While The World Shouts "Insane!", The City Of London Shouts "Not Enough!"
While government officials from around the world howl in anguish over the Fed's decision, the City of London feels a mere $600 billion of funny money is "timid."
But as is typical of politicians who are, in reality, bought and paid for by City of London interests, none of their protests included any real alternative to the continued bailout.
Bernanke's Washington Post Op-Ed
The day after the Fed's QE2 announcement, "helicopter" Ben Bernanke wrote a piece for the Washington Post to justify his actions. In it, he wrote:
Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable.
So what Bernanke is actually saying here is that after the first round of QE, the banks did not use the new liquidity to create new loans. Instead they used it to cover bad debts. That's ok, then.
This is essentially the effect the first round of QE had in the UK as well. The reason, which Bernanke seems to ignore, is that the banks were (and still are) so bankrupt and desparate for cash to prop up their balance sheets, that they hoarded the new liquidity first time around.
The general thrust of Bernanke's article was that his only care is promoting inflation - bubble inflation that is. He is only accountable to the private bank called the Federal Reserve and the interests it protects. Congress has no power over him. The first round of QE did not damage the USA sufficiently, and his only option is more.
And so, as market participants get excited about what Bernanke has done - which promises them another round of record bonuses - record numbers of Americans subsist on foodstamps and real unemployment over there sits at over 20%.
Bernanke's attitude is much the same as that of Mervyn King, and why shouldn't it be? They are both out of the same corrupt mould. King and his colleagues may have decided to avoid QE2 here in the UK for now, but that, I suggest, is a temporary situation.
These men can very well be described as kleptocrats. Under their kleptocracy, ordinary people have no right of property ownership. They can't just take our jobs, our homes and our lives from us. So they engineered a financial collapse which offers them the excuse for doing just that. The first round hit in 2007. Round two has just begun.