patrick.net

TMAC54 says

loss of real estate value tantrum.

Best description of our economic policy YET.

That should be in the text books, when History explains this era.

TMAC54 says

states holding interest rates close to Zero for two years is QE3 !

not really same as QE3. Because money is not injected into the system. The Central bank is trying to force the banks to lend, because reserves already in the system don't earn anything unless it is borrowed.

The core of the matter is whether this borrowing is done for something productive and useful for the economy. This is highly questionable, given that every time the Central bank has forced banks to lend, it almost always leads to misallocation of capital. Artificial demand vaporizes as soon as credit dries up.

They are trying to blow one more bubble...may be its in commodities, may be its in bonds...we'll know in a few years.

Tenouncetrout says

Best description of our economic policy YET.

That should be in the text books, when History explains this era.

Thanx TenOunce. Kinda hope my memory loss will equal my loss of security. (financial)

austrian_man says

The core of the matter is whether this borrowing is done for something productive and useful for the economy.

I agree. Borrowing for consumption is just giving interest payments away to a creditor for no good reason. It is impoverishing to the borrower, just a transfer of money, and a zero-sum game.

Borrowing for investment in something productive should at least in theory result in an overall profit for everyone.

Whether you're wasting money on a house or not depends on whether you could rent the same thing cheaper. If you can save on rent, it's totally worthwhile to buy. But the normal case in nicer neighborhoods is that the buyer loses, because renting would have been cheaper.

"A trillion or two of our tax dollars down the crapper"

what? Now, Iraq & Afghanistan is easily a trillion dollar waste, but much of the 2009 stimulus was tax cuts ($300B), healthcare ($150B), education ($100B), handouts ($100B), infrastructure projects ($100B).

Pull yourself together.

Bellingham Bob says

"A trillion or two of our tax dollars down the crapper"

Apart from what you already said - $600 billion of worthless MBS crap that the market won't buy + $600 billion in QE2 buying T-bonds. How about that for $1.2 trillion dollar effective increase in Fed balance sheet?