14 September 2012

Fairbank Report: "QE3 is Economic Cipro"

By Bian-lian Huang

Cipro is the strongest anti-biotic medicine on the market, and it comes with nasty side effects, often permanently compromising the patient's immune system.

So goes QE3.  By the time the Federal Reserve Bank is "done administering QE3" (the FRB said yesterday that it would sustain QE3 indefinitely), the US will have created $3.5 trillion (12 zeros) out of thin air.  The American body economic, like the Cipro patient, would be severely compromised from Dr Bernanke's treatment.

How can one create money -- that is, economic value -- by just willing it?  Has agricultural and manufacturing production increased by $3.5 trillion?  No!  Have we discovered $3.5 trillion worth of gold, silver or petro underneath our feet?  No!  Have we borrowed from the Chinese $3.5 trillion?  No!  (And not for lack of trying either!)

Money from thin air kills dollar-denominated assets and hastens the US dollar's demise as the world's reserve currency, which in turn undermines US political and economic power, that is, whatever power we can still muster...

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