Fire Up The Presses

We all said it and now they admit it - although I suppose there is proof that this has been going on for some time. LET THE MONEY PRINTING BEGIN.

DOLLAR TANKS AS FED SAYS IT WILL PRINT MONEY

"Since September, the Fed’s balance sheet has expanded from about $900 billion to more than $2 trillion as it lends money to new programs." (ETF Trends)

The drop to 0-5% rates it seems might have another effect (if banks use the money to lend money and reinvigorate the housing bubble). Here is one description --

Here’s something kind of funny: This current economic collapse can be largely traced back to the 2003-2004 1% Fed Rate era that fueled the housing boom by making absurdly inflated real estate prices “affordable” because these interest rates — both fixed and the evil adjustable ones — hadn’t been so low in half a century.

While it was sloppy/greedy “stated income” no-doc teaser-rate reverse-equity 105% loans that enabled Juan Drywallhanger and his old lady, Amber Asstattoo, to “buy” a 2,800-square-foot stucco monstrosity on a 3,000-square-foot lot in the Adobe Falls development behind the Sunburst Towne Center’s (now closed) Bennigan’s and Linens ‘n Things in the first place, it was the artificially cheap borrowing costs that made the option-ARM introductory payments on a $579,000 “Tuscan inspired” vulgarity briefly plausible for people making $40,000 per year and already buried in credit-card and SUV debt.

I thought that too funny of a description not to include even if I would not have articulated it just so.

So what are the results of all this printing of money (have you read about the Weimar Republic?)

According to CNN-

But there is a dark side to quantitative easing: inflation. The government has backed all of this new debt by selling Treasurys, which have been the golden asset of the credit crisis. They have been the only liquid security of late, reaching historic highs as their yields have hit all-time lows...

"The end result of all of this could be the next major problem: the crisis of confidence in the dollar," said Baumohl. "At some point, foreign investors are not going to come to the table to buy U.S. debt, leading to a dollar decline."

Of course add to all of that nonesense this - Drop in consumer prices is most since 1932.

And then the most asinie statement of a bizzare year:

"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse." Bush the Second

Doing a little (or much) evil to do a little percieved good. And this from a "conservative"

What a mess