The market is all atwitter today that Ben Bernanke issued another round of Quantitative Easing. However, that means bad things to you and me. It means two things and two things only: the FED will print money (they talk about taking money from our reserves, but we have none because we're in debt), and they will buy mortgages. Big woop. That will not create jobs. It will affect you and me in very small ways, mostly negative.
Unless you are buying "mortgage backed securities", you won't see any positive changes from this. THe FED will buy mortgages from banks and then sell that to investors, but chances are you're not much of an investor, and even if you were, you probably wouldn't buy these. They are "toxic" bonds like those that precipitated the Panic of 2009. If you're a homeowner, it will change to whom you pay your mortgage, but chances are the FED already owns your loan. They bought mine six months after I bought my house, which I found odd since I bought my house from Freddy Mac in the first place. In essence, I bought it from them, and they bought my note from my bank, so now they own the note again. Seems fishy.
Meanwhile, most regular folks will see the negative side of this. Eventually, inflation will expand beyond the gas and food sector which is bad enough, and in an economy bereft of job creation, raises, and promotions, we will pay more for the same but have less with which to do it. Pretty soon, you'll have to earn $250,000/year just to pass the poverty line!
Far too many people equate doing something with accomplishing something. Although you must do something in order to accomplish something, we all know about busy work. In fact, this morning an old friend of mine asked me if I require my students to turn in their lecture notes. Why would I want to read 30 copies of the same thing I originally said? Sounds like busy work to me, something that they do to keep us busy but not with any particular objective in mind.
Bernanke's choice and the market's reaction indicates that the financial sector is wrought with panic. The market has risen, not because we created wealth and the companies are worth more, but because the dollars in which they are valued are worth less. Another crash is coming, but some people insist, like former Senator Ensign told me once in a letter that "to do the wrong thing is better than to do nothing". QE3 is artificial, ineffective, and contrary to Romney's request. It smacks of insanity, because they are doing for the third time something that did not work twice before.
That's the attitude of the Obama administration. they never acknowledge that they are wrong; they just insist it hasn't been done enough or for enough time or whatever. More dollars are not more wealth; companies do not exist to provide jobs; QE3 will not help the 'middle class'. This is done to help rich people, investors, the people who know how to buy "mortgage backed securities" without getting hurt. I don't see how it's good for you and me. If Obama gets reelected, that might prove good for him, but I'm not convinced that Obama has done anything good for you and me either.
Do me a favor, Mr President, and don't do me any favors.
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