Follow The Bottom Violation
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Mar
7
Quantitative Easing Causes Oil to More than Double
I’m going to presume that the Fed implemented quantitative easing in the United States for these reasons:
- to stabilize the collapsing housing market.
- to combat so-called “deflation.”
- to create jobs.
Since the Fed announced zero interest rate policy (ZIRP) and began printing more money than ever in history, the results have been:
1. Housing prices continue to fall.
2. Foreclosures continue to increase.
3. The velocity of money is near zero.
4. Oil has more than doubled in price.
5. Precious metals hover at twenty-year highs.
6. Commodity prices continue to climb.
7. Consumer confidence has plummeted.
8. Several sovereign nations have announced their insolvency.
9. The dollar continues to lose value.
10. Unemployment hovers at its 30-year highs.
So remind me: when do Keynesian policies begin to bear fruit? Because it’s been almost a-year-and-a-half, and things look worse, not better. The U.S. has committed to spending $24 trillion to battle this crisis alone. It owes another $55 trillion. It manufactures very little. Now, explain to me how this a good thing again?
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Disclosures: Paco is long TBT, UCO, and gold. He also holds U.S. dollars by necessity, pending the advent of private gold-backed currencies.
You can buy his novel Discipline wherever books are sold.
2 Comments so far
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Partners
Why should banks want to lend (and thus increase money velocity) when they can borrow at the open window for almost nothing and then turn around and buy treasuries. Almost zero risk and an ok return without using their own money.
To my way of thinking, the fed raising rates across the board will cut this sweet deal off and leave the banks to either lend money … or take it to their casinos and gamble again.
eeeek.
Yeah… sounds like a no-lose proposition for the banks.