Christine Lagarde – the incoming chair of the European Central Bank – is planning her first press conference after the governing council meets on Thursday. She is expected to announce no interruption to the €20 billion per month capital fabrication scheme these governments call “Quantitative Easing”.
This ongoing willful expansion of the monetary supply that is the driving force behind asset bubbles (too much liquidity chasing too few returns) is conducted under the premise of pursuing an inflation rate of 2%.
Inflation exists in two forms, economically. Monetary inflation – or the credit and equity of nations fractionally banked into 10X supply side excess (on a minimal basis) and Price Inflation, which is where the prices for goods and services rise.
The cause of oth price inflation and monetary inflation is human. Inflation is not some independent force that swirls through the economic universe. Its a measurable coefficient of supply and demand imbalances.
The bubble analogy could not be more apropos.
Printing money, quantitative easing, and zero interest rate policy are all inputs to the bubble. The expandability of the bubble is equivalent to how much there is to buy out there. If you could print enough money to buy everything there is and all that there could be, you’d be at a point of total global liquidity we passed long ago…like somewhere back in the 80’s, more than likely.
And that’s why banks and governments have created derivative products like securitized debt, credit default swaps, and Exchange Traded Products, is because it creates more “things” to buy.
Now governments can point to the price of goods and say “Look! No inflation!” Mostly because they measure it in meaningless ways. When did the average price of gasoline last go down? When has the price of bread gone down?
Is that 2% per year that we are supposed to believe is a desirable rate of Price Inflation? That means prices are rising at 20% per decade. How is that supposed to be a good thing?
The Quantitative Easing Boondoggle
Here’s why “Quantitative Easing” is nothing more than a fraud against average Americans and Main Street investors everywhere:
The idea of pumping cash into the economy was defended by politicians because it was going to jump start businesses through investment.
But what happened?
The only beneficiaries of the government largesse were the biggest names on the S&P. Those massive companies controlled by handful of billionaires who were the LEAST in need of any financial assistance. Who also just happen to be the largest cash money donors to those same politicians who voted to give away all that money.
None of their homes were being foreclosed upon. None the them were at risk of becoming unemployed.
And none of any American or small business anywhere received a single penny of the trillions of dollars that flowed into the pockets of those supremely rich fat cats. Not a single penny.
That is the fraud.
We’ll print money for our friends. But unless you are one of us, you get bupkiss. Nada. Mierde. Sweet nothings.
This is the kind of behaviour by our “leaders” that starts riots, revolutions and civil wars.
Isn’t that what we have here now?
