“Thanks to Obama we now have UNLIMITED quantitative easing.  What?  Oh, well let me explain! You’re going to love this.”

THE RISING STOCK MARKET AND QUANTITATIVE EASING FOR DUMMIES


The announcement of an UNLIMITED  quantitative easing, or the Federal government buying of bonds with the intent of lowering interest rates, takes risky assets off of banks’ balance sheets. (If you are calling this a bank bailout without using the term “bailout”… you are correct.)

After this announcement, the global stock markets rallied, temporarily, but reality intervened as finance ministers from Brazil, China, Korea, China and other states accused the Government of the United states of intensifying the current currency wars that have been unfolding since Obama took office. (More on this later)

 “This effect is potentially important, because stock values affect both consumption and investment decisions.” 

Apparently the Fed is under the belief that it has a mandate to support rising stock prices.

This is ironically a trickle down monetary policy theory, where rising stock prices mean more wealth and more consumption that trickles down the economic ladder. One problem with this idea is that there is a gigantic mountain of household debt—about $12 trillion worth—that is diverting away any trickle down.

Most equity shares in America are owned by the wealthiest 10 percent.

What that means is that when the Fed engages in quantitative easing it is providing a benefit to a very narrow segment of society at the expense of others (either through future inflation or through the cost of raising taxes to pay for increased federal debts).

Easy monetary policy favors “senior management of banks in particular.” And quantitative easing  “has been found to be associated with significant declines in the yields on both corporate bonds and Mortgage Backed Securities.” Translation: the Federal Reserve has made it artificially cheaper for corporations to borrow money and has pushed up the prices of houses. (Correct me if I’m wrong, but I thought cheap loans allowing businesses to leverage up and juiced housing prices were key parts of what got us into this mess?)

What this boils down to is that the current federal administration is bailing out large financial institution and the stock market because you can’t. (unemployment highest since WWII)  And while you are praising the stock market rally, you are paying for it with higher taxes and higher price inflation. This is how you get a market recovery without actually putting anyone back to work.

Look at your smaller paycheck and higher food and fuel prices, and with UNLIMITED quantitative easing it’s going to get worse. Much worse.

But hey, some of you even voted for it. This is an unconventional monetary policy that helped re-elect President Obama.

So, while we are trying to scrape up that $20,000.00 per year that the I.R.S. says will be the cost of the minimum coverage health insurance for a family of four that you HAVE to buy under Obamacare, enjoy your free cellphone, Bonehead.

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