“Quantitative Easing” and “Open Market Operations” mean “printing money”

You may hear the terms “Quantitative Easing” and “Open Market Operations” from the Federal Reserve and wonder what they are.  They sound official and complicated, but are not.  When you get down to the basics, they quite simply mean the Federal Reserve is printing money.

Quantitative easing is a type of monetary policy that increases the money in an economy when the Federal Funds Rate (overnight lending rate) is close to (or at) zero.  The Fed (or central bank) purchases financial assets from banks and other financial institutions using money it has created out of thin air (ex nihilo is the latin jargon).  It is equivalent to “printing money” although it is done electronically so no printing is needed.  Just a push of a few buttons and magically they Federal Reserve says “we now have another $1000 Billion in the bank.”  Nice bank account if you can get it.

Quantitative easing and open market operations are complicated ways of saying that the Federal Reserve (or other central bank) is printing money.  The cost is inflation, or in the worst case, hyper-inflation.  Inflation robs you of the value of your money stealthily and is a hidden tax on your savings (retirement etc) and promised obligations.  Remember that, as Milton Friedman defines inflation, it is a monetary phenomenon – too much money chasing too few goods.

So, now you know the basics of quantitative easing and open market operations, and the risks involved.  Should you trust politicians and the appointed members of the Federal Reserve to manage the value of your money?  Would you find a ruler that changed length daily useful?  When a person is managing the value of the dollar, the value varies every day with the trend down.  Down more than 95% since the Federal Reserve was created.   That is the problem with inflation, a dollar today will be only worth a nickel eventually.

The Democratic Senate Puts Heavy Restrictions on the Internet

The Democrat controlled Senate is working on a Bill that would give President Obama the authority to shut down the Internet.  This is the so-called Cybersecurity Act of 2009,  S.773 was introduced by Senators Rockefeller, Bayh, Nelson, and Snowe.

The Bill would also give the government access to the digital records from many industries including telecommunications, banking and energy.  All would be under the authority of a cybersecurity czar.

Clamp down on the free speech on the Internet in the event of a need to “protect national security” and there goes the ability to dissent.