Mission Objective: Epic Failure
Mission Status: In Progress...
http://www.zerohedge.com/news/2012-09-27/guest-post-why-qe-wont-create-inflation-quite-expected
Just a little closer to implosion...
Add all this up and here's what we get: money is not just being created by the Fed, it's being destroyed by declines in asset valuations and writedowns of impaired debt. Credit may be expanding but the top rung of households is paying down debt, not borrowing more, and the bottom 95% are unable to add much to their already staggering debt load.
Incomes are declining, providing a smaller base for both spending and borrowing. The top 5% may be experiencing a "wealth effect" as stocks soar but 7 million people cannot levitate the entire $15 trillion U.S. economy much while the incomes of the 137 million other workers are stagnant or down.
Money velocity is plummeting and banks are hoarding Treasuries as much-needed collateral.
It's difficult to see how these forces could generate inflation. There may be new money and credit being created, but very little of it is flowing to households whose spending in the real economy drives inflation.
I think this analysis is mostly correct. Its a function of money supply AND the number of goods being chased. Right now the printing just goes to feed the balance sheets and make it look like banks are solvent. They don't act as if they actually had the money - they don't loan it out etc. The Crash has effectively already happened. The money that IS getting into the economy is coming as entitlements. Another 1 Trillion plus added every year. That is where inflation is coming from - SS, Medicaid, welfare, free Obama phones, and soon Obamacare. Print , loan and spend. I expect a massive bailout of public pensions during Obama lame duck months ( assuming they are lame duck) and that will add trillions more which will then trickle out as people get their pension checks. He may also try to push through his "infrastructure bank" which I am willing to bet will be backed with IRAs and 401Ks confiscated to fund it. And if he can't get it passed, he will just declare an emergency and do it anyway by fiat. The more I look at it, the more I think the sheeple are too stupid to understand what is happening, hence there will be no panic. That article said the top 5% are paying down debt - hunkering down, and getting ready for the worst. As Money velocity approaches zero you get an effective depression and deflation, which the fed is trying to counter with smoke and mirrors. The reality is still going to be falling production, layoffs, unemployment, shortages and economic depression, without the effect of saved money being able to buy more. Eventually everyone will have an EBT - and they will just start using it to print money - and that is when real inflation will start to ramp. And don't think Romney will save you from that future. He is as willing to buy votes with free stuff as any other democrat
