There are days I despair more than others and coming from me that says a lot as some of my readers may know.
Yesterday Russell Norman, a man who should not be anywhere near politics as his rampant ignorance on matters finance proves to me (mind you I could easily say the same for most politicians both left and right), announced that we should have a “Round of Quantitative Easing” to help rebuild Chch.
He argued that creating credit to buy bonds would devalue the dollar, reduce overseas borrowing, fund Christchurch rebuild and re-stock Natural Disaster Fund.
So in order for my readers to understand why my despair level rose a multitude of rampant, here are the next words for your banksters dictionary:
Quantitative Easing (QE)= The central bank buys bonds or financial instruments to make money the central bank printed out of thin air available to the banks who sell these instruments. The theory behind this is that banks will lend this money to real world people who need it to run their businesses creating demand for their products hiring people and thus stimulating the economy. Here is nice video from Investopedia about QE
Russel Norman argued that QE will not lead to inflation and therefore not raise prices which would debilitate those of us with a fixed income or stagnating wages.
Well.. it could be argued that Russell Norman is right… because not a lot of the money transferred to the banks needing liquidity ended up on mainstream where money is desperately needed to help businesses starved of funds to continue their trading thus masking the real world effects of QE.
For example at the moment more then a 100 million people are without work in the US alone. That is about 30% of it’s entire population. The amount of people on food stamps is about 12 times the entire New Zealand population which would equate to 1.3 million people in New Zealand.
But while the masses got poorer, lost their homes ( there are 5 empty homes for every homeless person in the US) and jobs (which have been outsourced even more in the last three years then ever before) and are living rough or on the verge off, inflation reared it’s ugly head in some strata of society: It appeared in the world of the 1% of the most wealthy people on the globe.
You see, the money that went to the banks wasn’t used to help the real world economy, it was used to continue the trade that started the financial instability in the first place: The Derivatives trade.
And with the derivatives trade was what paid the banksters huge bonuses and that allowed them to spend ever more outrageous sums on houses, paintings, cars, yachts and other luxury items. Here is Michael Sniders take on QE and what it will do to the global economy.
What is causing prices for food and fuel to rise is not so much direct inflation but the speculation of the same people getting the bonuses for trades in Derivatives, in future harvests and fuel production.
So with that in mind I hope that you will understand why James Henderson, guest writer for the Standard when he tries partake in the great global finance debate showing his utter ignorance spiked my despair several notches and if that was not enough here are some more reasons.
In promoting QE, Russell Norman shows that he has no concept of the historical background of QE, the international banking system, Fiat money, the Reserve system and the inevitability of the collapse of the entire financial system because the concept is unsustainable.
What is even more worrying is that websites such as the Standard and Tumeke, in their jubilation about the Greens coming out ahead of Labour with this incredibly ignorant policy, show once again that they too have absolutely no concept of what is about to hit us in the very near future and that no amount of QE will stop the inevitable global meltdown of the entire fraudulent fiat currency based system.
For those of you who feel lacking in the Financial knowledge department and who want to get up to speed with what is coming, here is Cris Martenson’s Crash course and here is Money as debt explaining how money is created and why the system is unsustainable.