Text of Fed Statement re: QE2

[washunut]

A lot of the rise came from expectations built on a hope and a prayer. Then there's reality, which is the country is still undergoing massive deleveraging that will take years to play out. Banks will not want to make a lot of risky loans or assume a lot of risk.

My sense what the Fed is hoping is that these NEW dollars will go into the system. This money is not adding to bank balance sheets. They hope these new dollars get into used to inflate riskier assets.

 

[richrf]

My sense what the Fed is hoping is that these NEW dollars will go into the system. This money is not adding to bank balance sheets. They hope these new dollars get into used to inflate riskier assets.

No need to hope. This is what is exactly happening.

The average household is getting poorer since their savings is being devalued and they are getting no interest on their savings. This amounts to trillions of dollars in lost income and wealth. Much more than any stock market bubble can produce.

Since the average household is poorer, they cannot purchase as much local goods leading to further job losses.

The wealthy few that have access to free money are taking that money and moving it overseas to Brazil, China, Russia, India, Taiwan, Korea, Australia ... where they feel they can get a big and almost risk-free return on free money. This helps expand overseas trade and makes the rich richer. This has been going on for two decades.

Foreign entities are buying up our infrastructure with cheap dollars and laying off people in the process lowering our overall standard of living. From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent. That is what free money to the wealthy buys you. And Bernanke doesn't care.

 

[richrf]

This morning I read a column in the Chicago Tribune highlighting that savers are being forced to take risks. And has anyone questioned from where does King Bernanke receive his authority to force people to take risk. Hasn't this blown up in the middle classes' face twice already. Seriously, this quasi-government that Bernanke reigns over really should be dismantled.