Happy Birthday QE…

This is how much money you will need to buy a StarBucks Coffee if the government doesn't stop printing money

Wow how time flies and the young-in are growing up right before our eyes as the radio plays Harry Chapin’s “Cats in the Cradle” in the background as the jobless recovery pushes on.  As here it is June and that means our friend QE (Quantitative Easing) One is now a year old, and it’s sibling Quantitative Easing Two is plying its way, to its first this coming autumn.  All the while we the American populous are staring at a “lost decade” much as our Japanese friends did in the past.

For the benefit of those not knowing about the beleaguered parasite the current Administration has attached to our wallet, we take a minute to revisit the concept they thought would be good for us as they assuredly know better than us. As “Quantitative Easing” is a made up term by people who think they are smarter than us and meant to also sound “smart” as so not to be questioned by the common man.  As here the government fired up the printing press, minting new money and instead of releasing it to the open market as in the past.  They decided to buy back government bonds (from the Chinese rhetorically as they are our biggest creditor).

In a way it sounds almost perfect like the Dire Straits song “Money for nothing and Your Checks for Free” as there was no victim here was there (well save for the Chinese who were really PO-ed).  So you’re asking why do it this way, good question and the answer is this would allow the government to reduce debt, sell more bonds thus send money back into the economy in the form of “bail out money”.  So you see Virginia, there really was a victim here and that was you and I because while it took a while for the cows to come home, the end product was the same.

As money is worth only something in reference to its total, so if there were only 100 dollars in the US, then as you can imagine 1 dollar would buy a lot!  However inject billions and the “value” will drop in proportion.  So we sit with our dollar now worth about 20 cents less than last year, what you didn’t notice that withdrawal on your bank statement?  You won’t, as you will see it at the grocery store, fuel pump, car dealership and so on.

So yes you where robbed, and no one even said thank you did they and to add insult to an injured pocket book we are still looking at a “Lost Decade” too!  Ok what’s a lost decade you ask.  Well that is where we go nowhere, things don’t get better and worst of all the world moves on without us as an happened in Japan in the late 1990s running about a decade into area of 2008 or so.  Here too things stayed the same however what did change is they lost their number two economic position in the world to China.

So what did we actually get out of all of this at the end of the day, nothing and now our checks even aren’t free any more…

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About Joseph Campbell

As a strong believer in the fact that "people work for people", it has been a life driver to better to understand the complexities of the various aspects which drive efficiency within this axiom, especially the concepts of leadership. Supporting this, I have been fortunate enough to having experienced this as leader on a global basis over the last decade and half. During this time it has been clear there are three core drivers being Life, Leadership and Economics.
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