Still hammering away on my next thread, so I thought I’d ask you about the topic currently doing the rounds over at DT: “Quantitative Easing”, or QE.
Actually, it’s printing money to you and me, but that can be misleading, as physical cash doesn’t always get printed in QE. Instead, the central bank buys back government debt indirectly from private bondholders, using digital money created “out of thin air”. According to the theory, these private bodies then go out and spend the money, stimulating the economy. Monetizing government debt is how many economists describe it. But no matter which way you slice it, the end result is that there are more dollars in circulation. If the currency was sound, (as we’ve discussed previously) the government could only do this by digging up more gold. But as a dollar no longer stands for anything, creating more of them, without also creating any actual new wealth, simply makes all the dollars worth less.
(BTW, a bit rude of those in charge of name tags to refer to Mr. Paul, don’t you think?)
Anyway: this is bad news if you are a saver; if you have cash in the bank, or under your bed. The government has just picked your pocket, to the tune of the percentage by which they have increased the money supply. But it’s great news if you are a debtor—if you owe the bank or anyone else money, particularly on fixed interest. Your president has just started paying off your debt on your behalf. With Other People’s Money. Even if you aren’t a U.S. citizen, but have a dollar-denominated debt, or are on the buy side of a dollar-denominated contract, you get the same benefit. Marvellous! The thrifty being fleeced in favour of the profligate.
Call me cynical, but I’m guessing it’s the second group that Brucker Bummer hopes to win over come November. Hey, it worked back in Sherwood Forest, in merrie olde England. Why not in twenty-first century U.S. of A, right?