Tuesday, April 07, 2009

Helicopter Ben and U.S. Monetary Policy

When I think of the economical woes we find ourselves in, the thing that is always on my mind is our monetary policy.

The amount of cash in circulation has increased rather steadily since the mid-80s. If we add the Obama program, that angle is heading straight up to astronomical levels.
Mr. Bernanke is sometimes known as “Helicopter Ben” because he once in an academic paper referred to the use of “helicopters” full of money to rescue an economy from deflation. [He] explain[ed] the Fed’s new policy of buying $300-billion in U.S. treasury bills, not[ing] that the Fed is now more worried about inflation being too low than about it getting too high in the future.
By printing and circulating billions of new dollars, America is at risk of becoming
the fountainhead of a new inflationary outburst. The U.S. dollar is now in decline, gold is moving sharply higher, and new global currency turmoil is on the horizon.
How will the Fed absorb all of this money being placed into circulation? It is unreasonable and unlikely.

America is not done, but it will emerge weaker and less powerful. Its citizens will be less wealthy and more dependent on an inept government for health care, environmental policy, education, energy, banking, and certain manufacturing areas.

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