Quantitative Easing – Doing More Harm Than Good

Federal Reserve Quantitative Easing

Officially Announced As Ineffective

Janet Yellen announced today that Quantitative Easing has been less effective than expected.

Federal Reserve Chairwoman-Janet Yellen today raised the Fed funds benchmark rate .25% but said that she does not see economic growth gaining speed. The world is concerned about the staggering amount of global debt, much of it created by the Fed during its socialized money creation known as Quantitative Easing. Confidence, the great driver of economic expansion in free market capitalism, is largely absent today. Dubious social financial engineering has stalled out a strong economic recovery, and we will continue to see more investors move into gold and silver among other hard assets.

Today, the U.S. dollar as a fiat currency (not backed by hard assets) is accepted as trade for goods and services.  based on the faith in the fiscal strength of the U.S. Treasury, and the Federal Reserve. An economic historian is aware that the U.S. dollar was backed by gold for many years including the period from 1900 through 1933. In January of 1934 the Gold Reserve Act raised the exchange rate of gold from $20.67 to $35 per troy ounce. This 70% rise in value of gold- created an incentive for gold owners outside the U.S., to redeem their gold for this windfall in dollars. The dollar was devalued intentionally by President Roosevelt, in the hope that deflation would be defeated, and inflation would rise.

In the late 1960’s and into the 1970’s, the U.S. experienced high inflation. Amidst a run on U.S. gold, in 1971 President Nixon suspending the direct international conversion of dollars into gold, and initiated price controls. Price controls are ineffective since they distort the relationship between supply and demand for goods and services. Inflation rose into double digits, and the price of gold quadrupled from $226 per ounce in 1978 to $850 in early 1980. Precious metals such as gold and silver, come under heavy demand, during times of economic distress-particularly when the dollar is losing its value measured in the cost of goods and services.

Fast forward to 2017, and the Federal Reserve has inflated the world with dollars through the use of Quantitative easing. The QE program sounds pleasant enough, until one looks at the staggering $19 trillion in debt that has been created by the Fed. Economic growth is reported at anemic levels of GDP figures often less than 2%, and some are questioning the accuracy of these figures that are often revised downward. These low reported growth figures, are not at levels that adequately support employment of new workers looking to enter the workforce.

I believe that people have lost confidence in the institutions of central planning-particularly the Federal Reserve, and also the Wall Street banks. President Trump did create some renewed hope, but his policies initiatives are already being opposed by the dethroned Democrats, as well as his own party.

Capitalism enables private citizens to make their own economic choices through a free market of exchange. Prices are set rationally based on supply and demand, and not by a central government, nor a central bank. As the European Union Central Bank, and the Federal Reserve continue to use  Quantitative easing to inflate their money supplies while the risk of crippling inflation of prices becomes an almost certainty. Former Federal Reserve Chairman Paul Volcker said,

“The truly unique power of a Central Bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.”

Its time to take action and insulate yourself from the impending economic turmoil we face as citizens of the United States.  The Federal Reserve will continue its Quantitative Easing program because it has to in order to keep our economy afloat.  Act now before its too late!  Move your wealth out of the dollar and into something tangible.  Precious metals IRA‘s are a good alternative as a long term investment strategy.  In the short term you may want to use a percentage of your wealth to own physical gold, silver, platinum or palladium bullion that you store at your house, office or bank.  When the coming economic crisis comes you will be glad you took preemptive action to protect your hard earned wealth.

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