The announcement by the Fed of its second tranche of QE in November 2010 sounded like an error of judgement at the time. Interest rates were low, and falling, and mortgages were becoming more affordable. That was looking hopeful for the housing market’s recovery, and in turn for an eventual recovery of employment. The unexpected second QE announcement sent interest rates scurrying higher, mortgages costs up and the nascent housing market recovery back into reverse. Stocks and commodity prices have boomed, with negative consequences for growth in the real economy. High energy costs kill industrial and business investment, and unemployment languishes with no recovery in sight.
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“If once [the people] become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions.” Thomas Jefferson (1743-1826), 3rd US President“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” Thomas Jefferson (1743-1826), 3rd US President[Corruption in high places would follow as] “all wealth is aggregated in a few hands and the Republic is destroyed.” Abraham Lincoln (1809-1865), American 16th US President (1861-65)“When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.” Frederic Bastiat (1801-1850), French economist“Inflation made here in the United States is very, very low.” Ben Bernanke, Fed Chairman, Thursday, February 10, 2011