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How the Fed Could Fix the Economy—and Why It Hasn’t

Quantitative easing (QE) is supposed to stimulate the economy by adding money to the money supply, increasing demand. But so far, it hasn’t been working. Why not? Because as practiced for the last two decades, QE does not actually increase the circulating money supply. It merely cleans up the toxic balance sheets of banks. A real “helicopter drop” that puts money into the pockets of consumers and businesses has not yet been tried. Why not? Another good question . . . .

When Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was not yet chairman of the Federal Reserve. He said then that the government could easily reverse a deflation, just by printing money and dropping it from helicopters. “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent),” he said, “that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Later in the speech he discussed “a money-financed tax cut,” which he said was “essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.” Deflation could be cured, said Professor Friedman, simply by dropping money from helicopters.

It seemed logical enough. If the money supply were insufficient for the needs of trade, the solution was to add money to it. Most of the circulating money supply consists of “bank credit” created by banks when they make loans. When old loans are paid off faster than new loans are taken out (as is happening today), the money supply shrinks. The purpose of QE is to reverse this contraction.

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Google "Operation Bernhard"

Although the Nazi's abandoned the plan because the Luftwaffe could not spare the required aircraft, it may give you some idea as to the absurdity of this idea.


Instead of "Operation Bern-hard" we could call it "Operation Bern-anke"!!!


What is a Note?

Once upon a time, people used precious metals as a means of exchange. Rather than keep their wealth at home they deposited the excess wealth into a bank, this was much safer as it would be secured in vaults or strongboxes.

For this service the banks used to charge a storage fee and - if required - a further fee for insurance against theft.

When a customer deposited their property into the Banks, they were given a Note, this Note was a receipt and proof of ownership representing the amount stored.

If a customer deposited 10 ounces of gold, they would be given a Note (or Notes) made out to represent that amount - in weight - as a receipt.

When a customer wished to withdraw his/her property they would produce the Note (piece of paper given as a receipt) that represented the amount - of their property - they wished to have returned to them.

The Note was not the money, it merely represented the wealth (owned by the customer) stored in the Bank.

As the Notes were not individually written out to include the owners name but instead were written out to represent an amount in weight, anyone in possession of the Note could take it to the bank and withdraw the amount it represented.

To save the time and trouble of a journey to the bank every time somebody wished to trade, people started to exchange the Notes instead. ("you can take that to the bank")

The notes were still not the wealth, they still only represented the real wealth stored in the Bank.

As time went by the Bankers realized that while people were using the Notes for trade and exchange, they rarely felt the need to take physical possession of what the notes represented.

It was this realization that led those enlightened to the advantages it would bestow upon them, to issue the first fraudulent paper Notes (that represented NOTHING of value in the REAL world) and lend them into the market place in return for something REAL.

And so began the parasitical transfers of wealth and the power it afforded those who controlled it's flow...

What Has Government Done to Our Money?


LOL - Didn't even get past the title

The Fed ... Fix Something !?!?!

Life is a sexually transmitted disease with a 100% fatality rate.
Don't Give me Liberty, I'll get up and get it myself!

Wait a second.....

Is this article suggesting that the printing fiat currency actually could help the economy?? This doesn't sound very free market.....

"I will not submit to authority of man. I'm alive, I'm awake, this is more than I can take." -Jordan Page

I read the article. The lady suffice to say is late to the party

Most of her comments are just a regurgitation of what people were saying back in 2008-9. She is a few years far too late.