Fed Launches QE3

Um, you guys know that Benji's interpretation of inflation is just an artificial creation and has no real bearing whatsoever on the actual stability of the system, right?

In fact it is pretty obvious to Austrian economists that the more the Fed forces the inflation to SEEM stable to the public view, the more unavoidable and dangerous the crash will be.

QE3 will make things seem better to wall street and even to Benji in his narrow little worldview, but it will have the opposite effect to the ability of the dollar to survive, and the ability of US to survive the fall of the dollar.
 


lukep said:
Um, you guys know that Benji's interpretation of inflation is just an artificial creation and has no real bearing whatsoever on the actual stability of the system, right?

In fact it is pretty obvious to Austrian economists that the more the Fed forces the inflation to SEEM stable to the public view, the more unavoidable and dangerous the crash will be.

QE3 will make things seem better to wall street and even to Benji in his narrow little worldview, but it will have the opposite effect to the ability of the dollar to survive, and the ability of US to survive the fall of the dollar.
Click to expand...

First of all benji's interpretation is not just his own. As I said, it's the official definition of inflation at the Bureau of Labor and Statistics. It's also the one that matters to everyone - the one everyone gives a shit about. There's nothing narrow about it. It's common sense.. and in a world filled with multiple definitions for everything which one are we supposed to choose?

I know the Austrian economics fans are shitting themselves right now, and that's why I can't control being a douche right now - they're so easy to troll.

Now, if inflation starts going double-digit in a few years then you'll be proven correct most likely.. even though inflation can be caused by many things other than Quantitative Easing. But so far, there's absolutely no evidence QE has caused any unnecessary inflation.. and we've been at it for a while. If inflation increases, guess what, Saint Ben throws a switch to deflate that shit.

Personally, I have no moral judgement on the wrong/rightness of QE. But I was actually betting against it. I didn't think they'd be so dumb to to do another round of QE so close to an election but they did it anyway.

I'm a saver and investor, like you, so I don't want the value of my savings to go down - who the fuck does. That said, the data shows modern Fed policy beats the shit out of old-school gold standard patriot/Ron Paul policy any day. If you only think like Ron Paul you're going to lose like Ron Paul.

Long Live Saint Ben!!
 
WickedJoe said:
First of all benji's interpretation is not just his own. As I said, it's the official definition of inflation at the Bureau of Labor and Statistics.
Click to expand...
Last time I checked, the BLS were part of the US gov, which is of course one of the parties we're pointing a finger at here. Quoting them is kinda like quoting hitler to jews when talking about how necessary it is to exterminate them.


WickedJoe said:
It's also the one that matters to everyone - the one everyone gives a shit about. There's nothing narrow about it. It's common sense.. and in a world filled with multiple definitions for everything which one are we supposed to choose?
Click to expand...
Herein really lies the whole problem. "Common" means stupid. Calling something common sense is to say it is for the lowest of the classes, and if you study on the subject well, you will surely find it false.


WickedJoe said:
I can't control being a douche right now - they're so easy to troll.
Click to expand...
Thank you for admitting that; I won't lose too much sleep over your responses here today that are much more stupid sounding than usual for you.


WickedJoe said:
But so far, there's absolutely no evidence QE has caused any unnecessary inflation.. and we've been at it for a while. If inflation increases, guess what, Saint Ben throws a switch to deflate that shit.
Click to expand...
Well, then you seem to have no concept of Inflation's silent partner: Value Deflation.

Simply put, inflation is loss of purchasing power. This can mean an increase in price for the same amount of stuff, or it can mean a decrease in the amount of stuff for the same price.

Value deflation and inflation are the exact same thing to consumers, we just aren't taught to recognize the former. We all pay more for our goods and services either way... And make no mistake; prices may not have risen much, but we ARE getting much less for our money.

Examples of value deflation that you surely have noticed too:

1. Portions of food have gotten smaller.

2. Fewer employees cover the same amount of shifts/customers

3. Fewer perks and extras in all walks of life. (hotel examples: slippers or designer-name soaps)

4. Fewer options offered in many different industries, such as travel destinations or menu items.

I bet if you think about it, you can find recent examples for all of the above many times over. Things are clearly not as good as they used to be.



WickedJoe said:
Long Live Saint Ben!!
Click to expand...
Now that's just going too damn far.

Tacky, tacky tacky...
 
Benji49 said:
Sure, I'll try to explain myself.

My definition of inflation:

Whether the price on the a basket of goods and service that I care about, rises in terms of the currency that I get paid in.
Click to expand...

gas-prices-graph-1998-2011.jpg
 
Funny how most of those gas price increases all occurred before QE 1. But who cares about data? QE did it cause its effects can time travel!

Btw, grats to those in Gold and Silver you're going to get some love. Your speculation panned out, especially if you sell before it crashes again :evil_laughter:

But seriously I like seeing people make a winning bet.. even if gold's percent increase is no where near justified given that inflation is near nothing.


Grindstone said:
gas-prices-graph-1998-2011.jpg
Click to expand...
 
lukep said:
Examples of value deflation that you surely have noticed too:

1. Portions of food have gotten smaller.

2. Fewer employees cover the same amount of shifts/customers
Click to expand...

One thing I've noticed for sure is the restaurant biz. Food prices have gone up, the wait time to receive food has gone up, the frequency in which waitors/waitresses frequent the table has gone down, and the food portions have gotten smaller. This is universally across every restaurant I've been to the last year.
 
100 years ago you could buy a nice business suit for an ounce of gold or for $20.

Today you can still buy a nice business suit for an ounce of gold but can you buy a nice business suit for $20?

Things cost the same?

Gold isn't money? Would you rather we value the dollar in horses? How about steers? Labor? When you measure the dollar against anything of real value it has decreased in purchasing power. This decrease may not happen immediately and there may be a number of manipulations that can be played out to delay the inevitable, but eventually a correction to the imbalance will occur.

Inflation and deflation are not inherently bad either, they're essentially inconsequential in a free market. The reason why inflation is bad in the case of the Fed is because they lend valueless fiat notes in exchange for real valuable labor, time and creativity. They exchange nothing for something. This is an illogical, unmathematical imbalance that has to be reconciled at some point by nature.

When there is an increase in our money supply we don't get an increase in our wages commensurate to this increase. So there is very little increase on the amount of money we take in each year, but there is a much larger increase on the amount of money we pay out.

The way inflation is supposed to work is if they double the money supply we double our wages. If things cost 2x as much and we make 2x as much it doesn't matter. But that's not how it works with the Fed. If they double the money supply, we keep our same wages (give or take), they buy debt from banks that bought real stuff, and we pay a tax on the difference through inflation.

But hey, if that's what Americans are into it is what it is. I'll just continue to watch my gold increase in value relative to the dollar and I'll continue to purchase real assets as this round of fleecing ensues.
 
Here's the scary thing about QE3: there's a feeling that the Fed doesn't know what they're doing.

A few of us with a reasonably good grasp of economics have been saying the Fed's prescription for the economy is shortsighted and wrongheaded. That it will set the stage for more pain down the road. (Search the forum.) But at least there was a (stated) limit to the "easing" Bernanke & Co. were willing to execute. Those limits came with promises. The Fed said, "When we ease, XYZ will occur."

XYZ never happened. The Fed's promises are now dust in the wind.

With QE3, they've essentially said, "We're gonna inflate [excuse me, "inject liquidity"] at $40 billion a month until the rate of growth increases and the unemployment rate goes down."

There's no stated limit. There's not even a concrete promise. Just an implied outcome that is nothing more than a repeat of a past broken promise.

Two years ago, there were exit strategies the Fed might have executed to sop up the flow and contract the supply. With QE3, they've said, "Fuck it. We're all in."
 
This is only for mortgages though...

Everyone was expected QE for treasuries, not mortgages.

Either way QE is still QE and the markets loved it, so did my pockets. Thank you Bernanke.
 
dreamache said:
One thing I've noticed for sure is the restaurant biz. Food prices have gone up, the wait time to receive food has gone up, the frequency in which waitors/waitresses frequent the table has gone down, and the food portions have gotten smaller. This is universally across every restaurant I've been to the last year.
Click to expand...

So true, waiters barely even come to your table unless its too damn slow, and food portions everywhere has gone down. Even strippers give shorter lap dances..shit is bad
 
Ohhh, so the food portions in the US are now only 30% larger than the rest of the world, instead of the previous 60% larger? What a shame.
 
Extras at hotels etc are reflective of the overall economy and lack of jobs. Give us the boom times in the early/mid 2000's and the perks would all come back. Unless you are stating the poor economy is due to QE1-3 - which I have not read in this thread.

I have a question, and yes I have Googled it, but want to see the answer from this group and this is a sincere question - I do not know the answer.

You learn in economics 1A, if I remember correctly, that a bank takes a deposit and then lends a fraction of that and therefore increases the money supply.
How then does the contraction of loans through realization of losses in foreclosures etc affect the money supply? Is it countering the newly printed money in some temporary way so that we do not yet see inflation?

Is it possible that the Govt is taking over all mortgages (FHA etc QE3 etc HAMP HARP etc) with some sight on seeing higher values again when what should be an inevitable inflation occurs?

If, as I have read here, Gold is due to a low value dollar then in inflationary times dont we usually see increased interest rates which then would increase the value of the dollar (assuming isolated relative inflation to the global markets) and therefore a decrease in Gold? or is that compensated for with the relative value?

If inflation brings higher rates and we do not see commensurate increase in income and employment shouldn't we see home affordability and as a result values go down?

OK well now I am waiting for facepalms etc. Just remember, I went to public school.
 
The Fed = Paying Interest To Rent Our Own Money.

[ame=http://www.youtube.com/watch?v=SL3hL_MgxU0]Andrew Napolitano - The Story of Money - YouTube[/ame]
 
You must log in or register to reply here.
Top Bottom