QE2: Fed to spend $900B more to spur econ. This on top of $2T already spent. WTF?!

[BoberFett]

It all comes down to the fact that the US has been over-consuming while under-producing for the past several decades. No amount of accounting tomfoolery is going to change that. The economy has to contract. It's a correction. Putting it off will only make the eventual correction worse.

 

[halik]

That's not what I was suggesting, it was a hypothetical question.

Nevertheless, I think we would be better off if we discussed what the FED did beforehand.

Boom part of the credit cycle and zero regulation will make that happen. That's not to say that FED actions in 30s were in anyway helpful.

Good paper on the topic
http://www2.tepper.cmu.edu/afs/andrew/gsia/meltzer/Munich.PDF

 

[Saint Nick]

Where does all of this money come from?

 

[halik]

Where does all of this money come from?

Member Bank / Primary Dealer's reserves

 

[airdata]

Where does all of this money come from?

It comes from thin air and is backed by nothing other than debt and us citizens lives.

I think they're trying again to do an audit of the federal reserve, but it's not going to work. Some people even speculate that we actually have no gold in our reserves to help back our currency...

 

[werepossum]

It all comes down to the fact that the US has been over-consuming while under-producing for the past several decades. No amount of accounting tomfoolery is going to change that. The economy has to contract. It's a correction. Putting it off will only make the eventual correction worse.

Quoted for truth. Unless and until we figure out how to revive manufacturing without killing our standard of living, we are merely borrowing money to prop up a standard of living that our productivity will not support.

It's also worth noting that while opinions have been varied on this board as to whether or not this is created money, there seems to be no such ambivalence from the rest of the world.