Friday, September 14, 2012

There he goes again!

Ben Bernanke, who along with Mr. Obama has done such a splendid job of managing the American recovery from the Crash of 2007, wants to treat us to another "quantitative easing" -- QE3 for short -- with interest rates near zero for the long term.

Some poor sap of a retiree with a million dollars in one-year Treasury notes, or in the bank, will thus earn an income in 2012 of $1700. If he likes to take risks, he might stretch out the maturity to ten years, in which case he'll earn $17,000, which still qualifies him for food stamps.What's worse, the inflation rate for July was 1.4 percent, so his million dollars will effectively be reduced in value by $14,000 to $986,000. (But think of the upside! At least he won't any longer be demonized as one of those "millionaires and billionaires" who don't pay their fair share.)

Insanity, as Albert Einstein supposedly said, is to do the same thing over and over again while expecting a different result.  The last time America ran this sort of economic policy -- subsidies, diktats, regulations, social engineering, indebtedness, and the fear of higher taxes to pay for it all -- was in the 1930s. Not a very reassuring precedent.

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