Day By Day

Thursday, March 19, 2009

Revolutionary Measures

From the International Herald Tribune:

WASHINGTON: The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed's measures in the last year.

Read it here.

This is a sure recipe for inflation as soon as credit starts flowing again, and we are not talking about the steady 2-3% inflation that has characterized the American economy in recent decades. This promises to be at least as bad as the ruinous inflation of the Seventies.

A few quotes that seem appropriate at this time:

In his book "The Ascent of Money" Niall Ferguson quotes John Maynard Keynes, who in turn attributes the idea to Lenin, to the effect that:

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.

Lenin's colleague, Yevgeni Preobrazhensky, described the banknote-printing press as

that machine-gun of the Commissariat of Finance which poured fire into the rear of the bourgeois system.

Wow! It looks as if the Obamination was serious when they promised fundamental, even revolutionary, change. We're talking about measures that threaten the very social fabric of this nation.

Be afraid of this guy in the White House..., be very afraid.