De grootste diefstal uit de geschiedenis van de mens: inflatie

Ben bepaald geen fan van Bill Bonner, echter het volgende artikel van zijn hand bevat (althans zeker voor mij) aardige gezichtspunten op het financiële beleid in de VS als instrument om dollars bij te kunnen drukken en daarmee de waarde van de dollar te verminderen. Zo zou de huidige dollar volgens Bonner in vergelijking met die van 1971 nog maar 3 dollarcent waard zijn......

Eén en ander is het gevolg van de 'nieuwe dollar' die in 1971 onder 'tricky dick' Nixon werd geïntroduceerd en waarbij de Fed de macht kreeg om (fiks) dollars bij te drukken en daarmee de inflatie te voeden........ Het grootste deel van het volk in de VS begreep niet waarom hun geld destijds zo snel in waarde verminderde en gaven de schuld aan de arabieren (vanwege de hoge olieprijs), echter de energiecrisis van de 70 er jaren bracht alleen de prijs terug op het niveau van voor de grote dollar diefstal in 1971* >> de OPEC besloot minder olie te produceren, waarop de prijzen stegen naar het niveau van voor 1971...... Zie in het artikel hieronder hoe de inflatie zelfs met dubbele cijfers groeide...... (het is een studie waard om te zien wat het effect van de nieuwe dollar en de infaltie in de VS was op de Nederlandse economie en die van de ons omringende landen....)

Inflatie is zoals Bonner zegt inderdaad een instrument om mensen nog meer belasting te laten betalen, waar de winsten daarvan in de VS vooral naar de superrijken stromen...... Terwijl 50% van de onderlaag in de VS sinds 1999 30% armer is geworden, stijgen de inkomens van de welgestelden jaar op jaar......

Vergeet bij dit alles niet dat ook in de EU, ofwel bij de Europese Centrale Bank (ECB) de geldpersen al jaren overuren maken....... Een zaak die in feite de 'EU maatschappij' steeds verder ontwricht.......

Lees het artikel van Bonner, overigens onderdeel uit een soort 'dagboek', waar je de link naar het vervolg van het hieronder opgenomen artikel, onder dat artikel terugvindt. Mocht je het interessant vinden dit 'dagboek' te volgen, neem dan het adres van Bonner & Partners of van Money and Markets over en houdt de boel in de gaten, dit artikel nam ik over van Money and Markets:

Bonner: The Feds and the Biggest Money Heist In History

Posted by Bonner & Partners | Jan 28, 2020 | News

Inflation is always and everywhere a rip-off. – Bill Bonner

BALTIMORE, MARYLAND — The nice thing about inflation, at least from the feds’ point of view, is that it doesn’t leave fingerprints.

Today’s dollar, for example, is worth only three cents of the pre-1971 dollar. But who dunnit? Who stole 97 cents out of every dollar?

New-Buck Scam

People thought the switch to a new buck in 1971 was just a “technical” move. Still do. But there was a big difference. The old dollar was a killjoy. The feds just couldn’t have much fun with it. But the new one was like an inflatable sex toy — it would go along with anything.

And when the first wave of consumer price inflation hit in the ’70s, few people understood what had happened. They thought the Arabs had pulled a fast one. But as we saw last week (catch up here and here), the First Oil Shock only returned the real price to where it had been before the feds’ funny-money printing began.

Investors didn’t notice their pockets were being picked either. In new dollars, the Dow barely moved throughout the ’70s. But it lost 92% of its real value.

And still today, only you… and we… seem to realize how the Federal Reserve’s money printing and ultralow interest rate policies (from 2009 to 2015) put $20-some trillion into the pockets of the richest people in the country.

Most people got nothing from it. And relatively, the poor got poorer as the rich got richer. 
The bottom 50% of the population are actually 30% poorer today than they were in 1999 — even using the feds’ phony inflation calculator.

But does anyone blame the real culprits? Nope. They blame the Mexicans and the Chinese. 

Do they vote for someone who pledges to end inflation? Or someone who calls for more of it?

It doesn’t matter whether the inflation goes into the capital markets or the consumer economy… it works the same way, like a thief in the night. And now underway is probably the biggest heist in history…

Like a Street Mugging

Milton Friedman was wrong about inflation. It is “always and everywhere a monetary phenomenon,” said he. But that misses the point of it. A shooting star is a phenomenon. So is irritable bowel syndrome; nobody is sure what causes it.

But inflation is no more a “phenomenon” than a street mugging; it is done for a reason, to transfer wealth from some people to other people. It’s a way for the feds — and their clients, cronies, and hangers-on — to get more than taxpayers are willing to give them.

If they tried to support their boondoggles and jackass programs by direct taxation alone, there would soon be mobs gathered in the Capitol, with pitch bubbling and rails at-the-ready.

But inflation?

Here at the Diary, we guess about a great number of things — always trying to connect the dots. We’ve been at it for so long, we’ve probably been wrong about most everything. We’ll get to the rest in due course.

But one thing we’re probably not wrong about is inflation. And when the Fed announced at its December 2015 meeting that it would stop inflating and “normalize” its monetary policy, we knew it was BS. Why?

With its ultralow interest rates and its quantitative easing (QE) programs, the Fed created a hothouse atmosphere. The QE program alone gave some $3.6 trillion in new money to big investors.

It was as if a very rich person in a small town bid on all the houses that came up for sale. 
Prices rose. Everyone thought he had gotten richer. But take away the reckless buyer, and the market would quickly adjust to normal supply and demand pressures. Prices would fall back to “normal.”

Falling prices would cause the “wealth effect” to reverse into a “negative wealth effect.” The economy would go into recession.

Keep the Heat On

Either you keep feeding warm air into the hothouse… or the orchids die. Greenspan, Bernanke, Yellen, and now Powell — have all kept the heat on.

The last Fed chief to turn off the heat was the recently deceased Paul Volcker. He saw the “Inflate-or-Die” trap. To escape it in 1980, he raised the Fed’s key rate to 20%, cut off the hot air, and opened the windows, causing the worst U.S. recession since the Great Depression.

Naturally, politicians, economists, and the press howled and whined. A mob even burned Volcker in effigy on the Capitol steps. But inflation quickly fell, from nearly 14% in 1980 to only 3.2% in 1983.

Years before, another great Fed chief, William McChesney Martin, explained why a good central banker is more likely to be branded a villain than a hero:

In the field of monetary and credit policy, precautionary action to prevent inflationary excesses is bound to have some onerous effects… Those who have the task of making such policy don’t expect you to applaud.

Tough Love

It’s been 40 years since Volcker’s tough love. Since then U.S. federal debt has gone from under $1 trillion to $23 trillion.

The Dow, too, went from under 1,000 to over 29,000. And the people willing to support an honest central banker — traditional fiscal conservatives and Ronald Reagan — have disappeared.

As for the old conservatives, they went AWOL when Republicans realized that, in a funny-money world, “deficits don’t matter.”

William McChesney Martin died in 1998. (He was replaced at the Fed in 1970 when he resisted the new-money plotters.) Paul Volcker died late last year.

Today, Fed jefes are willing to go along with the gag, and are described by the popular press as “saving the world” (Greenspan), or “heroes” with “the courage to act” (Bernanke).

And the current U.S. president is not worried about curbing inflation. He wants more of it. Here’s the commander in chief commenting on the Fed’s brief fling with prudence:

It was a killer when they raised the rate. It was just a big mistake. And they admit to it. They admit to it. I was right. I don’t wanna be right, but I was right.

More to come…

Regards,
Bill

• This article was originally published by Bonner & Partners. You can learn more about Bill and Bill Bonner’s Diary right here.

Zie ook het vervolg van dit artikel: 'Bonner: How Paper Money Became the Means for Modern Inflation'
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*  In Wikipedia spreekt men bij de eerste oliecrisis in 1973 over 'een politieke actie van de arabieren gericht tegen het westen', terwijl de olieprijs in dollars werd en wordt weergegeven, ofwel de arabieren kregen inderdaad veel minder voor hun olie, daar de inflatie destijds zelfs met dubbele cijfers groeide, zie het artikel hierboven..... Wikipedia......
Door de inflatie van de 'petrodollar' (ofwel de olieprijs in dollars), was de prijs van olie op een veel lager niveau gekomen, waarop de arabieren het westen maar vooral de VS 'de bel aanbonden' en begonnen met de vermindering van de olieproductie, zodat de prijs omhoog ging. De olieprijs werd overigens vanaf 1971 in dollars weergegeven. (al werd ook voor die tijd vooral naar de VS gekeken wat betreft de olieprijs, daar het land eerst de grootste olieleverancier was en later tot de grootste olieproducerende landen bleef behoren)

Fed: 'financiële methadon' zal de grootste recessie ooit veroorzaken

Gerald Celente, publicist van Trends Journal gaf vorige week vrijdag een interview, waarin hij de wereld waarschuwt voor het ongelimiteerd geld bijdrukken en het verlagen van de rente, zaken die grote bedrijven met veel schulden en aandelenhandelaren ten goede zullen komen.......

Ondanks dat het goed is voor de aandelenmarkten en bedrijven met grote schulden, die zo kunnen blijven uitbreiden, is de keerzijde een enorme schuldbubbel in de VS, een schuldenlast van houd je vast: 250 biljoen dollar!! Vandaar dat Celente dan ook de vergelijking met methadon maakt (eigenlijk bedoelt hij heroïne): ze blijven het lichaam van een stier volspuiten, zodat deze blijft rennen, maar de economieën elders worden er niet mee gestimuleerd en we zien nu dan ook een globale economische afzwakking.....

Celente wijst voorts op de waarschuwingen van het IMF en de Wereldbank voor een recessie door deze enorme schuld..... Miljardair en oprichter van Bridgewater, Ray Dalio, verklaarde onlangs dat hij nu als Celente vooral inzet op goud.... Ofwel de directeur van het grootste hedgefonds ter wereld maakt zich zorgen over een grote depressie (en tegelijkertijd uiteraard een recessie).......

Mensen zien wat er gebeurt terwijl de centrale banken geld blijven bijdrukken en de rentes verlagen, waar de Fed e.e.a. niet langer quantative easing* (QE) wil noemen (waar het natuurlijk wel QE is, immers het 'gereedschap' daarvoor wordt wel degelijk gebruikt..)....

Verder stelt Celente terecht dat veel mensen die niets meer bezitten en die alle vertrouwen in regering en financiële markten zijn verloren in opstand komen, daarbij noemde hij o.a. Libanon, jammer want daar zijn de CIA en de Mossad bezig de boel op te stoken, zoals de CIA dat ook pleegt te doen in Iran, Venezuela en Bolivia, plus alle andere landen waar de VS de verkiezingen manipuleert, of mensen opstookt in verzet te gaan....... Daarbij worden uiteraard wapens en explosieven geleverd**, als dat niet werkt kan de VS altijd nog een staatsgreep forceren en als ook dat niet lukt, begint de VS op basis van een berg leugens een illegale oorlog tegen zo'n land........

Ook noemt Celente Bolivia en verdomd alweer is de opstand daar ingegeven door de CIA, immers het gaat veel te goed met Bolivia en dat is te danken aan de opnieuw gekozen socialistische president Evo Morales, kijk daar heeft de VS de schurft aan, een links land, waar het ook nog eens goed gaat met de economie......***

Voorts heeft Celente wel gelijk dat het water het volk aan de lippen staat in landen als: Ecuador, Chili, Columbia, Spanje en Hong Kong (al heb ik ook bij die laatste zware bedenkingen, immers er wordt daar in de eerste plaats niet gedemonstreerd omdat men het het financieel slecht vergaat en je kan er ook daar donder opzeggen dat de CIA een dikke vinger in de pap heeft, immers men verwacht dat China uiteindelijk zal ingrijpen en zo kan men China afschilderen als een nog demonischer staat...) Dit terwijl de VS de ene illegale oorlog na de andere begint.....

Vergeet bij dit alles niet dat figuren als Celente een zekere politieke macht hebben en deze macht misbruiken om zaken zo te sturen dat zij er voordeel bij hebben..... (niet alleen in de VS, maar ook in het buitenland...)

Het volgende artikel komt van het rechtse Money and Markets en werd geschreven door J.T. Crowe:

Celente: Fed’s ‘Monetary Methadone’ Causing ‘The Greatest Depression’

Posted by JT Crowe | Nov 5, 2019 | Economy, News

Trends Journal publisher Gerald Celente gave a rather stark interview Friday in which he said central banks around the world are causing “The Greatest Depression,” and that we’ve already passed Stage 1 as unrest builds in more and more countries.

Celente, speaking with Kitco News, first commented on the Federal Reserve’s latest interest rate cut, the third since July — and third since 2008 — essentially calling it a big mistake for everyone but stock traders and companies with massive corporate debt.

“It’s positive for the equity markets and the huge debt that corporations are taking in to keep expanding. But on the negative end, they’re just building more debt into the already over $250 trillion debt bubble,” he said. “So what it is, I call it ‘monetary methadone;’ they’re just shooting in more money to keep the addicted bull running. It’s not boosting economies around the world — we’re looking at a global slowdown.

“The IMF, the World Bank, one after another are warning of a recession.”

Celente then pointed out that billionaire Bridgewater founder Ray Dalio has been following what Trends Journal has written about the beginning of the gold bull run, and how he came out a couple of weeks later and said he is bullish on gold.

“This is the head of the largest hedge fund in the world and then just a few weeks ago, he said now he’s worried about a Great Depression,” Celente said.

“So the people see it and it’s just artificially being boosted by central banks injecting more cheap money, lowering interest rates, and now we have the Federal Reserve — we’re not going to call it ‘quantitative easing,’ we’re going to make up another story.

“We’re pumping in $60 billion a month to buy Treasurys — oh and by the way, $120 billion a day into the repo markets.”

Celente went on to say that what the Fed is doing is “only temporary” and the crash won’t be held off forever.

“You’re seeing housing sales go back up, mortgage refis go back up because the money is cheap,” he said. “But the earnings aren’t there, the debt levels for the consumers are getting heavier and heavier, so it’s artificially propping it up just like it did since the panic of ’08. It hasn’t filtered back to society, it’s only gone to the 1%. And I’m not making that number up. You have three people in the United States, (Jeff) Bezos, (Warren) Buffett and (Bill) Gates, who have more money than half of America’s population.

“And then you go around the world and, according to OxFam, what do they have? Twenty-six people have more dough than half the world’s population combined. So, no, it’s not working. It’s only making it worse.”

So where should investors go to protect their wealth?

“I call it the guns, gold and the getaway plan,” Celente quipped after saying he’s no financial adviser. “Speaking for only myself, gold is the No. 1 investment, and I’ve been saying that since I began buying gold in 1970.”

Celente said he’s long on both physical gold and stocks, including the “IRA, the GLD ETFs.”

“I have some silver, but gold is my priority,” he added. “I have two-thirds gold.”

The host then mentioned uprisings in a number of countries around the world and asked what it all means, and Celente said it’s the beginning of “The Greatest Depression.”

“It’s signalling the people have had it. Again, the money’s gone to the 1%. When people lose everything and have nothing left to lose, they lose it, and they’re losing it,” Celente said. “This is part of The Greatest Depression, it’s Stage 1, it’s already happened. Millions of people taking to the street, protesting that they don’t have enough money to live while they’re getting higher taxes, costing more for everyday living. So they’ve had it and this is extremely important: All these movements don’t have leaders. Whether it’s Hong Kong, whether it’s Spain, whether it’s Lebanon, what’s going on in Iraq with the massive demonstrations, Ecuador, Chile, Bolivia, Columbia, one after another, no leaders because the people feel it. And this is part of the Greatest Depression.

“When we say it’s going to get worse, when The Great Depression hit, there were 2 billion people on the planet. We’ve added 5.5 billion more. They’re out of work, they’re living in poverty, violence all around them, corruption. So this thing is exploding.”

These five charts prove that the stock market is on the cusp of crashing by 70%, maybe more. (let op, dergelijke artikelen willen je niet zelden strikken voor de aankoop van bepaalde aandelen of andere financiële producten, Money and Markets staat er bomvol mee)

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*   Zie: 'Lagarde (top ECB): "Je kan beter een baan hebben dan spaargeld"' (met een apart artikel over Quantative Easing [QE])

**  En niet zelden levert de VS scherpschutters om op het protesterende volk te schieten, om zo de schuld in de schoenen van het bewuste bewind te schuiven, het bewind dat men weg wil hebben, ofwel een false flag operatie.....

*** Zie: 'Bolivia: bewijs op tafel dat VS aanstuurt op een coup'

Lagarde (top ECB): "Je kan beter een baan hebben dan spaargeld"

Lagarde heeft afgelopen vrijdag de baan van topgraaier Draghi als president van de Europese Centrale Bank (ECB) overgenomen, ook al heeft zij bepaald geen financieel economische opleiding gevolgd. Alle hoop van een aantal centrale banken in de EU op een ander beleid dan dat van Draghi werd vrijwel onmiddellijk de grond ingeboord. Vreemd overigens die verwachting, immers Lagarde is ook verantwoordelijk voor de gore spelletjes die het IMF sinds 2011 heeft gespeeld, in dat jaar werd ze directeur van deze inhumane neoliberale organisatie..... 

Overigens,  Lagarde is in feite een veroordeelde misdadiger, die haar straf van een jaar gevangenisstraf ontliep daar er anders een crisis in het IMF zou zijn ontstaan, dit nadat haar voorganger en verkrachter Strrauss-Kahn het veld moest ruimen..... Ongelofelijk daarom ook dat de ondemocratische EU Lagarde koos als topgraaier van de ECB.......

Lagarde nam haar functie bij de ECB op o.a. door Nederland en Duitsland te manen hun overschot te investeren, voorts begon Lagarde te zeuren over onderlinge 'solidariteit', ofwel steek ook je kont diep in de schulden. Wat betreft het 'beleid' van Draghi: Lagarde gaat gewoon door op de doodlopende weg die Draghi eerder heeft bewandeld: obligaties van landen opkopen en het verlagen van de rente tot nog verder onder de – 0,5%, die nu al ingevoerd wordt (zo ongeveer de laatste actie van Draghi), ofwel een rente die nog verder onder het 'nulpunt' zal dalen, anders gezegd: negatieve rente (waarmee geld lenen zelfs geld zou moeten opleveren, al zal dat 'natuurlijk niet' voor het gewone volk opgaan...)....

Dat daardoor een flink aantal mensen in de problemen komt interesseert autocraat Lagarde net zo min als haar voorganger Draghi, schijt aan de pensioenen die mensen hun werkende leven lang hebben opgebouwd, dokken en niet zeuren....... Ook de kleine spaarders kunnen wat Lagarde betreft doodvallen, ze durfde keihard te zeggen dat je beter een baan kan hebben dan geld op de bank..... Moet je nagaan: de misdadige dweil Lagarde gaat een inkomen verdienen van rond de 4 ton op jaarbasis is en dat is exclusief een gigantische onkostenvergoeding......

Taaie stof mensen, het hieronder opgenomen artikel van Tyler Durden, maar zeer de moeite van het lezen waard (het artikel werd eerder gepubliceerd op Zero Hedge). Daaronder een verduidelijking over QE ofwel Quantitative Easing, een artikel van Investopedia, QE of het waanzinnige beleid van Draghi om zoveel mogelijk obligaties van EU landen op te kopen (ook werden schulden van banken in Zuid-Europa opgekocht, waardoor de Grieken de regie in eigen land zijn kwijtgeraakt en nog steeds diep in  de ellende zitten...).... 

De ECB heeft overigens al aangekondigd, na de stop van één jaar, opnieuw bonussen ter waarde van 20 miljard euro op te willen kopen, ook al is het allesbehalve duidelijk of dit ook maar iets heeft opgeleverd voor de EU, behalve dan dat de drukpersen voor papiergeld overuren maakten en ons geld in feite steeds minder waard werd ook al merken we daar nu nog weinig van..... (dat gebeurt als de volgende crisis zich aandient en zoals je weet die komt eraan, de vraag is wanneer precies)

Lagarde: "We Should Be Happier To Have A Job Than To Have Savings"

by Tyler Durden

Mon, 11/04/2019 - 06:12

Any hopes that the replacement of Mario Draghi, who on Halloween left the ECB more polarized than ever, as the core European nations revolted against the Italian's profligately loose monetary policy in an unprecedented public demonstration of discord within the European Central Bank...

... with the ECB's new head, former IMF Director and convicted criminal, Christine Lagarde would result in some easing of tensions, were promptly crushed when Lagarde picked up where Draghi left off, calling on Germany and the Netherlands to use their budget surpluses to fund investments that would help stimulate the economy, in a sharp rebuke that will not win the former French finance minister any friends in fiscally conservative Germany.

In an appeal to Germany's sense of solidarity, and in hopes that Germany's memory of hyperinflation has faded enough, Lagarde said that there "isn’t enough solidarity" in the single currency area, adding: “We share a currency, but we don’t share much budgetary policy for now."

"Those that have the room for manoeuvre, those that have a budget surplus, that’s to say Germany, the Netherlands, why not use that budget surplus and invest in infrastructure? Why not invest in education? Why not invest in innovation, to allow for a better rebalancing?" asked Lagarde, blaming Germany and the Netherlands for living within their means, and demanding they should no longer do so, just because most other Europeans decided to pull a page out of the American playbook, and live exorbitantly outside of their means.

Lagarde's direct attempt at shaming Europe's fiscal conservatives was nothing short of shocking: normally ECB officials avoid naming individual countries in public statements, because their mandate is to act in the interests of the eurozone as a whole. But when Lagarde made her speech she had not yet officially taken over at the Frankfurt-based institution — she succeeds Mario Draghi on Friday.

We somehow doubt this "explanation" will fly with the German population, which sees itself as funding peripheral Europe's profligate ways for the past decade, even as it benefited from the weak euro to supercharge the German export machine.

And just to guarantee she is as resented by Germany as was Mario Draghi, she said that the German and Dutch governments, which last year had budget surpluses of 2% and 1.5% respectively, "have not really made the necessary efforts," she added, referring to establishment's increasing desperation to force anyone with an even remotely normal balance sheet to sink to the same level as their insolvent peers.

As for the punchline, Lagarde defended the negative interest rates introduced by her predecessor Draghi, arguing that people should be happier to have a job than a higher savings rate. This, as a reminder, comes at a time when virtually everyone who is not named "Draghi" or "Lagarde" thinks that negative rates are catastrophic, and assure doom for the Eurozone.

When asked about the impact of negative rates on savers, Ms Lagarde said on Thursday that they should think about how much worse the situation would be if the ECB had not cut rates as much as it had.

“Would we not be in a situation today with much higher unemployment and a far lower growth rate, and isn’t it true that ultimately we have done the right thing to act in favor of jobs and of growth rather than the protection of savers?” she asked.

The unemployment rate in the 19-country eurozone has fallen from 12 per cent in 2013 to 8.2 per cent last year. GDP growth in the single currency zone was 1.8 per cent last year and the ECB expects it to slow to 1.1 per cent this year.

Finally, for those curious if the authorities will stop at anything to destroy the currency and send rates to even more negative levels if it means kicking the can on a global, populist uprising, by just a few months, weeks or days, here is the answer: "We should be happier to have a job than to have our savings protected," said Lagarde.

"I think that it is in this spirit that monetary policy has been decided by my predecessors and I think they made quite a beneficial choice."

Let's check back on that statement in a year, shall we?

Of course, there is no magic solution here: all the ECB has done is kick the can, and ensure that the next crisis will be even worse than if some semblance of a price-clearing reality had been allowed under Draghi's 8 years. Instead, the ECB's balance sheet exploded to €4.7 trillion euros, as the world's largest central bank-cum-hedge fund bought every bond in sight in hopes of keeping asset prices artificially elevated.

In October, the ECB, less than a year after it ended QE* in a failed attempt to "renormalize" monetary policy, announced it would cut rates to a record -0.5% and unveiled open-ended plans to start buying €20bn of bonds starting in November.

Needless to say, the comments by the former French finance minister confirm market expectations that she is likely to pursue similar monetary policy strategy to Draghi who flooded the financial system with cheap money to fight slowing growth and inflation while calling on governments to do more through fiscal policy to take the burden off the central bank.

In the end, the consequences of Draghi's monetary policy, as we explained before, will be catastrophic, but the former Goldman partner was wise enough to get off the European Titanic before it hit the iceberg. It will now be Lagarde's task to save as many people as possible once the ship starts sinking, and judging by her remarks, she is perfectly fine of not only going down with the ship, but also being blamed for the collision.

Tags: Business Finance
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* Hieronder de uitleg over QE of: Quantitative Easing, geschreven door Jim Chappelow en gepubliceerd op Investopedia (zie ook het eerste staatje in het artikel van Durden):

Quantitative Easing (QE)

REVIEWED BY JIM CHAPPELOW Updated Sep 6, 2019

What Is Quantitative Easing? (QE)

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to increase the money supply and encourage lending and investment. When short-term interest rates are at or approaching zero, normal open market operations, which target interest rates, are no longer effective, so instead a central bank can target specified amounts of assets to purchase. Quantitative easing increases the money supply by purchasing assets with newly created bank reserves in order to provide banks with more liquidity.

KEY TAKEAWAYS

• Quantitative easing (QE) is the name for a strategy that a central bank can use to increase the domestic money supply.
• QE is usually used when interest rates are already near 0 percent and can be focused on the purchase of government bonds from banks.
• QE programs were widely used following the 2008 financial crisis, although some central banks, like the Bank of Japan, had been using QE for several years prior to the financial crisis.

Understanding Quantitative Easing

To execute quantitative easing, central banks increase the supply of money by buying government bonds and other securities. Increasing the supply of money is similar to increasing supply of any other asset—it lowers the cost of money. A lower cost of money means interest rates are lower and banks can lend with easier terms. This strategy is used when interest rates approach zero, at which point central banks have fewer tools to influence economic growth.

If quantitative easing itself loses effectiveness, fiscal policy (government spending) may be used to further expand the money supply. In effect, quantitative easing can even blur the line between monetary and fiscal policy, if the assets purchased consist of long term government bonds that are being issued to finance counter-cyclical deficit spending.

The Drawbacks of Quantitative Easing

If central banks increase the money supply, it can cause inflation. In a worst-case scenario, the central bank may cause inflation through QE without economic growth, causing a period of so-called stagflation. Although most central banks are created by their countries' government and are involved in some regulatory oversight, central banks can't force the banks to increase lending or force borrowers to seek loans and invest. If the increased money supply does not work its way through the banks and into the economy, QE may not be effective except as a tool to facilitate deficit spending (i.e. fiscal policy).

Another potentially negative consequence is that quantitative easing can devalue the domestic currency. For manufacturers, this may help stimulate growth because exported goods would be cheaper in the global market. However, a falling currency value makes imports more expensive, which can increase the cost of production and consumer price levels.

Is Quantitative Easing Effective?

During the QE programs conducted by the U.S. Federal Reserve starting in 2008, the Fed increased the money supply by $4 trillion. This means that the asset side of the Fed's balance sheet grew significantly as it purchased bonds, mortgages, and other assets. The Fed's liabilities, primarily reserves at U.S. banks, grew by the same amount. The goal was that the banks would lend and invest those reserves to stimulate growth.

However, as you can see in the following chart, banks held onto much of that money as excess reserves. At its peak, U.S. banks held $2.7 trillion in excess reserves, which was an unexpected outcome for the Fed's QE program.

(voor de staat die hier hoort te staan, zie het origineel)

Most economists believe that the Fed's QE program helped rescue the U.S. (and world) economy following the 2008 financial crisis. However, the magnitude of its role in the subsequent recovery is more debated and impossible to quantify. Other central banks have attempted to deploy QE to fight recession and deflation with similarly cloudy results.

Following the Asian Financial Crisis of 1997, Japan fell into an economic recession. Beginning in 2000, the Bank of Japan (BoJ) began an aggressive QE program to curb deflation and to stimulate the economy. The Bank of Japan moved from buying Japanese government bonds to buying private debt and stocks. The QE campaign failed to meet its goals. Ironically, the BoJ governors had concluded that "QE was not effective" just months before launching their program in 2000. Between 1995 and 2007, Japanese GDP fell from $5.45 trillion to $4.52 trillion in nominal terms, despite the BoJ's efforts.

The Swiss National Bank (SNB) also employed a QE strategy following the 2008 financial crisis. Eventually, the SNB owned assets nearly equal to annual economic output for the entire country, which made the SNB's version of QE the largest in the world as a ratio to GDP. Although economic growth has been positive during the subsequent recovery, how much the SNB's QE program contributed to that recovery is uncertain. For example, although it was the largest QE program in the world as a ratio to GDP and interest rates were pushed below 0%, the SNB was still unable to achieve its inflation targets.

In August 2016, the Bank of England (BoE) announced that it would launch an additional QE program to help alleviate concerns over "Brexit." The plan was for the BoE to buy 60 billion pounds of government bonds and 10 billion pounds in corporate debt. If successful, the plan should have kept interest rates from rising in the U.K. and stimulated business investment and employment.

From August 2016 through June 2018, the Office for National Statistics in the U.K. reported that gross fixed capital formation (a measure of business investment) was growing at an average quarterly rate of 0.4 percent, which was lower than the average from 2009 through 2018. The challenge for economists is to detect whether growth would have been worse without quantitative easing.

Peter Schiff (econoom) waarschuwt voor het waanzinnige beleid van de Fed: 'failliet' van VS dreigt

Een econoom die bekend staat in de VS, t.w. Peter Schiff, heeft de vloer aangeveegd met het beleid van de Fed: rentedalingen en 'quantitative easing' (QE) doorvoeren (het laatste betekent grote hoeveelheden geld bijdrukken, zonder toegevoegde tegenwaarde)....

De rentedalingen zorgen voor het op spanning houden van de over de toeren draaiende huizenmarkt en veroorzaakt een beursbubbel, die beiden vroeg of laat tot een ramp leiden bij het imploderen van de prijzen, het beleid dat de Fed voert, leidt daar onherroepelijk vanzelf toe......

Volgens Chiff zal de VS het niet makkelijk krijgen bij volgende pogingen, daar China en Rusland, eerder geneigd schulden van de VS op te kopen, wel uitkijken dat nog langer te doen, immers de waardepapieren die ze bezitten zullen alleen maar minder waard worden..... De VS heeft nog één geluk en dat is de petrodollar, vandaar ook dat de CIA een opstand organiseerde in Libië daar Khadaffi al vergevorderde plannen had om een gouden dinar als betaalmiddel voor olietransacties te introduceren, een munt die in tegenstelling tot de dollar een tegenwaarde in goud zou hebben, waar de dollar gebakken lucht vertegenwoordigt.....*

Lullig genoeg is één ding zeker: als het financieel misgaat in de VS hebben we ook hier 'de failliete poppen' aan het dansen......

Peter Schiff on the Economy’s Fate: ‘We OD on Stimulus and We Destroy the Dollar’

Posted by JT Crowe | Sep 23, 2019 | Economy, News

Economist Peter Schiff has been sounding the alarm of late regarding the Federal Reserve’s policies, and he thinks the central bank will take rates back to zero and restart quantitative easing — and that still will only further inflate the bubble before a massive collapse.

The Fed successfully pulled the U.S. economy out of the Great Recession by dropping interest rates all the way zero, where they remained for almost a decade, and with three rounds of QE, which has reflated the real estate bubble, blown up a bond bubble and helped pump up the stock market to new record highs.

Schiff, appearing on the Tom Woods Show last week, admitted he didn’t think the Fed would be able to rescue the economy last time around because he underestimated how the world would so quickly accept the previously outrageous QE — pumping new money into the economy through bond purchases — but things are different this time around.

Economist Peter Schiff has been sounding the alarm of late regarding the Federal Reserve’s policies, and he thinks the central bank will take rates back to zero and restart quantitative easing — and that still will only further inflate the bubble before a massive collapse.

The Fed successfully pulled the U.S. economy out of the Great Recession by dropping interest rates all the way zero, where they remained for almost a decade, and with three rounds of QE, which has reflated the real estate bubble, blown up a bond bubble and helped pump up the stock market to new record highs.

Schiff, appearing on the Tom Woods Show last week, admitted he didn’t think the Fed would be able to rescue the economy last time around because he underestimated how the world would so quickly accept the previously outrageous QE — pumping new money into the economy through bond purchases — but things are different this time around.

“I don’t think we’re going to have a whole lot of help from those other countries who are already trying to minimize their exposure to the dollar now. I don’t think they’re really going to step it up in order to enable QE4.”

Another problem facing the Fed this time around are monstrous deficits already in excess of $1 trillion compared to the $250-$300 billion deficits the country had at the time under President George W. Bush.

“Is there any way the Federal Reserve can monetize $3 or $4 trillion per year of government debt without the dollar falling and without igniting a bigger increase in inflation?” Schiff said. “If the Fed tried to inject enough stimulus into this economy to try to reflate an even bigger bubble than the ones we already have, I just think the economy dies of an overdose. We overdose on stimulus and we destroy the dollar. And then we have massive inflation.

“But what would be required to stop it would be so politically damaging in the short-run that they may opt not to stop it, which is even worse. It just happens a little bit later.”

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* Khadaffi had voor de invoering van die dinar een enorme goudvoorraad aangelegd, die 'vreemd genoeg' verdwenen was nadat de VS en andere NAVO-lidstaten Libië in 2011 een jaar of 70 terug in de tijd hebben gebombardeerd, tja waar zou dat goud zijn???? (waarschijnlijk verdeeld tussen de VS, Groot-Brittannië en Frankrijk (met wat fooien voor de terreurgroepen die door het westen werden bewapend, getraind en van rollend oorlogstuig voorzien)..... Wellicht dat ook nog een paar NAVO-lidstaten wat goud hebben ontvangen als beloning voor de steun aan deze zoveelste illegale oorlog van de VS tegen een soeverein land.... Voor het ingrijpen was Libië het rijkste land van Afrika waar het niemand aan iets ontbrak en dat veelal gratis...... Nu behoort Libië tot de armste landen van Afrika, waar het de bevolking aan van alles ontbreekt en is het land in chaos gedompeld, een land waar nu zelfs openbare slavenmarkten worden gehouden, alles met dank aan de VS en een aantal andere NAVO-lidstaten, waaronder Nederland (ja, ook met ons belastinggeld!).....