J Street: With Friends Like That, Who Needs Ben-Amis?

[Spengler]

J Street: With Friends Like That, Who Needs Ben-Amis? on the Spengler Blog


by David P. Goldman


Shabbat Shalom.

[Walter Sobchak]

Spengler, outside of the bad pun, were you thinking of anything in particular?

[lzzrdgrrl]

Oh, gosh...... Let's see........

......So how is QE2 meant to work? As America's central bank, the Federal Reserve has the power to create "high-powered" money, ie notes and coins, as well as "digital" money, which it can credit to the private banks when it purchases assets from them. The Fed is hoping that when the banks receive this freshly created money, they will start lending it out. This is a good hope to have. However, so far private banks, fearful of the continued decline in house prices, rising foreclosures and a weak economy have chosen to protect their balance sheets by holding onto their cash. Moreover, the demand side is little better, for what is often forgotten is that there can be no lending unless there are willing borrowers. Most households are looking to repay debt; it is unlikely that QE2 will change their minds on this......

"This is a good hope to have"......... 0_o........ you can't even mock this.....

But I do like Karl Denninger's assertion that QE is essentially a two-trillion dollar tax imposed on working Americans since 2009, if you include that $600bn bit that is supposed to roll out starting this month. Simply lurvly... ......