Tuesday, October 2, 2012

Guest Post: QE3

By Alex Perales

In an effort to educate the El Paso citizenry about the haphazard attempts to help our economy with our nation’s economic policy I’d like to specifically talk about the effect of monetary policy in the form of Quantitative Easing 3.

The Federal Reserve, a private banking institution, has just recently announced QE3 in which mortgage backed securities will be bought from other private banks at the rate of 40$ billion dollars a month. This policy is to attempt to stimulate the economy by printing money out of thin air to induce spending now as opposed to saving and spending later.

The reasoning behind this policy is the attempt to create jobs, help the middle class and the poor, and to avoid a recession.

The actuality of the policy is the destruction of jobs in the future, producing a smaller middle class and making the poor poorer, creating a bubble that will lead to a burst which creates recessions, AND most importantly enrich the politically connected.

The fallacy of our “easy money” monetary policy is inherent of Keynesian economics which believes that a centrally run economic system is best to cure the “failures” of the free market. It should be of no surprise that Democrats and Republicans both full heartedly support this system since it’s their friends that become richer.

What’s the real answer?

Google Austrian Economics

1 comment:

Alex Perales said...

Thanks for publishing this Jaime! If you don't mind I'd like to leave a link to a more in depth post about QE3 for those that might have further interest.