Saturday, April 6, 2019

When you don't know how things work but are sure that you do

When the Federal Reserve undertook quantitative easing (QE) a number of years ago conservatives totally freaked out, "the gov't is just printing money, bread will cost a billion dollars!!!!!". The Fed was in fact printing money and buying up existing debt so the money was in theory backed by something 'real', not the same as just printing money. This is really what the Federal Reserve does all the time when it loans money to banks, it's just not so obvious. 

The Fed felt compelled to take this unprecedented action because the GOP controlled Congress made it clear that they would burn the entire country to the ground rather than let Obama have a win. Now the Fed has been unwinding this program by reselling these debt instruments on the open market effectively taking cash back out of circulation. No wheelbarrow needed when going to the bread store. 

The Orange Nightmare has latched on to this as the reason his economic policies aren't generating the 6% growth rate he promised. Really some of his sycophants must be telling him this rather than telling him tax cuts for the rich and his disorganized trade war are crippling the economy. It's not like he's read about the Fed's policies, he orders McDonald's because reading anyone else's menu it too much work. 

So Trump wants the Fed to resume QE, not just stop unwinding the old program although he probably doesn't know the difference. It likely wouldn't have any effect if they did undertake a new QE program, of course if Trump was calling the shots maybe he could trigger runaway inflation.

The Orange Baboon is building a situation where the economy is going to abruptly stall and he will certainly follow this with blunders that will crash the world economy. Bread will be cheap, you just won't have any money to buy it.