While several heads of Federal Reserve Banks have called for more quantitative easing, Boston’s Fed Head Eric Rosengren has upped the ante and is calling for “open-ended” quantitative easing of a “substantial magnitude.” No joke.
Apparently, Rosengren has bought the John Law/John Maynard Keynes position that money is merely a medium of exchange and that the quantity does not matter as long as certain “economic outcomes” are achieved in the short run. Such a position furthers the thinking that potential future problems, such as hyperinflation, will not arise or that they can be handled as they arise. You have to wonder if Bernanke will not take Rosengren to the woodshed for this outburst.
Although Bernanke is not afraid to admit to being a paperhanger, his image still suffers from his “electronic printing press/helicopter” comment that earned him the moniker “Helicopter Ben.” As the high priests of paper money, members of the Fed are supposed to be reserved, controlled, with the ability to show restraint. Supposedly, they know just how much paper money to print, they know when the soup if just the right temperature. How restrained is calling for open-ended quantitative easing?
The sad history of paper money is that politicians print it until it is worthless. Statements by a few influential persons does not guarantee that we are on that road to destruction, but the fact that heads of Federal Reserve Banks are publically calling for more fiat money is evidence that the climate is right for a major step down that road.
The first step was taken in 1913 with the establishment of the Federal Reserve System. Roosevelt’s 1933 gold call-in was step number two. Number three was the removal in the Lyndon Johnson years of the requirement that the money in circulation be limited by the amount of supposedly gold held at Ft. Knox. Of course, Nixon “closing the gold widow” in 1971 put all the machinery in place for unlimited money creation.
Now the climate is ripe for massive printing because the Establishment has been so successful in selling Keynesianism as a monetary policy that there will be no opposition to more printing. Batten down the hatches. Hyperinflation is coming your way.
Through out the millennia rebublic after republic h fallen by the wayside! Their failures were caused by the debasement of their currencies ,never ending costly wars,extreme political deadlock and unrestricted greed by the upper echelons ! Ever time a currency is reissued to infinitive levels the value of previous currencies drop ( in real purchasing power! When the end comes and the republic (falls because of bankruptcy and default) the fiat system that allowed this catastrophe to happen also collapses leaving the population with useless paper or base.metal coinc! When civilization have a value for thei money pegged to a relative constant( say the value of he currency as related to Gold and Silver) the result is less catastrophic in economi pc and fiscal terms ! Remove the coral ation with unbacked fiat currencies and the delicate balance is broken! Unless the U.S and the rest of the world are force to remember this nd act accordingly the formation collapse I’ll strike them also! Kinsman economic theory I’ll once again be proven wrong( 1930 Great Depression )!!
Michael Rozeff, PhD and retired Professor of Finance from the University of Buffalo, has taken note that three Fed Heads have called for more quantitative easing and explains its fallacies in his lewrockwell.com piece Lunatic Sorcery.
Importantly, the professor notes that “The results of Rosengren’s recommendations (open-ended quantitative easing) are bubble prices in asset markets, low returns to savers, increased uncertainty, low investment in capital goods, and stagnant economic activity.”
Rozeff’s article is must reading for precious metals investors.