The Most Predictable Financial Calamity in History

[traelin0]

In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2). The reason, according to the Fed, was “progress toward its objectives has been disappointingly slow.” So, to try and turn the economy around, the Fed said, “. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.” (Click here to read the complete announcement from the Fed.) QE means the Fed basically creates money out of thin air to buy debt. The current money printing orgy is financing more than half of U.S. government right now. The first round of QE bought toxic mortgage debt and bailed out the bankers.

What was not said in the press release was much more important and may go down as one of the biggest turning points in the history of America. Bringing on QE2 meant QE1 ($1.75 trillion) failed to provide a sustained recovery. It also exposed the $12.3 trillion total spent or loaned by the Fed since the meltdown of 2008 failed to give the economy a lasting boost. The Fed did save some businesses and all the big Wall Street Banks from bankruptcy, but we now know nothing has really been fixed.

This brings me to one really important question. I put this question to a group of well-known market experts, economists, investment bankers and big thinkers. The five guys you are about to hear from have at least one major thing in common. They all predicted tough times for America when most didn’t see it coming. So, I asked them all last week to peer into the not-so-distant future for their take on “What happens when QE2 ends?”

Read more here.

[fairlycrazy23]

This is from QE1, Murphy explaining if the fed has an exit strategy, he also gives a quick primer on fractional banking.

[AgeOfEnlightenmentSCP]

Quantitative easing, stimulus spending, lending-- it's all pushing on a string. The demand is just not there. The credit and consumption binge is winding down, and when it does we are going to have a deflationary recession in the midst of a sea of greenbacks. And when that happens, the dollar collapses. Period, end of story.

[fairlycrazy23]

Most likely in a few years financial pundits will be saying, it sure would have been better if we had taken the hit on mortgage backed securities back 2008 instead of having the fed buying so much of it (that was what tarp was for, but was actually used to buy into banks).

This whole mess is a result of centralized planning and centralized banking.