The Economic Collapse
September 25, 2012
QE3 has barely even started and some folks on Wall Street are already
clamoring for QE4. In fact, as you will read below, one equity
strategist at Morgan Stanley says that he would not be "surprised" if
the Federal Reserve announced another new round of money printing by the
end of the year. But this is what tends to happen when a financial
system starts becoming addicted to easy money. There is always a deep
hunger for another "hit" of "currency meth". Federal Reserve Chairman
Ben Bernanke was probably hoping that QE3
would satisfy the wolves on Wall Street for a while. His promise to
recklessly print 40 billion dollars a month and use it to buy
mortgage-backed securities is being called "QEInfinity" by detractors.
During QE3, nearly half a trillion dollars a year will be added to the
financial system until the Fed decides that it is time to stop. This is
so crazy that even former Federal Reserve officials are speaking out
against it. For example, former Federal Reserve chairman Paul Volcker
says that QE3 is the "most extreme easing of monetary policy" that he
could ever remember. But the big Wall Street banks are never going to
be satisfied. If QE4 is announced, they will start calling for QE5. As I noted in a previous article, quantitative easing tends to pump up the prices of financial assets such as stocks and commodities,
and that is very good for Wall Street bankers. So of course they want
more quantitative easing. They always want bigger profits and bigger
bonus checks at the end of the year.
But at this point the Federal Reserve has already "jumped the
shark". If you don't know what "jumping the shark" means, you can find a
definition on Wikipedia right here. Whatever shreds of credibility the Fed had left are being washed away by a flood of newly printed money.
Those running the Fed have essentially used up all of their bullets
and the next great financial crisis has not even fully erupted yet.
So what is the Fed going to do if the stock market crashes and the credit market freezes up like we saw back in 2008?
How much more extreme can the Fed go?
One can just picture "Helicopter Ben" strapping on a pair of water skis and making the following promise....
"We are going to print so much money that we'll make Zimbabwe and the Weimar Republic look like wimps!"