Thursday, November 11, 2010

The Color Of The Brothers Kochs' Money



Update: A number of smart folks, with good arguments in the comments make a solid case that it just might not be same thing....And I thank them for that.....Has to do with things like lack of full capacity and other forces currently at work that should push back against a rapid-onset hyper-inflation....But still....What happens when the bitter taste of aspertamier inflation is forced down peoples' throats in the form of plastic backed by prison?.....

Can anybody tell me, precisely, how 'Quantitative Easing'......

"...Popular media's definition of quantitative easing focuses on the concept of central banks increasing the size of their balance sheets to increase the amount of credit available to borrowers. To make that happen, a central bank issues new money (essentially creating it from nothing) and uses it to purchase assets from other banks...."

...Is NOT the fast lane on the road to a place called Weimar?

"...The sudden flood of paper money into the economy, on top of the general strike - which meant that no goods were manufactured, so there was more money, chasing fewer goods - combined with a weak economy ruined by the war, all resulted in hyperinflation. Prices ran out of control - eg a loaf of bread, which cost 250 marks in January 1923 had risen to 200,000 million marks in November 1923..."

(and we all know where roads like that really lead to when you've got folks like the good brothers Kr......errrrr.... Koch around to whip the damaged and the dumb into a frenzy of hate, hubris, and irrational blindness)



JJ said...

QE is just a more socially acceptable term for printing more increasingly useless pieces of paper. they give all this extra money to the banks, presumably in the hope that it will free up lending of capital to businesses so they can start hiring.

Good luck with that.

That money goes straight to the casino.

RossK said...


Hadn't thought of that....

The Weimars didn't have that CasinoCycle to keep things rollin' on a little longer before the fall.

(and Marty B. didn't have G. Beck either).


Ed Seedhouse said...

The answer is that it will not until the economy is running at it's full production capacity, and you may discover how that is at this web address:

It's a bit of a slog but well worth it. Modern Monetary Theory shows how the monetary economy actually works, and that a progressive government regime can fund it's goals without financial constraints if it is a modern state that is sovereign over it's currency and also operates a pure fiat currency.

That includes most countries including the USA and Canada among many others.

The government in such a country is not constrained by revenue and may spend as it likes without fear of inflation so long as the economy is not running at full production.

The problem with "Quantitative Easing" is that it is not very effective. What is needed is to create money and give it to people do do jobs, not to the banks.

Sad that a progressive person like you is caught in the web of deceptions known as "neo-liberal economics".

RossK said...

Thanks Ed.


Did I not leave in the pop media front end?

Here's the thing.

It's not really the economic fronted aspect that worries me, strictly speaking (ie. I'm with Krugman AND you).

Instead, it is that political propaganda backend that scares the bejeebuz outta me.


Jeff Barkley said...

I think we will have inflation of commodities but no hyperinflation. As the Fed prints more money, the dollar will be devalued. The countries that sell oil etc will not want to accept a less valuable dollar in exchange so they will increase the price. The Weimar hyperinflation will not happen because they have absolutely no intention of increasing the wages of working people. Without increasing wages, we will get hungry yes, but we will not be pushing a wheelbarrow full of cash to the grocery store because we won't have one. The very wealthy, whose pockets are being filled don't need or want more food or oil than they have now so there will be no demand, which will keep hyperinflation from happening.

So, we (working people) will see increased costs for food, and fuel etc with no increase in our wages and the rich will get richer since they are simply printing more money to cover all their bad debts. Its like a tax increase on the working folk, to pay for the fraud and theft in the Banking system. Asset deflation will occur with our homes as we begin to have less and less disposable income due to the increased prices of commodities like food. While this is happening, the stock market will go up because most of the newly printed money will end up there...however....the increased commodity prices, in conjunction with reduced demand will cause "margin compression" for businesses, so their profits will fall, eventually causing another stock market crash (the markets are overvalued but the fundamentals are getting worse). How does that sound? :)

Bob Broughton said...

I heard Ravi Batra talking about this on the radio, and he referred to the printing of the $600 billion as "corruption."

He said the same thing as a couple of other commenters here; all this accomplishes is to make commodity prices go up, especially oil.

Ed Seedhouse said...

"As the Fed prints more money, the dollar will be devalued."

Jeff, even Milton Friedman would disagree with such an unqualified assertion. And he was wrong about most things. He asserted the current mainstream assumption that it is the amount of money multiplied by the velocity of it's circlation that determines inflation. Extra money by itself cannot cause inflation if it is sitting unspent in bank accounts.

The "quantity times velocity" assertion is also disproved at the site I referred to above.

Above all what we need to increase is demand, which will only cause inflation if manufacturer's don't respond by producing more goods. But if that happens "neoliberal" economic's underlying theory is proven wrong.

It is, again, sad to see progressive people being fooled by regressive economics.

West End Bob said...

RossK, you're in good company with the correlation of "Banana" Ben's QE move to the Weimar Republic.

Chris Hedges had the same parallel in his interview on the November 2 broadcast of CBC's "The Current" - Once again, you are on the cutting edge . . . .

Rick said...

Ok people get a grip on reality. The Fed is printing more money to buy treasuries and bonds created by Congress. The Fed creates this money out of thin air and is buying interest bearing treasury notes and bonds that the American people have to pay the interest on. None of this money can get into the economy until a man or woman signs a promissory note which creates the money. The only value in the whole equation is the man or woman signature on the promise to pay. When a man or women makes a promise to pay that in fact is the money. When you get a mortgage and sign a promissory note you have paid the mortgage as the Bank has no money but the money you just created. Wake up to the Ponzi scheme before the Bankster Gangsters have stolen all the wealth. There is not much time left.

Hugh said...

Japan was QEing from 2001 to 2006. I don't think it resulted in hyperinflation.

Declan said...

Ed is mostly right, in my opinion.

At any rate, the last thing the Koch's (or any truly wealthy person) wants is hyper-inflation (or even restless inflation).

In theory, the best escape for a wealthy person from this high-debt situation we find ourselves in, would be for the government to let the debt come down via people defaulting on it, rather than doing anything to help them repay it (e.g. inflation). If the defaults were kept to a moderate pace, the government could keep handing over money to the wealthy creditors to replace the money they were losing due to people defaulting.

In practice, the current outcome seems to exactly resemble a theoretical best-case scenario for billionaire's such as the Koch's.

Go figure.

No coincidence either that the Koch's funded the tea party movement which is deeply hostile to all money printing or inflation or anything that would bail out debtors.

Not to say, of course, that they wouldn't do their best to take advantage of the situation in the unlikely event that we did get some actual inflation.

RossK said...

Thanks all....

Will have a re-think.