Ryan: QE3 is a bailout for Obama
posted at 1:31 pm on September 16, 2012 by Jazz Shaw
There has been no end of distracting topics for the media to focus on over the last week, but under the covers, the economy is still there and the cliff lying ahead of us hasn’t gone away. Somewhat overshadowed by foreign policy discussions was the decision by the Fed to launch into QE3. (For the few of you just joining the program, that’s the third stage of “quantitative easing.”) The lower half of America’s Comeback Team didn’t miss it, though, and called it out for what it is.
Rep. Paul Ryan (R-Wis.) said the Federal Reserve’s latest policy shift amounts to a “bailout” of the economy under President Obama.
Speaking at a campaign event in Oldsmar, Fla., Mitt Romney’s vice presidential candidate lambasted the Fed’s recent decision to try and do more to boost the economy as “sugar high economics.”
“We don’t need synthetic money creation. We need economic growth. We want wealth creation,” he said. “We don’t want to print money. We want opportunity and growth.”
So what is the future Veep talking about? We’ve already had two rounds of “easing” so far, right? Why is this different? Well… it is.
On Thursday, the Fed announced it was embarking on a third round of “quantitative easing,” in which it would buy up $40 billion of bonds every month. But in a new move, the Fed said this time it would be continuing the purchases until it was satisfied with the rate of growth in the labor market — the past two rounds of easing were set at a specific volume of purchases. The Fed also said it expected to keep interest rates near zero until mid-2015 (it had previously predicted rates would stay low until the end of 2014), and that it was willing to do more if it found it necessary.
Read that last part again. We’re not just talking about opening up the candy store for a few hours here. We’ve done that before, but investors know that if they’re going to have to cover a shortfall a few months down the line, they’ll remain cautious if the free market isn’t going to continue the surge. But this is essentially the same as saying that it’s party time for the next few years so the sky is the limit. This is a sugar rush. But it’s one where the hangover doesn’t come due for a long time.
How long does it need to last? Till the first week in November. After that the party is over anyway. But if it pumps up the numbers on Wall Street and gets people in a mood to toss cash into the ring, it bumps up the metrics. I know what you’re thinking here… the Fed is beyond politics and I’m just being cynical. What can I say? I’m suspicious by nature.