If anybody out there understands how quantitative easing (Q.E.) benefits a country, please let me know. Call me old-fashioned but I was taught that government programs should be financed by taxes paid by a healthy expansion of the private sector economy. The more growth, the more taxes collected by the state. If the government wants more money, it has 2 choices: raise taxes or go into debt (deficit financing) by borrowing on the open bond market.
But the Obama administration doesn't do this. Through Q.E., the Central Bank prints new money, releases it through the bond market and "stimulates" the economy. If this is such a great program, is there a limit on how much new money can be printed? Is it 50 trillion dollars? 500 trillion dollars? 1000 trillion dollars? This sounds like a Ponzi scheme to me - robbing Peter to pay Paul. If I were a foreign investor, I don't think I would trust the American dollar - after all, where is the financial backing for the currency?
When Q.E. ends, the American government will still need money and if the Democrats are re-elected, they will need tons of money to fund their "entitlement" giveaway programs. And with Q.E. gone, the only place to get that money would be on the international bond market. If I were a big international player, I wouldn't want an interest guarantee on my loan - I would want equity - ownership of America's industries, resources and technology and other assets.
That scenario boggles the mind. But I could be wrong. Come on readers - please enlighten me.
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