The Treasury will raise “just” $67-72 billion new cash next week. That’s some $20 billion less than the TBAC forecast. Woohoo. The recovery is here. TARP repayments, growing tax receipts, and reduced outlays are giving Treasury finances a boost. QL1.5 is working just the way it’s supposed to. The cash is filtering through the markets into the economy. Renewed economic growth results in increasing tax receipts, cutting the defecate. QE2 not needed.
Wait a minute. Here we are cheering the fact that the government will only need to borrow $70 billion next week in order to meet its expenses. Woopdedoo. And we don’t need no stinkin QE2 because QL1.5 is also lifting commodity speculation, which boosts inflation. Isn’t that what the Fed wants–another transfer of wealth to the leveraged speculating community to boost consumption and economic growth? Of course that extra cash that what’s left of the middle class will have to spend on food and fuel is just another form of tax that will only further reduce discretionary spending and send the economy spiraling into a black hole.
The Fed’s easing policy, whether QL1.5 or an enlarged QE2, is sowing the seeds of its own demise. It is robbing the middle class, or what’s left of it, to enrich commodity speculators. It is raising the cost of basic necessities for the world’s working people and those formerly surviving on fixed incomes. At the same time it eliminates the interest income that they would normally have to help them survive.
The Fed is certifiably insane, if not criminally insane.
Stay tuned for more analysis, with tables and charts worth a thousand words, in this weekend’s Fed and Treasury updates.
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