• Buying Re-election With QE Infinity

The preponderance of misrepresentations and fiction floated by most of the MSM in these frenetic final weeks of the Presidential election, may in the long term cause much harm to an already overburdened Nation. Making decisions with bad information never works out well.

Near the top of our influence food chain we have Ben Bernanke fuelling inflation of risky assets through a continuation of the quantitative easing strategy. The markets have siphoned money from “savings” accounts where interest rates are at near zero. How great is that? The stock markets are booming, while anyone holding interest-bearing assets continues to get decimated. 

Feckless ignorance and economic illiteracy, praises this bull-run as ‘success’ and a sign of a stable economy returning to health, rather than address what it really is, . . . artificial, and transient gains. The markets have become a bubble, and when this bubble bursts, there will be a dearth of ‘shorts,’ to provide support with a bottom, as occurred during the last crash. Real ‘shorts’ were driven out by regulation and fear of helicopter Ben. 

 Bernanke admonished Congress for not reaching agreement on spending and taxes, in an effort to cover his backside. He should instead drop in on the President, interrupt a dinner with a star-of-the-hour, or interject himself into a golf game, and admonish him for the same thing, and he should point to the fiscal cliff much more forcefully. But we know this will not transpire, and given the timing of his Infinite Quantitative Easing, Ben won’t even bother to educate Obama. The President’s lack of knowledge is to Bernanke’s advantage, and to the advantage of his friends in the inner sanctums of the most senior banking establishments. Bernanke ordering Obama to back-off his anti-business vitriol and his destructive actions, would have more positive impact on jobs than QE3 will ever have. 

 So let’s look for some clarity at why with all the cash apparently floating in the streets, the banks are not putting all these free dollars to work toward the rebuilding of the country, and there is no reduction in the numbers of unemployed Americans. Is there something not quite right which we are not fully aware of? 

The following is a rare but useful piece of critical information most of us can appreciate from the WSJ, “In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.” Yah? So, who cares? If you are unemployed, or if you are a budding entrepreneur, it is not over-reaching to understand that this is not helpful to your cause. Additional administrative burden on small and medium sized businesses will not improve their balance sheets. It will not create new jobs. 

 The galloping expansion of government bureaucracy is an insidious characteristic of its political leadership which the Nation must reverse. I recently outlined how the current Administration ‘used’ the auto industry and abused bankruptcy laws to enrich its friends, and further its progressive agenda, while the MSM ignored or covered up the misdeeds. We once again discern the sound of crickets from the MSM as Ben Bernanke, just before the Presidential election, announces QE3, which is in reality QE Infinity since he is embarking on an open-ended policy of feeding banks. 

 The Fed will expand its holdings of long-term securities by buying up an additional $40 billion a month of mortgage-backed securities for an indefinite period. Who can fathom the depth of the toxic asset well? Not the banks. Not Ben. Not the taxpayers. Infinity is a long time, so Bernanke is jumping into the well, with no flashlight, and with no clue as to its depth. What could go wrong? Since this wasn’t enough, Bernanke also announced an extension of “Operation Twist” in which The Fed sells its short-term bonds for longer-term bonds in the hope that this might drive down mortgage rates. Oh good, more artificial manipulation of some critical economic elements in the country’s foundation. 

QE1 and QE2 have worked so well. Didn’t they? Well sure, the banks receive ‘free’ money, and the stock markets, which really have little to do with the health of the economy, keep rising. The Administration and the MSM have something to brag about. Something which will provide the appearance of economic encouragement. The repressed truth will be disheartening. The unemployed remain so, and the trillions which corporations are sitting on, remain ‘out of the game’ and uninvested. Why? Explicit uncertainty is one reason. 

 The following is an insight on one of the numerous rationales for this pronounced uncertainty. Dallas Fed President Richard Fisher addressing the Harvard Club of New York actually said these daunting and worrisome words, “We are blessed at the Fed with sophisticated econometric models and superb analysts. We can easily conjure up plausible theories as to what we will do when it comes to our next tack or eventually reversing course. The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.” 

Such insight required some audacity from Fisher. Admitting that Bernanke and The Fed have no idea what to do is more than just a bold move. It sends shudders through the spines of every taxpayer in the Nation. These tremors will turn into back-breakers when The Fed decides sometime in the future to dispose of its accumulations. 

 Bernanke has no confidence in America, in its companies, in its ingenuity, in its creativity, or in its entrepreneurialism. Nevertheless, he evidently must keep the White House resident in the house. No one will ever know how many dollars Ben creates in his infinite wisdom to accomplish his objective. Launching his ‘Hail Mary’ just before the election is nothing more than political ingress by a body which should remain out of the game and on the sidelines. Furthermore, The Fed should not attempt to ‘manipulate’ the economy as it has been doing. That has never been The Fed’s intended purpose. 

 The sound of crickets from the MSM on the realities of The Fed and its actions is impairing voter determination.