QE2 Announced

The Fed announced they will print $900B in 2011 in QE2 to finance Treasury debt in hopes to keep interest rates low thus spurring consumers and businesses to borrow thereby reducing unemployment. Interest rates are already zero yet neither consumers or businesses are borrowing. Most banks won't loan to those who really need loans and those who qualify aren't taking on more debt.

Let's put $900B in perspective. The federal government took in about $2.1T in tax revenues during 2009. But the federal government spent an extra $1.3T that it had to borrow in 2009.

So it looks like the Fed intends to just print next year's deficit. Just print money out of thin air, based upon nothing. That sounds like dollar devaluation to me. Devaluation of the world's reserve currency. That's serious business.

So all the things that we buy that come from other countries will cost more in dollars, oil, sugar, metals, minerals, et al will go up for US citizens. How will that help US exports and jobs? It won't.

And those of us saving for retiring? Bernanke says we need inflation. Our stock portfolio might be going up 6% but the dollar has already lost 15% of it's value and may lose 20%. So that big balance is actually 14% less than you had invested a year ago.

So when if you retire, inflation will mean that you pay more for what you need with dollars that are worth less.
How's that going to work for you?

Americans are exuberant over the election results yesterday. Big government may slow but the real story was the QE2 announcement today. We are so fucked.