The Federal Reserve Shows They Know The Obama Economy Is Dead

The big news yesterday was that the Federal Reserve was not going to “taper” their 85 billion dollars worth of bond purchases every month. The “money printing” will continue.

The “Quantitative Easing” program that Federal Reserve Chairman Ben Bernanke cooked up was supposed to be a way to “get the economy going.” Once the economy was moving again, then, Bernanke told us, the QE could be ended—ended incrementally or “tapered.”

But creating new money doesn’t actually create new wealth. No new services or products are brought into being in that process. Nothing is added to the real economy in this way. Instead, prices get distorted. We won’t have high overall price inflation yet because we are still in the middle of a credit collapse. But putting new money into the economy does cause prices to rise in some things—like stocks and food and energy. People living on a fixed income are being bled for the sake of the people who make money on the stock market. A grandmother eats dog food so some CEO can live his dream.

But we have to also consider how this decision shows what the Federal Reserve Board thinks about the economy. They promised to start “tapering” when the economy began to recover. They have decided not to taper. Therefore, they have decided that there is no real recovery in this economy.

The Federal Reserve has just admitted the Obama economy is a big phony. It isn’t real. There is no real economic growth, just churn due to Bernanke’s money-printing.

It is telling that when David Asman interviewed Ron Paul the only thing the Fox News TV anchor could say in defense of the Federal Reserve is that QE had “helped the housing market.” That tells you all you need to know. The only possible economic salvation the Federal Reserve can hope for is another housing bubble—and thus another collapse.

But even supposed “conservatives” are in denial. Just listen to these cheerleaders on Fox Business. No asset bubbles to worry about. No, stocks are not overpriced. All is sunny because we print money.

Only one person in power tried to stop the rush to a new collapse and the Wall Street Journal mocked her for her efforts:

“In a day of Fed surprises, one thing proved as predictable as the setting sun: Kansas City Fed Esther George’s dissenting vote. For the sixth time in six Fed meetings so far this year, Ms. George voted against her colleagues’ collective decision to press forward with their $85 billion-per-month bond-buying program, which is aimed at spurring growth and lowering unemployment. Ms. George has argued the Fed’s current policies risk creating new financial bubbles and excessively high inflation.”

Bernanke has had one and only one trick to fix the economy that he has used repeatedly no matter how much it doesn’t work, but George gets derided for being “predictable.”

The Federal Reserve has spoken loud and clear. The Obama economy is dead; Bernanke is desperately trying to keep it twitching so you won’t notice the smell.