Financial Standard Comments - No QE, not bad

Comment by scbarlow ()

scbarlow () — Wed, 04 Apr 2012 14:58:15 +1000

"An essential point in the social philosophy of interventionism is the existence of an inexhaustible fund which can be squeezed forever. The whole system of interventionism collapses when this fountain is drained off." - Ludwig von Mises, 'Human Action'
Everytime the U.S Federal Reserve Bank ('the Fed') engages in a balance sheet expansion (i.e. printing money) the 'liquidity effect' of their interventionist activity results in asset market rises. Domestic and international shares go up, but some of this excess liquidity also finds its way into other asset classes including commodities because the Fed has no control over where the money flows once it is released into the economy.
The Fed has now engaged in two (actually 3) rounds of "quantitative easing" (ie. money printing) and whilst global stock markets have benefited, we have also seen global oil prices double resulting in huge price increases at the petrol bowser and a whole host of other increases in commodity prices that are important elements in the cost of living.
Price inflation in the U.S is now running above 3% while wages continue to decline in real terms. Thus the Fed's actions - far from improving the situation - have infact undermined the living standards of tens of millions of modest and medium households.
Lamenting the lack of another round of quantitative easing is dispicable.
If you're going to comment on economic fundamentals - and make light of them - do your readership (and credibility) a favour and get a grip on the basics. Try 'Economics in One Lesson' by Henry Hazlitt, or for something much more fun try "How an Economy Grows and Why It Crashes" by Peter D. Schiff, or "Meltdown: A Free Market Look at Why the Stockmarket Collapsed, the Economy Tanked and Government Bailouts Will Make Things Worse" by Thomas E. Woods.

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Comment by BenO ()

BenO () — Wed, 04 Apr 2012 15:45:24 +1000

Thanks for your comments scbarlow and I respect your opinion. But... do you really have to diminish yourself by adding insults just to prove your point? Thank you all the same. No harm, no foul.

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Comment by Flabbergasted ()

Flabbergasted () — Wed, 04 Apr 2012 16:03:19 +1000

Well responded to BenO. Ad hominem attacks diminish the argument and form an unpleasant punctuation mark. t

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Comment by BenO ()

BenO () — Wed, 04 Apr 2012 16:31:15 +1000

cheers.

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Comment by JohnG ()

JohnG () — Wed, 04 Apr 2012 16:37:09 +1000

I am also with you Ben - give yourself another payrise! Your analysis and opinions are why the readership continues to consider your comments.