We have been warning conservatives about Federal Reserve Chairman Ben Bernanke’s taxpayer-funded Super PAC that has so-far pumped something like $2 trillion into the economy to help re-elect President Obama.
Yesterday, the Fed doubled down on this failed strategy and announced an unprecedented plan for an open-ended round of Quantitative Easing(QE3) and extended the period for which it will keep interest rates between 0 and 1/4% to mid-2015.
What this means is that the Fed will print money at a projected “burn rate” of $40 billion a month until… forever.
Here is one of the key paragraphs from the Fed’s Open Market Committee statement from yesterday, Thursday, September 13, 2012:
“….The Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions…should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”
As finance writer Jeff Macke pointed out in a column on the FOMC announcement, “Unlike QE1 and QE2, no dollar amount or time-limit was placed on the program. The Fed essentially announced it will be purchasing $40 billion in MBS per month until further notice.”
The Fed tied the end of the program to a substantially improved “outlook for the labor market.”
Given the job creation results Obamanomics has achieved so far, “until further notice” could be a very long time.
On average, Obama’s so-called recovery is adding less than 66,000 jobs a month — or about half of what’s needed just to keep up with population growth. And, despite some growth in manufacturing employment, we are still a half a million jobs down from our pre-Obama mark in that key metric.
To keep up with population growth and get 23 million unemployed and under-employed people back to full employment would take a staggering level of economic growth. The American economy would have to create better than 600,000 jobs a month over the four years of a second Obama term.
As Jeff Macke said in his column on the Fed’s announcement, “There’s a certain willful spunkiness to the plan, but in terms of economics it’s little short of bizarre.”
It is bizarre unless your goal is to re-elect President Obama.
Pumping something like $3 trillion into the economy through the Fed’s three quantitative easing programs — on top of Obama’s $5 trillion in federal deficit spending — has managed to inflate the value of all kinds of assets: oil, gold, the stock market, commodities in general…
This inflation looks like growth to the Obama apologists in the establishment media, but it hasn’t put real people on Main Street back to work.
The good news in all of this is that Governor Mitt Romney spoke against Bernanke’s inflationary strategy and has vowed to replace Bernanke if he is elected. As we have said before, and will keep repeating until the polls close on Election Day, we should all work hard to make sure Romney gets the chance to make good on that vow.