Kwantitatieve verruiming of gewoon geld verzinnen

“Quantitative easing” by the Fed, just forces more paper dollars into the financial system, supposedly to counteract deflation. This is just outright crazy, first of all, creating more paper money “does not create more wealth” and “does not create more savings” only “more fiat dollars.” And fiat money after all is simply a “medium of exchange,” paper does not have intrinsic worth of its own, more importantly when that paper “medium of exchange” is devalued “by increasing its supply” the devaluation effects “are not uniform,” because some people get to use the extra paper money sooner then others before the prices of things change, so the price rises created by these extra dollars affect people unequally (because as the price of things begin to rise income could still be falling for some), these distortions lead to the destruction of real wealth for the people who don’t get access to the new money right away.




In other words, not only does increasing the paper money supply fail to expand the economy but it eventually brings about a reduction in the overall size of the economy because by devaluing the medium of exchange (by increasing its supply) hurts savers or anyone on a fixed income or relative fixed salary who must use their previously saved dollars “that had more value” on goods that have been marked up because of the increased dollar supply, so the Fed’s “quantitative easing” is not only misguided from a pragmatic economic perspective, it is ethically and morally wrong.



Perhaps it can better be explained by a simple example, say we have some people on an island 1) a diamond producer who hires workers on a fixed salary to mine the diamonds 2) a gold producer who hires workers on a fixed salary to mine the gold, and 3) some bankers who don’t work at all (but just lay on the beach all day drinking mint julep’s and spending money buying diamonds and gold for their bikini-clad girlfriends). Now you may be asking where do the bankers get all that money to buy that expensive diamond and gold jewelry for their girlfriends if they don’t work to produce anything of tangible value? Easy, they just print it up at the central bank and then pass it out to all the bankers under the guise of some “TARP program” where the bankers tell the ordinary people they need this money because they are “too big to fail” at what they are doing and go to work for a living.

http://www.soundmoney.be/2010/08/18/kwantitatieve-verruiming-of-gewoon-geld-verzinnen/