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What is the difference between Fed central banking and QEs... ??? Peter Schiff fails to this point out. I grant him that QEs don't help economic activity, but Schiff doesn't explain why.

The FRNs created by monetizing government debt, is a totally different FRN than the one created through quantitative easing. Quantitative easing is the final step before the collapse of the central bank currency system based on monetizing government debt.

Under a central banking system, government debt is sold against payment of interest. However, since governments rarely balance their budgets, the accrued interest on the debt compounds and compounds year over year for decades, until after a few decades the total amount of interest due exceeds the total amount of original debt. At that point, selling of additional debt can never reduce the original debt, since the additional interest incurred will not allow it by the rules of mathematics. At that point, "printing currency out of thin air" is the only solution to keep making the interest payments due, and to keep an economy from collapsing.

However, with each QE the value of the existing currency is cheapened. Central bank currency is a Ponzi scheme, because it requires taxes to pay the interest on the year over year debt sold during the initial portion of its life when the accrued amounts of interest are relatively low. However, when the compounded interest has accrued to such levels that tax payments are no longer sufficient, then the creation of currency by "Quantitative Easing" is the only way out to avoid default.

Yet, another description of "Quantitative Easing" is "printing money out of thin air". Therefore, QE money is down right toxic because it represents nothing but "thin air" in payment of interest due.

For its effectiveness to promote productive employment, the Fed central banking system depends on "congressional earmarks". However, if these "earmarks" direct funding into local services rather than into local activities that involve productive enterprises, the multiplyer effect of government funding is lost.

When the multiplyer effect of government expenditures in local economies is lost, and it no longer helps to create jobs in the domestic, productive industry, then these industries are subject to stiff foreign competition. When finally all government funding turns into funding local services, then private businesses have no longer an incentive to invest their savings to create wealth. Service business, be that private or government, do not incur the risks of private capital investment.

Once an economy has arrived at a point where its central bank monetary system can no longer be sustained by government spending to incentivise private investment, meaning using private capital to create wealth, then the only solution for creating "money" is a currency created by "printing it out of thin air".

This is what Peter Schiff should have pointed out.

"Money printing is not the solution to our problems, it is the source of our problems." ... . Peter Schiff.

That is not exactly true, Peter, for it is only a problem whenever the printed money is electronically transferred into the wrong bank accounts/closed vaults/crooked hands ... .. and to imagine that newly created instant wealth/QE credited to and placed in the proven greedy and incompetent hands of old money systems will result in anything other than the same old money system problem which has it transferring such wealth into crooked private streams/pathetic little empires, is clearly quite delusional as current events are now clearly proving.

Given to those who will spend it and certainly to those who will spend it extensively and much more wisely in projects which deliver sustainable and increasing bounty, rather than depositing it with tools who would just gamble it away and lose it to squirreling paper tiger fortune hunters on ponzi markets and in sub prime collateral debt obligation offerings and dodgy futures and derivative ventures and systems' algorithm forays, would and will generate new free flowing wealth and an Intelligence of novel informative currency with edutaining processses.

And ignoring that elephant in the room, ... . money resting in the wrong place and proving too easily moved into the trading accounts of the intellectually challenged and morally bankrupt within what is essentially an incestuous closed system for elitist shenanigans and perverse corrupting power plays ... . has the elephant continuing to dump on the system and burying it in its own toxic waste.

Or is that far too simplistic a clear view of what is always being pimped as a complex situation, although whenever true would the complexity be a contrived artificial falsehood and just misdisinformation?

Once one identifies the problem, is the likely course of the what is to follow if the problem hasn't changed, surely inevitable and already well known? Or is one to expect a wholly different outcome/solution?

Look dude, the only good place for your money is in my hands, coz I'll surely spend it more wisely than you can. And if you don't let me spend your money, I'll just print up some money and buy up the things you are too stupid to buy with your money. I adamantly insist that any money in your hands is money in the wrong hands.

Seriously, is it really so hard for you to see that the problem is not with "money in the wrong hands" but more fundamentally with the use of counterfeit money?

"And ignoring that elephant in the room... " @ amanfromMars 0903-0633 -

... is leading to a question "what to do with the body" when the elephant is dead, being rather sudden, though (-:

The big question is sacrifice will the citizenry of western culture where there is a good part of the population that recieves a bribe from socialist programs willing to feel the pain ? Will Ron Paul turn down the fiat money he recieves in his pension and the best health coverage offered of course not that would be a power of example. The last great generation were probably korean war vets they wouldn't spend more than they earned beacuse they tasted the last great depression today were to soft this is going to be ugly see ya.

"Money printing is not the solution to our problems, it is the source of our problems." ... . Peter Schiff.

That is not exactly true, Peter, for it is only a problem whenever the printed money is electronically transferred into the wrong bank accounts/closed vaults/crooked hands ... .. and to imagine that newly created instant wealth/QE credited to and placed in the proven greedy and incompetent hands of old money systems will result in anything other than the same old money system problem which has it transferring such wealth into crooked private streams/pathetic little empires, is clearly quite delusional as current events are now clearly proving.

Given to those who will spend it and certainly to those who will spend it extensively and much more wisely in projects which deliver sustainable and increasing bounty, rather than depositing it with tools who would just gamble it away and lose it to squirreling paper tiger fortune hunters on ponzi markets and in sub prime collateral debt obligation offerings and dodgy futures and derivative ventures and systems' algorithm forays, would and will generate new free flowing wealth and an Intelligence of novel informative currency with edutaining processses.

And ignoring that elephant in the room, ... . money resting in the wrong place and proving too easily moved into the trading accounts of the intellectually challenged and morally bankrupt within what is essentially an incestuous closed system for elitist shenanigans and perverse corrupting power plays ... . has the elephant continuing to dump on the system and burying it in its own toxic waste.

Or is that far too simplistic a clear view of what is always being pimped as a complex situation, although whenever true would the complexity be a contrived artificial falsehood and just misdisinformation?

Once one identifies the problem, is the likely course of the what is to follow if the problem hasn't changed, surely inevitable and already well known? Or is one to expect a wholly different outcome/solution?

Good synopsis of events. I would suggest that the reason the USA has not seen hyper-inflation is that "jobs" are not being created. The Treasury sells bonds to the big banks who have a monopoly on these bonds-these banks in turn sell the bonds at a profit to the FED who issues money out of thin air. The government continues to pay for the status quo and its huge military hegemony. Germany saw hyperinflation in the 1920's because it had FULL EMPLOYMENT and hence very high DEMAND. In the USA we still have high employment and thus lowered demand. No smart executive is going to make more product if there is no demand for such product.

QE2 is not the reason for recession but makes the sluggish growth environment last longer than it should. The issue is not an exclusivity of the US but Europe and Japan follow the same path.

Key reason: Politicians want to be re-elected and administer the suffering in small doses.

Ron Paul's problem: He would provoke a short but painful cure. This is enough to frighten a majority of voters.

PS. The proportion of government dependent voters does stop to increase worldwide.

"QE2 is not the reason for recession"

I think you are misrepresenting Peter Schiff here. From the article above, the quote is "The reason that we are headed back into recession is because the Fed did QE2. Money printing is not the solution to our problems, it is the source of our problems."

He is not saying that QE2 is the reason for the recession. He clearly states that money printing (in all its forms) is the cause for the recession. Further, he implicates QE2 as being the cause for the *return* to a recession because it prevented the recession from being cured.

QE2 is not the reason for recession but makes the sluggish growth environment last longer than it should. The issue is not an exclusivity of the US but Europe and Japan follow the same path.

Key reason: Politicians want to be re-elected and administer the suffering in small doses.

Ron Paul's problem: He would provoke a short but painful cure. This is enough to frighten a majority of voters.

PS. The proportion of government dependent voters does stop to increase worldwide.

Reply from The Daily Bell

Yes, the idea that QE2 is the reason for the current recession (or whatever it is) seems a tad simplistic ...