Last week we looked at who gets all the money the FED prints and before that we looked at the process the FED uses to get the money "Out of Thin Air" and into the hands of people who can spend it. Today we are going to look at what is "Quantitative Easing" well it sounds cool anyway... ~editor What is Quantitative Easing? Fed’s Perspective & Writings Part 3 in a 6 Part Video Series on Quantitative Easing A Wall Street Journal article (10/27/10) on quantitative easing (QE) hints the Fed will take a middle of the road approach in terms of the size and duration of QE2. As we would expect, the stock and commodity markets’ initial reaction is negative. A middle of the road … [Read more...]
How the FED Prints Money
Printing Money: The process of "printing" money is always a kind of mystery to most people since only about 10% of the total money supply is actually in physical currency. Technically most of the money isn't printed so the term should be "money creation" or "money supply expansion" but "printing money" is used euphemistically to include all forms of expanding the money supply. The monetary base (or money supply) is typically controlled by adjusting monetary policy. This is usually done by the central bank (in the U.S. this is the Federal Reserve Bank or FED). The FED changes the monetary base through "open market transactions" (i.e., buying and selling of government bonds). The FED also … [Read more...]
How You Can Help Take Money Creation Out of the Hands of the Government
Updated February 2014 We all whine and complain about it but usually there isn't much we can do about inflation. About our only choice is to vote with our feet, we can move our funds from one doomed currency to another. This is what the Forex industry is all about. The only other alternative to fiat currency is hard assets like gold. As I've said many times, the value of our money is based on the supply and demand fundamentals. Right now the demand for U.S. dollars is falling and the supply is rising because the government has the ability to create them out of "thin air". Based on basic Economics 101 this means that the value of the U.S. Dollar will continue to fall as long as the … [Read more...]
No Way Out
By Doug Casey, Casey Research I really dislike sounding inflammatory. Saying that things are going to go terribly wrong runs a risk of being classed with those who think the world will end in December 2012 because of something Nostradamus or the Bible says, or because that’s what the Mayan calendar predicts. This is different. In the real world, cause has effect. Nobody has a crystal ball, but a good economist (there are some in existence, though very few) can definitely pinpoint causes and estimate not only what their immediate and direct effects are likely to be (that’s not hard; a smart kid can usually do that) but the indirect and delayed effects. In the first half of this … [Read more...]
Complimentary 90-page Deflation eBook from Robert Prechter Available Now
New Deflation eBook Available Now: Our friends at Elliott Wave International have just released a complimentary 90-page ebook on deflation from Robert Prechter. As deflation fears are back in the news and most likely also on your mind, it's more important than ever to -- at very least -- give the deflationary scenario a serious look. After all, deflation could pose a serious risk to your wealth if it occurs, and no one has explained the potential threats -- and how you can survive them -- better than Prechter. Even if government stimulus and out-of-control spending have you more convinced than ever that inflation is dead ahead, we recommend that you take a look at Prechter's reasonable … [Read more...]