Thursday, September 27, 2012
By Paul Martin
SEPTEMBER 27, 2012

TribTab’s Charles Biderman has released a scathing attack on The Fed’s QE∞ policy, stating the Bernanke Put is Dead and QE3 will be worthless as far as the economy is concerned.

‘ The US government has borrowed and printed $5 trillion in deficit financing since the start of fiscal 2009. Over that same time frame, the Federal Reserve has grown its on and off balance sheet assets by $3 trillion, making for a combined growth of $8 trillion. So printing and borrowing $8 trillion has boosted equity values $10 trillion. That is not all that bad if it would continue.

But if the Bernanke Put is dead and stocks go down despite the current perpetual easing, what else has the $8 trillion accomplished? The answer: much less then the amount of money spent.

Do you get it? To boost take home pay by a $1 the government and Fed prints and borrows $7 to $8 and spends it. It is gone. That was not so bad when the market value of all stocks kept rising by trillions of dollars as the Fed eased. But what happens if the stock market no longer goes up on easings? Given what is happening in the rest of the world these days, I do not think this insanity can go on for very much longer before the world wises up to the naked US emperor.


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