American Monetary Expansion

rumour

Pending our re-entry to the international borrowing circuit, is it now time someone focused on what is happening in the USA. Have a look at the graph below;

It tracks the U.S. monetary base, a direct measure of how much money the Fed has been printing — and injecting into the banking system. The sheer magnitude of this expansion is mind-boggling in the extreme. Look at the relatively gradual slope of growth in the 1990s and 2000s — before the Lehman Brothers failure, bear in mind that even at this stage which is nothing compared to what is happening today, that "slower" pace was considered irresponsibly rapid by many experts.
Next, look at what began immediately after the Lehman Brothers failure. That's when the federal reserve embarked on the previously unheard of trajectory into the outer space of monetary policy.
You can see the response to post-Lehman crisis (QE1) was replicated not just once, but twice — with QE2 and QE3.
Here are some facts I've picked up on the internet.

1. Immediately prior to the Lehman Brothers failure, the Fed reports that the monetary base stood at $849.8 billion. This past October 30, it was $3,607.7 billion. That's an expansion of $2,757.8 billion — over $2.7 trillion.
2. This $2.7 trillion expansion has all taken place within just six years and one month. If, the Fed had continued to expand the monetary base at a normal pace (by the same amount as it had since 1961), it would have taken nearly 150 years to come this far. In other words ... With normal growth, the Fed's recent $2.7 trillion monetary expansion would not have been achieved until the year 2158!
3. Prior to 2008, there were only two times the Fed embarked on extremely rapid monetary explosion of this type — first in anticipation of the widely feared Y2K bug; and later, in the aftermath of the 9-11 terrorist attacks. But as of the latest tally, the post-Lehman QEs have been
o 43 times larger than the dramatic Y2K expansion, and ...
o 69.5 times larger than the Fed's explosive reaction to 9/11.
Fed wannabe chief Janet Yellen in her testimony before Congress this week, said little or nothing about the 2008 debt crisis, federal deficits, European debacles, fiscal cliffs or any other issues which are among her predecessor's favourite excuses for the unprecedented money printing she vows to pursue.
Nor does she talk much about a weak economy.
Instead, her new rationale is that, although the economy has improved, it hasn't quite improved "enough." What on earth will be enough, the policy is already leading to absurdities.
Consider, for example, the absurdity of this recent chain of events:
· The U.S. Labour Department announces a far better-than-expected report on new jobs ...
· Investors fear that the good economic news may nudge the Fed a tad closer to cutting back its stimulus ...
· They dump their investments by the truckload, and ...
· Bond prices plunge the most in four months, driving interest rates skyward.
All in response to supposedly good news about the economy!
All because investors would rather see the economy sink than see the Fed cut back on its monthly megadose of money shot up their veins.
Or consider the long sequence of excuses Fed Chairman Bernanke has offered for ignoring the 100-year Fed prohibition against running the money printing presses 24/7 ...
First, he said they had no choice because of the great debt crisis of 2008.
"Unless we flood the banking system with money," went the argument, "megabanks will fail and global financial markets will collapse in a heap of rubble."
Second, as soon as the worst of the debt crisis was apparently behind us, they promptly came up with a brand new rationale: Trillion-dollar federal budget deficits year after year.
"Unless we buy Treasuries by the truckload," they reasoned, "the deficits will smash the bond markets and sabotage the economic recovery."
Next in the long line-up of excuses came the European debt crisis, the Fiscal Cliff and, most recently, the government shutdown.
The U.S. economy is now so addicted to the Fed's monthly $85 billion injection of monetary stimulus ... that just the thought of withdrawal is enough to cause violent market convulsions.
I admit this is not all my own material and comes from a subscribed service, I thought this the bast way to share it and I’m only be able to check in here from time to time,so responses may be limited, however I am keenly interested in this.

Where is all this going?, how can it have a good ending? This is the most massive money printing exercise in human history. Everyone knows what has happened in the past when this is undertaken.

Can someone explain to me how this time it will be different?

Finally what should ireland be doing to protect itself?

Dob74

The only thing saving the world economy is QE by the US fed.
Where did you get that graph fox news?

ChicagoJoe

Is the USA to have for Govt (A) the few or (B) the many. The latter would include breaking up the banks, a focus on job creation and safety net expansion where needed, single-payer health insurance, higher taxes on the wealthy, far lower military spending, public members on corporate boards, greater employee workplace control.

sin_city

Dob74 wrote: »

The only thing saving the world economy is QE by the US fed.
Where did you get that graph fox news?

That's one opinion.

Another is that money printing as seen hundreds of times before over many hundreds of years will cause hyperinflation.

I think we're getting ready for a bigger crash than we would have otherwise had.

Bitcoin just hit $1,000. You'd have to be pretty blind to see that confidence in the US dollar is falling away.

What exactly about the graph do you disagree with?

hfallada

sin_city wrote: »

That's one opinion.

Another is that money printing as seen hundreds of times before over many hundreds of years will cause hyperinflation.

I think we're getting ready for a bigger crash than we would have otherwise had.

Bitcoin just hit $1,000. You'd have to be pretty blind to see that confidence in the US dollar is falling away.

What exactly about the graph do you disagree with?

Hyperinflation happened after WWI with germany. But they were printing so much money. Likewise in Zimbabwe. But America isnt printing that much and its merely a on paper procedure, which could be reversed rapidly. Very few American economist are saying their economy is a bubble and they would have no reason not to say it.

Bitcoin is a drop in the ocean in money terms. Its being used by people in countries with tight transaction controls like china to transfer money. Millions of American arent replacing there life savings with bitcoin, as its has no reputation. It could disappear tomorrow, but the dollar will always exist

sin_city

hfallada wrote: »

Hyperinflation happened after WWI with germany. But they were printing so much money. Likewise in Zimbabwe. But America isnt printing that much and its merely a on paper procedure, which could be reversed rapidly. Very few American economist are saying their economy is a bubble and they would have no reason not to say it.

Bitcoin is a drop in the ocean in money terms. Its being used by people in countries with tight transaction controls like china to transfer money. Millions of American arent replacing there life savings with bitcoin, as its has no reputation. It could disappear tomorrow, but the dollar will always exist

Keep that for your stand up routine.

Very few American economists also predicted the crash of 2008. I tend to listen to the ones that did and see what they are saying now.

Yes, the FED and the whole world are printing huge amounts.

The dollar will last forever? Not likely if you look at the trend of its diminishing value.

Look up Kyle Bass who made half a billion on the correct hedge of 2008 and Peter Schiff. They saw it coming and they are the people that make sense.