The Meaning of QE3

We wrote Obama or Romney: The Banker Fraternity’s Choice for Serial Warrior? on September 3, 2012, one week before Bernanke announce his QE-3: “The Banker Fraternity wants another Quantitative Easing, meaning electronic printing of dollars, maybe even a thousand billion new dollars, which would enter our economy, not at the food stamp or public works level, but at the bankers’ level.” *1)

We choose not to predict who the FED would push for our President, but we stated that its actions would give us a clear picture of which candidate the bankers want or do not want. We wrote, “On September 11, or soon thereafter, Ben Bernanke will announce when and how much new “stimulus” will be injected into the economy like crystals of Meth under the tongue. If the amount is huge and the date is imminent, such as “we started yesterday,” this will signal the fix is on for Obama to return to the White House. A positive stock market is the President’s hope for reelection…his “Yes We Can” moment.”

And is that not exactly what happened? In spit of sluggish economic news, the stock market is near record high ground, just in time for the election, and Mr. Obama is gaining at the polls.  This should not be construed to mean Romney is not also a good fit for the bankers’ President. But the bankers are clearly satisfied with President Obama; therefore we consumers can not trust either candidate.

Most of us do not have an inking of how QE-3 is supposed to shore up the economy, except that we have heard it is to encourage real estate loans, and the FED will spend $40 billion per month. No one asks where Mr. Bernanke will get all this money. The FED will print $40 billion a month, maybe for years, to buy up millions of bad mortgages that bankers have left from the last real estate boom and bust.
It took only two weeks after Bernanke’s speech for a Bloomberg News’ reporter to figure out what we had said in advance. . . the prime beneficiaries of QE-3 are not consumers longing for homes of their own, but the bankers who are stuck with bad mortgages.

Bloomberg’s story puts it this way: “Fed Helps Lenders’ Profit More Than Homebuyers” and “The Fed is targeting the $5.2 trillion market for mortgage bonds guaranteed by government-backed Fannie Mae, Freddie Mac and Ginnie Mae, which helps determine the rates that lenders can offer. Lenders bundle about 90 percent of new loans into the securities to sell to investors, giving them funds to make more.”*2)

The Bloomberg story does a decent job of explaining the essence of the deal which simply gives banks a chance to pawn off their old, dead and dying mortgages into the willing pocket of the the FED, which does not really care if it is bad paper because it prints the money to buy them.
I also want you to know this scam could be fixed in a heartbeat to funnel most benefit to home buyers with just six words from the FED… “WE WILL BUY ONLY NEW PAPER.” If Bernanke announced this simple policy, the banks would hurry to make new loans to anyone who could sign, and it would indeed trigger a real estate boom that would boost the building and real estate business and lots of related businesses. “For Sale” signs would soon come down in your neighborhood. The bankers would still make their origination fees, but this would not be nearly so juicy as the scheme that allows them to unload old, bad paper for newly printed dollars. We must never forget, the FED is not owned by the taxpayers, but by the biggest and most powerful banks, so the bank’s interest always comes first.  The FED could do the same thing at will with commercial loans to small businesses… if they wanted to. Should monetary decisions be made this way? Of course not.

Massive gifts to businesses or individuals can only lead to more chaos in a year or two. We all know instinctively that someone has to pay for every bad loan and every crafty, self-serving decision made at Bernanke’s level. It is we the consumer (not necessarily the taxpayer) who pays in higher prices for everything we buy with our depleted and debased dollars. The FED can never go broke because it can print an endless supply of dollars for any scheme. We have a limited supply of dollars, and will eventually be unable to pay for the inflated food and basic needs.

If we could ignore the short-sighted benefits of this “crystals of Meth under the tongue” and if we had power to do something, what should be our course be? We should support the audit law Ron Paul finally got passed through the House — The Federal Reserve Transparency Act. Harry Reid, the Senate Majority Leader and Nevada Democrat, has vowed it will not be put to a vote in the Senate. We should insist the FED be physically occupied and nationalized, not just audited… it is a private business, which is another way of saying “eliminate the FED.” We will never be free of war and inflation until this is done. *3)

Most important, we should explain to our children and friends what we have learned about the FED and other control factions. Politics and Faith are not proper and polite subjects of conversation in the 21st century where our standards are increasing guided by the media, bankers, and politicians. We need to set our own social standards of what issues are important, and tell those most dear to us the painful truths we have learned. Our children will not thank us for keeping them ignorant.