The writing is on the wall for anyone who cares to take a look. The world’s central bankers are going to print until their currencies break. It’s the only way out of this global system of unsustainable debt. History tells us so, human psychology tells us so, and if you pay attention to the financial press, the bankers themselves tell us so.
The latest is the Business Week article “QE Cubed: A modest proposal for more Fed buying. A lot more.” Frankly, the presentation is so preposterous that I’m still not convinced it isn’t a joke. No sign of The Onion logo, and its date is February 1, not April 1, so maybe it’s real. The author is David Kemper, CEO of Commerce Bancshares and former President of the Federal Advisory Council of the Federal Reserve. And according to Mr. Kemper, the Fed, and its fine business acumen, can save us all:
“The ongoing depressing news about the American fiscal situation has obscured the startling and very impressive earnings performance recently announced by the Federal Reserve. The Fed, in its usual understated way, just revealed it will be turning over $90 billion in 2012 profits to the U.S. Treasury, a much-needed contribution that will put a sizable dent in our nation’s current $1 trillion federal deficit.”
See what I mean? That’s just the opening paragraph and it’s already a parody of itself. How on Earth can the Fed not be be immensely profitable when the only thing it produces is digital money out of thin air? If Congress would allow me to create dollars by keying digits into my account, I could produce a pretty tidy sum myself.
“The Fed’s earnings performance over the last several years has been exceptional. It earned more than twice Apple’s after-tax earnings last year, the result of a simple but powerful strategy: borrow money at very low rates, then buy long-term bonds.”
Yes, printing money and using it to buy bonds is indeed a simple but powerful strategy. However, to use the word earned to describe how they came by that money is a bit of a stretch of the definition. Apple had to actually create a product that people voluntarily purchased in the market. There is no competition in marketplace of money. The federal government prohibits it.
“Why not go with a business model that has proven to be such a winner?…
That is why I propose the Federal Open Market Committee’s next move be to take our central bank to a whole new level—a 2013 campaign that I call QE Cubed. Why not expand the Fed balance sheet exponentially, from its current $3 trillion to $33 trillion? Earning an extra 3 percent on another $30 trillion in bonds would allow the Fed to return an additional $900 billion to the Treasury—thus wiping out most of our federal deficit while avoiding actually having to do anything about current government spending.”
Ok, ok. You got me. This doesn’t even make sense by central banking standards. But you’ll have to cut me some slack. After all of that talk about trillion dollar coins, nothing seemed too much of a stretch for these guys. This clearly appears to be satire in the tradition of Jonathan Swift. But why? Perhaps he is mocking the thought process he finds himself surrounded by? Whether he is personally on board with this program makes little difference, as it is clearly the dominant attitude towards our insolvency.
Keep in mind that what appears to be a parody today is often reality tomorrow. We may not get 30 trillion dollars all at once, but before this is over, we may very well get close.
There is no doubt about it. The fact that the article has “a modest proposal” in the title is prima facie evidence that the author is intending to be satitical. See Jonathan Swift “A Modest Proposal”. http://art-bin.com/art/omodest.html. His point is well taken.