
    ~~~~~~~~~~~~~~~~~~~~~~~~
    Yep, there it is…

  16. Glossary

    The Gold Standard, bubbles are so bad, let’s just skip to the depression.

    QE3, because the Fed won’t admit it run out of dollars, until the ground admits it can run out of oil.

  17. http://www.nytimes.com/2012/09/27/world/europe/greece-faces-national-strike-to-protest-austerity.html

    Iraq was the conservative Vietnam, and “The Great Recession” the 1973 downshift. The rattle apart pressures are growing, in that we have a great wave of profit push inflation. Labor and its gains are not enough to produce any inflationary pressure at all, and, in fact, are in a meso-deflationary cycle. The problem is that the profits that should have been invested in new capital, were invested in military hardware, rapid liquidity, and a parallel society for the wealthy. The need to maintain profits is now so rigid that companies are not even pretending to maintain quality of product.

  18. Celsius 233

    Stirling Newberry PERMALINK
    September 26, 2012

    Labor and its gains are not enough to produce any inflationary pressure at all, and, in fact, are in a meso-deflationary cycle. The problem is that the profits that should have been invested in new capital, were invested in military hardware, rapid liquidity, and a parallel society for the wealthy. The need to maintain profits is now so rigid that companies are not even pretending to maintain quality of product.
    ~~~~~~~~~~~~~~~~~~~
    I also read your piece over at Corrente; it would seem “we” are powerless to affect this meso-deflationary manipulation by big brother; so what’s a working stiff to do?
    I like your comment above, scary as it is to think about;
    “QE3, because the Fed won’t admit it run out of dollars, until the ground admits it can run out of oil.” (SN)

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