(Illustration by Victor Juhasz)
Federal Reserve Couldn’t Wait for Washington to Reach a Consensus
Last year I listened to two very intelligent people being interviewed on Bill Moyers program.
One of the guests was Yves Smith, a brilliant economist with an incredibly keen financial mind. She writes for her own blog called Naked Capitalism. It would be well worth your time to spend a few minutes a week reading her compilations.
The other guest was Matt Taibbi, an incredible financial mind who writes for Rolling Stone magazine. Some scoff at who he has contracted to write for, but after you read some of his stuff, you’ll understand why it’s a perfect fit. Matt Taibbi has been one of the harshest critics of the financial sector coining the term “Banksters” for the criminal behavior by many of the sociopathic bankers sitting atop our “Too Big to Jail” financial firms.
In Matt’s most recent column titled, “The Mad Science of the National Debt”, he loads up his shotgun and blasts through the stage of political rhetoric on both sides, but mainly aimed at republicans who have lost control of their party to the hands of tea sipping buffoons.
His first shot goes toward those who have dumbed down our national debt discussion by comparing our federal budget to your household budget. This is a common argument used by local tea party members.
For those who have moved on to higher levels of understanding, the most common metaphor used now is credited to Republican House Speaker John Boehner. As Matt points out, “House Speaker Boehner, fast becoming the pope of the blossoming new national Church of Budgetary Misunderstanding, has moved the ill-considered metaphor from the government being like a household needing to pay its bills to the government being like a business in bankruptcy.”
In defending his parties pushing forth the recent Full Faith and Credit Act, which prioritizes debt payments once we reach our arbitrary debt ceiling, our federal government is now being compared to a corporation in bankruptcy by requiring the U.S. Treasury to “prioritize” our debt payments.
I wonder if this will make the credit rating agencies less weary of our repayment ability?
While many of us who would simply like to lasso the reigning stupidity in Washington and toss the whole lot into the Atlantic, the point of the article is how the worlds central banks have circumvented the idiocy in global politics by injecting trillions into our economy in an effort to spur economic growth. Our Federal Reserve has been doing this since 2008 under a boorish name called Quantitative Easing (QE).
On Wall Street, it is now referred to as QE Infinity since the stimulus money being pumped into our economy has exceeded well over a trillion dollars since 2008 and there is no end in sight – a form of financial steroids. We’ve experienced QE1, QE2, and QE3.
Japan has announced a trillion dollar QE of their own.
It begs the question, where are the deficit hawks who fear inflation associated with any stimulus plan?
Another question is why hasn’t all this money injected into our economy resulted in job growth and economic expansion as expected?
Or, even a more obvious question, “What happens when they stop injecting trillions into our economy?”
“We are living in a time of experiment,” says Christian Menegatti at Roubini Global Economics, the independent research firm led by Nouriel Roubini, famous for predicting the housing crash.
So, on the surface while our pundits and talking heads argue about the coming debt ceiling crisis, the central banks of Europe, America and Asia are experimenting with a centrally planned monetary infusion unlike anything ever done, putting trillions into the hands of the financial sector whose greed caused the global financial collapse in 2008.
What could possibly go wrong?
Or, as Matt concludes:
Domestic politics have devolved into an ongoing hostage crisis in which the opposition party threatens to blow up the financial universe every six months or so, and the leading political minds in the country can’t figure out how to keep this from being a permanent feature of our budgetary process. Meanwhile, global monetary policy is drifting in the direction of semipermanent stimulus, and no one has any idea how it all ends. It’s two different runaway-freight-train action movies going on at the same time. God help us.