Youtube helped popularize the video, “Quantitative Easing Explained,” an animation that explains the Federal Reserve’s plan to engage in quantitative easing again in order to try and stimulate the economy.
As pointed out by the video, quantitative is very dangerous. When the Federal Reserve prints more money and thrusts it into the economy, the value money decreases. When this happens, the prices of goods and services inflate because the numeral figures of money goes up, but not the value. As a matter of fact, a majority of economists agree that quantitative easing is bad for any economy and should not be used as a way to help rebuild one.
Back during the post WWI era, Germany tried to do the same in order to help their shattered economy recover, as well as to pay war debts. The German government printed massive amounts of the German Marks. Unfortunately, the value of the mark dropped significantly to the point where the paper it was printed on was worth more than the currency itself. Hyperinflation was the result.
Since then, hyperinflation has always managed to plague every country that was unfortunate enough to engage in one form of quantitative easing or another. Argentina, during the times of Evita Peron, had prices of jeans drastically rising from a few dollars to a few thousand dollars, all in a matter of days. Under Mugabe, Zimbabwe reprinted its money repeatedly in order to keep up with hyperinflation. Since Mugabe’s election to presidency, Zimbabwe has experienced 100,000% inflation and now sits at an 80% unemployment rate.
Not saying that America can end up like Zimbabwe, but there are definitely side effects if we were to engage in quantitative easing again. Last year, we printed two trillion dollars and pumped it into the economy. Ben Bernake, the head chairman of the Federal Reserve, was sure that the inflation caused by the quantitative easing would create jobs.
It did not.
When prices inflate, employers are generally more wary about purchases and hiring more workers. Consumers are also more wary about spending and making long-term investments. Bernake was trying to prompt people to find work because of the higher prices, thus prompting employers to hire more because of the high rate of job demand.
Now, Ben Bernake believes printing another 600 billion dollars will help the economy. How is doing the same thing that has already failed once helping, especially since the consequences are projected to be quite dire?
Another topic discussed on the video was the Goldman Sachs. I do not know the Goldman Sachs very well in the sense that I have not done much research about them but I do know they are a bunch of godless assholes who do, indeed, rip off Americans. The Federal Reserve announcing when they will buy bonds and how much they will buy is like President Obama announcing to the world when the US will pull out of Iraq. It gives the Goldman Sachs a chance to form a game plan into screwing the Fed. Maybe if Bernake were like every other financial leader—secretive—we will not be in this mess.