Everybody knew it was coming. With the economy continuing to founder, it was only a matter of time before Ben Bernanke and the Federal Reserve decided to turn once again — like the proverbial pig to its wallow — to printing money in a vain attempt to jolt the moribund American economy back to life. As with the first two such feckless efforts, they’re dressing this one in fancy verbiage — “quantitative easing” — that fools no one.

This third round of quantitative easing — QE3 for short — announced on September 13, is just the digital equivalent of printing still more money, money that banks and other financials will either hoard in vaults or pour into equities, driving up stock prices but doing little to enliven the economy as a whole.

In point of fact, this latest Fed “stimulus” will end up doing more harm than good, prolonging and exacerbating an epochal downturn that refuses to go away — because America’s financial policymakers refuse to let the Great Correction run its course. The latest Fed initiative will involve the monthly purchase of up to $40 billion in mortgage-backed securities by the Federal Reserve, which it will pay for by expanding the money supply. The Keynesian logic (if such it can be styled) of this move is that the Fed purchases will keep mortgage rates low and encourage skittish American homebuyers to jump back into the market. More home purchases will get money circulating again, encouraging people to go out and shop and start running up their credit cards like they did in the go-go days prior to 2008.




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