An Eventual Explosion Caused by the Federal Reserve's Quantitative Easing Program

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The idea that former Federal Reserve Chairman Ben Bernanke’s ‘Quantitative Easing’ program deserves the credit for healing the wounds inflicted on our nation from the housing collapse of 2008 omits two possibilities: that we actually haven’t recovered, and his policies have actually laid the path for an even greater collapse ahead. The Chairman’s actions hold no precedent, he himself has even admitted to flying blind. The bond and mortgage backed security purchasing program (known as Quantitative Easing’ or just ‘QE’) creating the artificial high by re-inflating asset bubbles was the easy part. To truly follow out the process an exit strategy must be laid to liquidate the nearly ‘$4 trillion dollars’ in toxic assets the Fed now holds …show more content…

These ultra-low rates of interest have worked to drug up corporate profits, artificially push up stock prices and lower the cost of debt financing for ultra-leveraged up corporations, debt riddled home owners and most of all, the ‘monumentally’ indebted federal government. This stimulatory drug masquerades itself as try economic stability and growth but in reality it is nothing of the sort, a dangerous dependency has set. The Federal Reserve is now the biggest buyer of mortgages and US debt (treasuries), my question would be; how is it that we believe suddenly stopping QE will not result in a complete economic collapse? In a nutshell, the Fed now “is” the housing market! There is no entity currently capable of filling in the void of the Fed’s purchasing power, when that buying program seizes to be, interest rates will “have” to rise. The problem is, our ultra-leveraged up bubble dependent economy could not handle such turbulence, if interest rates rise on bank lending interest rates on credit for American consumers will rise significantly as well. If yield rates rise on Treasury bonds even by a few percentage points, the US government will have to pay “significantly” higher rates of interest on the National debt. With our outstanding treasuries currently standing at over “17 Trillion dollars”, even rising by a few percentage points could result in default. How we ever got ourselves into such a mess is beyond

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