Michael Snyder
The Economic Collapse
September 16, 2012
The mainstream media is hailing QE3 as a great victory for the U.S.
economy. On nearly every news broadcast, the "talking heads" are
declaring that Ben Bernanke's decision to pump 40 billion dollars a
month into our financial system is definitely going to help solve our
economic problems. The money for QE3 is being created out of thin air
and this round of quantitative easing is going to be "open-ended" which
means that the Federal Reserve is going to keep doing it for as long as
they feel like it. But is this really good for the average American on
the street? No way. Despite two previous rounds of quantitative
easing, median household income has still fallen for four years in a row, the employment
rate has not bounced back since the end of the last recession, and new
home sales have remained near record lows. So what have the previous
rounds of quantitative easing accomplished? Well, they have driven up
the prices of financial assets. Those that own stocks have done very
well the past couple of years. So who owns stocks? The wealthy do. In
fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans. Those that have invested in commodities
have also done very nicely in recent years. We have seen gold, silver,
oil and agricultural commodities all do very well. But that also means
that average Americans are paying more for basic necessities such as
food and gasoline. So the first two rounds of quantitative easing made
the wealthy even wealthier while causing living standards to fall for
all the rest of us. Is there any reason to believe that QE3 will be any different?
Of course not.
This time the Federal Reserve is focused on buying mortgage-backed
securities. Yes, the same financial garbage that helped cause the last
crisis. The Fed plans to gobble up tens of billions of dollars of that
trash every month from now on.
But will the Fed pay true market value for those mortgage-backed securities? If you believe that, I have a bridge to sell you.
So this is going to be a huge windfall for some people, and that does not include us.
Not a single penny of this 40 billion dollars a month will go
directly into our hands. The theory is that it will "filter down" to us
eventually.
But that hasn't happened with previous rounds of quantitative easing.
So where does the money go?
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