28 Replies to “Rick Santelli on QE3”

  2. It will be the equivalent of the biggest destruction in our history. The folks will have their wealth stolen right out from under them and they will be stunned. Think Germany in the 1920’s etc. A huge hidden destruction of wealth and property.

  3. Who is the young progressive snivle-shit who asked the question and wouldn’t wait for the answer when it started attacking his beloved icon??? That college boy is an oxygen thief.

  6. This didn’t start with Bernanke, it started with Greenspan. The Fed has been following a weak dollar policy for more than a decade. The principal mission of the central bank is to defend the value of the national currency, and the Fed has been prostituted into economic stimulus, starting in the Clinton years.
    Santelli is right that this will all end very badly. And it’s those who have saved which are going to be the worst hit.
    It’s hypocritical in the extreme for the US to complain about China manipulating currency. What did they expect? The US is only solvent because China buys US government securities. Naturally China takes its own measures when the US government attempts to degrade the value of what it sold to China.

  7. Robert:
    You can find the original at zerohedge.
    Chris:
    That’s the NYT’s economic ‘whiz’ Andrew Sorkin, which of course makes him Democrat, and an avid pianist with Bambam’s team.
    Gotta love Santelli. Doesn’t have an iPhone, still reads a newspaper, and won’t let people take him down primrose paths. For those who don’t know, Santelli worked for years in the trading pits, and there’s one salient thing about trading – you can’t trade on wishes or hope, or you go broke quickly. You quickly realize what’s real and what’s BS. Santelli’s epic rant about 5 years ago is what started the Tea Party in the US. Stuff Jack Layton – Santelli’s the guy I’d really like to have a beer with, and I don’t like beer.

  8. Investments wise I’m using this a an opportunity to trade in gold stocks. I have made a good bit of money off the short term volatility being wrought by this policy.
    For the longer term I am putting money into real estate investment trusts. I can make 6 to 8 percent in dividends from these, and if we have a hyper inflation the value of the real estate will also rise. people still need a place to live even if the RE values drop, rental income shouldn’t. It,s a lot easier to invest in REITs than it is to buy a small building and become a landlord. i can also sell with a few clicks of a mouse if I choose.
    As long as we maintain our civil society and don’t have total collapse, and you can wait out any down turns I think this is a good plan. If you look at longer term data, after the 2008 crash massive amounts of capital were lost but strong companies paying dividends didn’t reduce their payouts. If you had the money to get in then you made out like a bandit. I made good money off bank stocks in this time.
    If I could predict tomorrow I’d have retired a long time ago, bet I can’t so this is what I’m doing. If it gets really really bad We try to maintain a years worth of food in our pantry and I’m well supplied with brass and lead.

  9. Gold is only a great investment till the government decides it needs you to sell them your gold for 20 cents on the dollar.It’s patriotic!

  10. But my sleepy brain just caught up to my fingers and I see you wrote gold stocks.
    Still, it’s not gonna end well.

  11. As the man said, all it will take is a pro-business president to get elected and the economy will take off. Then we will see the inflation from printing all that money, the theft from savers who got a percent or two only to have the value of their money cut in half by the government. If it looks like Romney is a sure thing to get elected buy US real estate using some of that 1 – 2 % money that Obama has stolen from savers.

  12. A “Austrian” perspective on QE3 with an interesting quote from James Mill about the natural and necessary balance between demand and production.
    Sowing the Wind.
    That Mill quote is important because the key fallacy of Keynesianism is the idea of “insufficient demand” which must therefore be juiced by the gubment/bank cartel organized crime syndicate.
    Echoing KevinB, loved his comments about the gadgets and the ear buds. I’ve been saying that our modern version of “bread and circuses” is “gadgets and reality (sic) shows” and the sick culture it has spawned. Also loved the giant water hose and little geranium and the “we got the gadgets, they got the paper”. This guy really understands economics. In his gut.

  13. Yer not gonna read it, but what the hell:
    Here’s an excerpt from the late dean of the Austrian school, Murray Rothbard. From his definitive book on the Great Depression.
    An excellent summary of Austrian Capital Theory which aligns nicely with Santelli’s remark about the misallocation of capital which so few people understand. It very effectively covers the difference between natural business fluctutions and the mass clusterfook generated by gubment/bank cartel/organized crime counterfeiting ops.
    The Keynesians, BTW, don’t have a capital theory which is why it’s totally bankrupt intellectually.

  14. The Keynesians, BTW, don’t have a capital theory
    Would you care to expand on this comment? I want to make sure I understand exactly what you mean before I call “shenanigans”.

  15. Bernanke has been wrong in everything he’s ever publicly said/ predicted about the economy.
    Why would anyone believe a word he says now?
    The Fed’s print volumes of money to lend at interest to the government who then takes the money and gives out 0% interest free loans to banks and the “To Big to Fails”. The balance of borrowed Fed money goes to fund election based social programs and dead-end “bridges to nowhere” projects.
    The “too big to fails” give out huge profit based bonuses to the executives of their mismanaged companies and the banks lend you their interest free money at high interest.
    You then pay back the Fed the interest for the original government loan through your ever increasing taxes.
    The scam is not rocket science.

  17. What alternative does Bernanke or did Greenspan have other than devalue the currency? The best they can hope for is that domestic savers and foreign debt holders will pay the debt tab.
    The USA economy will be the best of a bad lot when compared to Euroland, Japan and eventually China. If the USA cannot save itself the international collapse will be horrendous.

  18. ct, the only option they had was to do nothing, maintain the currency value and force Congress to deal with spiralling government deficits much earlier. But Bush had a war on, and the Dem Congress had a huge expansion to Medicaid on.

  19. Good point ct.
    Q3 is a red herring missing the problem (like a video missing the cause of terrorism). The real problem isn’t Q3, the problem is an incompetent President who hates business and won’t deal with the fiscal cliff issues.
    Therefore without an engaged POTUS, the only thing that has been tried by sane people in Washington (Bernanke is sane albeit now pushing on this string up a hill for too long) has been monetary policy to try and prevent deflation a la Japan for over 20 years, since 1989. Deflation means no profit, only loses for business. That is a cascade effect difficult to get out of, like a depression.
    So with no leadership on the economic front, other than Solyndra scandals and a stimulus package to top up unfunded unionized teachers, the Fed was the only tool to try and keep the boat afloat. But the Fed needs to stop trying the impossible and wait for an election that might put a pro business person in the WH and thus change the psychology of business people.
    Meanwhile businesses are too scared to invest, too scared to hire due to the threat of Obama’s next ObamaCare- like policy to steal from them. Without investment there is no economic growth. Private sector growth is the only solution to the fiscal cliff.

  20. KevinB, I don’t know if the Keynsians have a capital theory or not. But the misallocation of capital he’s talking about is the basic and unavoidable efficiency difference between central planning and the free market. Its what collapsed the Soviet Union and will collapse China probably pretty soon. And us, if we don’t get out act together.
    Which I’m sure you knew. I thought I’d say it for general consumption, as your comment fired off a neuron.

  21. Expansionary monetary and fiscal policy in unison. What could possibly go wrong?
    Well inflation for one thing, private investment crowding out for another thing; both not good at all given lowering productivity from retiring/slowing down baby boomers, a process which has just begun and will last probably as long as it took to have the boomer babies – about 15 years. But it will be a rough 15 years.
    America has ensured a bit rougher ride; if they continue their inflationary ways it will turn into a Greece style train wreck.
    As Santelli says, the piper will come calling someday, and when it happens it’s going to get ugly.
    I hope the Dems aren’t seriously considering inflating their way out of debt. They can’t be that stupid, arrogant and irresponsible, can they?
    American voters need to give their head a shake and consider who is going to take them to debt disaster more quickly, even if Romney is milqetoast Republican.

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  23. I visit SDA once or twice daily, but I seldom go to the comments. Today I realized how much I am missing! There is a goldmine in the comments! BTW, the busted link, http://www.smalldeadanimals.com/www.zerohedge.com/news/santellis-queasiness-about-bernankes-quantitative-easiness is fixed by removing the SDA remnant. However, the PAGE .. NOT FOUND redirect on SDA is priceless! Kate does a magnificent job, and the commenters definitely provide valuable additions!

  25. Let’s be honest with ourselves for a moment and admit the Fed is a private banking consortium which has the US as a client – it has taken the power of congress to create money and credit and it issues money into the economy as a debt owed private investors of the Fed.
    The Fed has come completely off the rails in the past decade and is (at the behest of corrupt Washington regimes who finance deficit with unsecured currency) cranking out unsecured fiat dollars in volumes that exceed the reserve requirement 20 fold and refusing oversight and audit by congress. This policy amounts to legal counterfeiting and essentially robs anyone with savings by devaluing those savings with inflation.
    Given what we know about the incestuous relationship between spend thrift government and the Fed, we just KNOW if Obama gets in again, Periodic quantitative easing (printing worthless money) periodically will turn into a continuous policy of printing money to cover government deficit spending.
    We also know deep down that Romney and his alleged “fiscal Conservative” side kick will do nothing to reform the Fed and its deadly abuse of the currency issue power.
    Hope for monetary/fiscal reform died with Ron Paul’s capitulation to the GOP RINO machine – it is now up to Americans to force change or go bankrupt.

  26. Shamrock, the US government has been following this policy for nearly 15 years with their “weak dollar” strategy. The problem is it never works because other countries don’t like having deflation exported to them, so they retaliate. The currency wars have been going on for a decade and have produced nothing except debased currencies all round.
    Occam, this has been at the behest of Congress, not despite it. The howling if the Fed actually defended the dollar’s value would be heard on the far side of the Moon.

  27. KevinB:
    I’m merely repeating what I’ve read a 1000 times in the Austrian literature. I’ll confess ABC theory is not easy to explain, but I’ll try:
    Austrian business cycle theory blames the artificial lowering of interest rates by the Fed for causing an imbalance between consumption and capital investment.
    Normally interest rates reflect “time preferene” in society. High time preference means a focus on present consumption; low time preference a willingness to forego current consumption increasing SAVINGS which are then made available to businessmen to expand capital investment. Low time preference entails a natural lowering of the interest rate and essentially a message from consumers for businessmen to expand capital investment, to lenghthen the productive process.
    By printing new money out of thin air they give false signals to businessmen as to the level of real savings causing them to over extend. Eventually these errors become manifest when the bubble bursts causing massive liquidation of inappropriate capital investments, something radically different than the normal business fluctuations due to consumer prefences changes, technology etc.
    As you know Keynes had this crazy notion of “animal spirits”, i.e., that for some mysterious reason people become pessimistic and reduced their consumption and increased savings which is “dead money” (hoarding). Keynesians believe that during these periods the problem is “underconsumption” and that the FED must artificially lower interest rate in order to boost consumption.
    This thinking reveals a lack of understanding of capital theory: the changing allocation between consumption and investment which results from a natural change in time preference in society.

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