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As Predicted, Bernanke Launches QE3 to Help the Big Banks … Which Will Destroy the Economy

Posted By admin On September 14, 2012 @ 2:21 am In Featured Stories,Money Watch,Tile | Comments Disabled

Washington’s Blog [1]
Sept 14, 2012

We predicted last week [2] that Bernanke would launch QE3 this week.

Today, the Fed announced that it will buy $40 billion dollars of mortgage-backed securities per month [3]indefinitely.

This is just another bailout for the big banks [4]. (If the government had instead given money directly to the consumer, we would be out of this economic slump by now [5]).

Bernanke claims that the main justification for QE3 is to boost employment.  This is slightly ironic, since Bernanke’s policies are largely responsible for creating high unemployment in the first place [6].

The real justification is to try to artificially prop up asset prices [7].  But that approach has been proven [8] to be an absolute failure [9].

This is in addition to numerous other easing programs. As CNBC notes [3]:

In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. It also will continue its policy of reinvesting principal payments from agency debt and mortgage-backed securities back into mortgages.


“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative,” the Fed statement said.

And the Fed isn’t stopping there [3]:

“There’s strong hints that they’ll do Treasurys next,” Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London. “They’re pulling out all the stops to try to get this economy to gain some traction and, most important, to get unemployment down.”

This sounds nice … except that the experts say that quantitative easing destroys the economy and –despite widespread assumptions [10] – hurts the little guy [2].

As we said in 2008:  welcome to the Fed’s Weekend at Bernie’s [11].

P.S. Yes … if you’re a homeowner, you will probably want to re-fi.

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URLs in this post:

[1] Washington’s Blog: http://www.washingtonsblog.com/2012/09/as-predicted-bernanke-launches-qe3-which-will-destroy-the-economy.html

[2] predicted last week: http://www.washingtonsblog.com/2012/09/the-fed-is-expected-to-launch-qe3-next-week.html

[3] $40 billion dollars of mortgage-backed securities per month: http://www.cnbc.com/id/49018964

[4] just another bailout for the big banks: http://www.washingtonsblog.com/2012/03/big-banks-continue-to-suck-at-the-government-teat-with-never-ending-stealth-bailouts.html

[5] we would be out of this economic slump by now: http://www.washingtonsblog.com/2009/09/steve-keen-out-thinks-larry-summers.html

[6] responsible for creating high unemployment in the first place: http://www.washingtonsblog.com/2011/07/confirmed-federal-reserve-policy-is-killing-lending-employment-and-the-economy.html

[7] try to artificially prop up asset prices: http://www.zerohedge.com/news/punchline-his-own-words-bernanke-advocates-blowing-asset-bubbles-antidote-depression

[8] proven: http://www.washingtonsblog.com/2009/03/the-geithner-summers-bernanke-plan-to-prop-up-asset-prices-has-failed.html

[9] absolute failure: http://www.washingtonsblog.com/2009/08/bis-slammed-federal-reserve-and-other-central-banks-for-blowing-bubbles-and-then-using-gimmicks-and-palliatives-which-will-only-make-things-worse.html

[10] despite widespread assumptions: http://www.washingtonsblog.com/2012/05/liberal-stimulus-draconian-austerity-two-sides-of-the-same-coin.html

[11] the Fed’s Weekend at Bernie’s: http://www.washingtonsblog.com/2008/09/the-feds-weekend-at-bernies.html

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