Interesting article and one I find myself in agreement with given my reasonably poor understanding of economics.
http://papermoneycollapse.com/2012/08/more-qe-is-on-the-way-the-central-banks-are-digging-themselves-a-deeper-hole/
Quote: More QE is on the way – The central banks are digging themselves a deeper hole
Last month we entered the sixth year of this crisis, although parts of the media seem determined to continue calling it a ‘recovery’. Wishful thinking. We have been in continuous crisis for half a decade. Doses of Valium and Prozac – called QE among central bankers – have calmed nerves occasionally and given the false impression of healing.
QE – and zero interest rates – is the policy equivalent of crack cocaine. It makes addictive. There is no end to it.
That QE3 would ultimately come was clear from the moment that QE2 had been concluded. It was only a matter of time. For what it is worth, my guess is the Fed will have to do more than the lame $600 billion they did last time. And at some point they will have to also stop paying interest on the massive excess reserves at the Fed to push more money into the economy.
The idea that all this monetary madness is only temporary, only to help us get out of the crisis, and that the central banks have an ‘exit strategy’ – a term that I have not heard or seen in any discussion of central bank policy since spring of 2011! – is getting less tenable by the day. There is no exit strategy. Not in the US, not in the UK, not in the Euro Zone.
One day a sufficiently large section of the public will realize that the central bank and the government have no alternative to printing ever more money and taking on ever more debt. The only way they know of how to ‘stimulate’ the economy is via cheapening credit and encouraging more lending and borrowing. At some point, confidence will evaporate, people will disengage from bonds and paper money, inflation will rise (as money becomes a hot potato) and real interest rates rise even faster (as bonds become hot potatoes, too). Nobody knows when that will be.
The goal seems to be to make the endgame as catastrophic as possible
The gentleman's 'credentials'... Quote: Mr. Schlichter had a 19-year career in investment management. He worked at J.P. Morgan & Co. (1990-1998), Merrill Lynch Investment Managers (1998-2001) and Western Asset Management Co. (2001-2009). During his career Mr. Schlichter has overseen billions in assets under management for institutional clients from around the world. He left the industry in 2009 to focus exclusively on his first book, Paper Money Collapse
Germany engaged in several bouts of QE between 1920 - 22. 1923 of course became known as the year of the wheelbarrow!!
It's impossible to say where the tipping point in all this is. The central banks are playing with fire and they know it, but what else can they do? Economies all around the developed World demand people taking on ever more levels of debt to survive, once that debt hits a certain level the appetite for it does away as does economic activity as we have seen through this current depression.
There are no magic get out of jail cards, indeed it is very difficult to see how the UK can extradite itself from this. Yesterday one of the papers bounded about a story about a massive house building program and relaxation of planning on the green belt as a way to stimulate the economy. Without a doubt it would but what it would also do is crash the notional value of the existing stock and a lot of the banks whose balance sheets are barely scraping even on current notional values.
Devil and the deep blue sea..... The politico's know it yet none will man up and tell it like it is............
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