QE2

Quantitative Easing - or QE2 as they are calling it - doesn’t make a lot of sense to me. I know I am not an economist, but I am logical and this doesn’t sound logical. Am I missing something? I mean, this is the process that’s informally known as “printing money”, and I seem to recall that when Germany did that with deutschemarks World War One, it caused hyperinflation and a depression.

Anyhow, as I understand it, the US Fed recently purchased about 600 billion dollars worth of US securities. Um. So isn’t that like buying my own debt? How does that help me get OUT of debt?

Apparently the theory is that by doing this they keep interest rates low. Ah! Ok.

But, by printing all of this money to buy these securities their own securities they are devaluing the US dollar. Which will make oil (priced in US dollars) more expensive. In fact it will make EVERYTHING more expensive; which will lead to inflation; which will raise prices and raise interest rates.

Are you as lost as I am? I’m not understanding how this is a good thing. Making goods more expensive doesn’t put any more money in the people’s pockets nor does it put any more money in the government’s coffers because they will have to pay higher interest on their national debt.

If, however the US government followed OUR advice and put import duties on imported goods (especially Chinese goods), people might pay more, but the government could USE this import duty money to, oh say pay down the debt; or pay for the cost of medical care that is in the trillions of dollars, and encourage production at home. You see where I am going with this.

I have tried to read up on the logic of what they are doing and I understand the short term plan but I can’t find a whole lot that explains the long term plan.

Like I said at the beginning. I am not an economist, so I sure hope these guys know what they are doing, OR is the US on the way to its very own hyperinflation debacle?

Oh, and am I alone in wondering how much commission the likes of Goldman Sachs and others made on this sale and purchase of debt from one pocket to another?

If you understand Qualitative Easing and think it’s a good idea, please write me at feedback@nakednews.com and explain it to me OR just write us to share your views!