Quantitative Easing Affects All Of Us

Federal Reserve’s “Quantitate Easing (QE)” is simply money printing. Money is typically printed to accommodate an expanding economy. When money printing greatly exceeds economic growth, every dollar printed slashes (lowers) the value of existing dollars. Excessive printing is now being done to TEMPORARILY prop up our government and the stock market.

Fed’s QE’s Slashes Dollar’s Value

Various debts and deficits are being partly mitigated through lower interest rates by the QE dollars dumped into the economy. Stock prices go up when the dollar is devalued because, assuming a fixed company value, more new dollars are required to equal the old dollars. These QE impacts are great for politicians in an election year, particularly for the existing Administration. QE money allows difficult choices on deficits and debt to be delayed, provides more cash to create jobs, and provides more cash for consumers to spend.

History shows that governments’ cannot print or borrow money to spend their way out of a recession or tax their way into prosperity. It works for a while then it blows up! Rome, Argentina and Greece are examples. Present QE is simply delaying the crisis until after the election.

Each of us will be greatly affected by excessive money printing. There are a few up sides, e.g., the dollars decline in value may help exports and allow paying down debts using less valuable dollars, but most impacts are negative. The value of wages and income from investments will decline. Inflation will increase resulting in less buying power per dollar, and impeding borrowing by consumers and businesses leading to jobs and job growth decline. Investors in our national debt (private and foreign governments) will demand higher interest rates thereby greatly accelerating the national debt. One or more of these results will be felt independent of your age or wealth.

The truth is that the scale and magnitude of the problem is larger than our politicians’ ability to respond. This terrifies them because it demonstrates their need for power and personal greed have been their top priority with our nation’s long-term wellbeing a distant second priority. We need to become better informed to save our nation.

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Dr. Cleland’s Ph.D. is from Purdue University where he specialized in complex systems theory. His technical training and experiences includes analyses of many types of systems, involvement with numerous federal, state, and local agencies, and management of a broad set of set of professionals, services, and trades people. He has managed scientists, engineers, policemen, firefighters, environment, health, safety and emergency planning experts, building trades and maintenance crafts personnel, and others.

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July 2012
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