QE3: The definition of insanity returns

Cain Solutions Inc. | September 18, 2012 

By Herman Cain

Einstein may have been a genius, but it doesn’t take a genius to see the wisdom of one of his most famous sayings: Doing the same thing over and over again, and expecting a different result, is the definition of insanity.

That’s how you know that the Obama Administration and the Federal Reserve have lost it. The Fed announced last week that it plans another round of “quantitative easing,” which means keeping interest rates artificially low and printing a lot more money (technically through the buying of mortgage-backed securities – $40 billion a month’s worth).

This is known as QE3, and it follows the highly unsuccessful QE1 and QE2, but it is different in one respect: QE3 is forever. Fed Chairman Ben Bernanke says he will put no sunset date on this plan. The Fed will keep doing it until the economy improves, no matter how long it takes.

Bernanke’s announcement got immediate results, too, although not the type he wanted. The credit rating agency Egan-Jones immediately responded to QE3 by downgrading America’s credit rating from AA to AA-. Explaining their decision, Egan-Jones said what anyone should be able to figure out: All this pump-priming is not going to raise America’s gross domestic product, but what it will do is deplete consumer purchasing power.

Remember last year when Standard & Poors downgraded the United States from AAA to AA+? Democrats and the media insisted that Standard & Poors had taken this action solely because Tea Party Republicans had demanded budget cuts as a condition for raising the debt ceiling, thus introducing a short-term risk of default on the debt.

In fact, Standard & Poors cited the dysfunction of the policymaking process in general, and rightly so. Rating agencies don’t care how you reduce your debt – cut spending, raise taxes – they just want you to do it. What they saw is what anyone with common sense can see. Our fiscal situation is so out of control that we have to borrow money just to pay the interest on the money we’ve already borrowed. When the debt ceiling showdown resulted in no serious action on the deficit, Standard & Poors had seen enough. Even so, Democrats and their media allies did everything they could to blame the Tea Party – as if the people who want put a stop to out-of-control debt are the ones upsetting the credit agencies.

So then, how will they find a way to blame the Tea Party for Egan-Jones’s latest downgrade of the U.S., which is it second this year? The first downgrade resulted from the utter failure of Congress and the White House to deal with the debt. This time, Egan-Jones recognizes that devaluing our currency will do nothing to make the situation better. The only way to do that, after all, is to achieve robust and sustained economic growth.

So why won’t QE3 do that? In buying up all those mortgage-backed securities, they’ll certainly pump a lot of capital into financial institutions. The banks will turn around and lend it, and Main Street will suddenly be cash flush, right?

Wrong. That was the theory behind QE1 and QE2, as well. Why didn’t it work? Because of a little thing called Dodd-Frank, the “reform” through which Democrats presumed to crack down on big banks. Dodd-Frank has introduced so many new regulations and restrictions, big banks are scared to death to make risky loans of any kind. So sure, there’s going to be money, but they’re only going to lend it to the safest loan applicants – people who would almost certainly have gotten loans even without the pump-priming.

So we devalue our currency for nothing, and we’re going to do it endlessly!

I don’t know how we maintain a credit rating as good as AA- when we maintain policies like this. These people have no idea what they’re doing.

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2 Responses to “QE3: The definition of insanity returns”

  1. Stuart Shepherd on September 19th, 2012 2:41 pm

    Insanity breeds insanity. In Psychiatry there is “mass hysteria.” PCism and all the many years of the lefts’ illogical and immoral thinking and propaganda have produced nothing but insanity, stupidity, and worthlessness (even as human beings). America as a great nation is COMPLETELY FINISHED, OVER, THROUGH, KAPUT. You cannot separate out the moral from the economic from the political, etc. They are all part of the “Spirit” of a nation- we have an insane spirit and we have finally met our destruction. Sorry, I’m usually an optimist but i’m a realist, also.

  2. Stuart Shepherd on September 19th, 2012 2:50 pm

    Example of insanity- Paying for a mans’ sex change operation and his transferral to the women’s prison who is in jail for killing his wife (by slicing her throat with a wire!) psychologically thinking he would then be the woman. He supposedly has a “right” to this. Beside the insanity and disgusting immorality of doing this, we have actually REWARDED him for his horrific crime (by giving him what he wanted) rather than PUNISH him. With totally totally insane liberal judges like this (and so many others) how do we stand a chance. ALL THREE LEGS OF THE AMERICAN DREAM- LIFE, LIBERTY, AND THE PURSUIT OF HAPPINESS- HAVE BEEN REDUCED TO THE ASH HEAP. THERE IS NO RIGHT TO LIFE AND THERE IS NO LIBERTY OR PURSUING HAPPINESS UNDER A TOTALITARIAN SOCIALIST/LIBERAL FASCIST STATE. IT’S OVER!!!!!!!!!!!!!!!!!!!!!!!!!!!LBJ AND FDR AND JFK AND WOODROW WILSON AND HILLARY CLINTON AND BARACK OBAMA AND LIBERAL JUSTICES WON!! THEY WON!! THE GAME IS OVER!!

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