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Alan Greenspan on Quantitative Easing Parts One and Two


"It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion," he said. "Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1."



Fed's Massive Stimulus Had Little Impact: Greenspan

CNBC

The Federal Reserve's massive stimulus program had little impact on the U.S. economy besides weakening the dollar and helping U.S. exports, Federal Reserve Governor Alan Greenspan told CNBC Thursday.

In a blunt critique of his successor, Fed Chairman Ben Bernanke, Greenspan said the $2 trillion in quantative easing over the past two years had done little to loosen credit and boost the economy.

"There is no evidence that huge inflow of money into the system basically worked," Greenspan said in a live interview.

"It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion," he said. "Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1."

Greenspan's comments came as the Fed ended the second installment of its bond-buying program, known as QE2, after spending $600 billion. There were no hints of any more monetary easing--or QE3--to come.

Greenspan said he "would be surprised if there was a QE3"  because it would "continue erosion of the dollar."

Shorter Greenspan: We tried to warn them.

Ah yes, the "unexpected" consequences of The Left's Holiday from Sane strike yet again. The countdown to a proposed QE3 starts now, since 0bama and his administration are all about reinforcing failure.

In other related news, "TurboTax Timmy" Geithner joins the rest of 0bama's original Economic Team in looking for the door:

Geithner to Consider Leaving After Debt Debate

By Hans Nichols | Bloomberg

Treasury Secretary Timothy F. Geithner has signaled to White House officials that he's considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the federal debt limit, according to three people familiar with the matter.

...

Geithner hasn't made a final decision and won't do so until the debt-ceiling issue has been resolved, according to one of the people. All spoke on condition of anonymity to talk about private discussions.

...

An exit by Geithner would complete the turnover in Obama's original economic team, with Council of Economic Advisers Chairman Austan Goolsbee scheduled to leave in early August to return to the University of Chicago.

Looks like all the rats are departing the sinking ship of the 0bama administration...
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Comments (11)

The complex negative intera... (Below threshold)
LeBron Steinman:

The complex negative interaction of Quantitive Easing in respect to the national debt and it's relationship to consumer spending and debt with it's inherent impact on the value of the dollar here and abroad ,I believe can be addressed and described in one succinct conclusion:

Obama's a d**k.

He glosses over the exchang... (Below threshold)
dunce:

He glosses over the exchange rate effects. Every country has been printing money to maintain approximate parity. The price of commodities has kept pace with the printers because price is just a number used to measure value. Foreign oil exporters are demanding more currency for the same barrel of product because they can and they can not allow foreigners to give them beads and trinkets for their treasures or worth less daily pieces of paper. The exchange rate between dollars and euros and yen or the yuan are relative prices not values.

Shorter: Don't let the door... (Below threshold)
Sep14:

Shorter: Don't let the door hit you in the ASS!!

Barry would do well to follow suit.

Looks like all the rats ... (Below threshold)
jim m:

Looks like all the rats are departing the sinking ship of the 0bama administration...

More like they are just avoiding being thrown under the bus.

As for the purchasing power of the dollar, inflation is clearly here. Some food items have gone up 40% in the last year (yes there are other issues that effect price but inflation is undeniably a significant component). The relative value (yes price and value when talking curencies are essentially the same thing) of the dollar to the euro and other currencies has eroded. Other countries are not printing money to "Keep pace" with the dollar. The dollar is losing value because we have printed over a trillion more of them and we are flirting with default on our debt.

obama is marching us straight into a hyperinflation crisis and he is either doing it on purpose or is incredible ignorant to the realities of monetary policy. If we default on the debt, hyperinflation. If we print money to cover the debt, hyperinflation. If we try to borrow more money to cover the interest and continue spending, hyperinflation.

The only real hope is to dramatically cut spending. The problem with that is that no one in DC has the guts to do it (heck, the dems don't even want to. Some of the GOP want to but are too timid), and it is very possible that even if we do the longer term effects of QE1 and QE2 will still push us into hyperinflation.

Frankly I think that hyperinflation is just another crisis that obama wants so he can capitalize upon it.

Yeah, but Soros' equity hol... (Below threshold)
Tsar Nicholas II:

Yeah, but Soros' equity holdings have been boosted quite nicely by QE1 and especially by QE2, so at least Team Obama has that going for them.

Geithner should leave - in ... (Below threshold)
Jay Guevara:

Geithner should leave - in handcuffs.

Jim M,Given that t... (Below threshold)
Brucepall:

Jim M,

Given that the political leanings of a great swath of America doesn't lend it self to the acknowledgment of the existence of our dire national economic and financial straights, then how will America ever arrive at the resolution which you (and I) advocate? To get there, that would take some pretty sharp financial acumen that America's left leaning progressives are not capable of... at least, until it reaches up and latches with a vengeance onto the backsides of each and everyone of them.

Problem there being, it will also bite everyone else - you and I included - cause we will all be in the same predicament. Hyper is just one of many horrific possible outcomes which I can foresee. But, am I just resigned to the inevitable fate then?

Given what I said before, If the answer is "no," then what can my family and I do to prepare? More to the point, I'm interested in knowing what you are doing to protect yourself and your family from the approaching storm - I sure could use some sage advice.

Semper Fidelis-
Brucepall

If you don't think we have ... (Below threshold)
cirby:

If you don't think we have inflation - quite a lot of it - you aren't paying attention.

A lot of items have changed price, but in ways that you might not notice, like the tortilla chips I always buy. Last year, they were $1.99 for a one pound bag. This year, they're still $1.99. No inflation, right? Except it's now a 12 ounce bag, not one pound. Increased from 12.4 to 16.5 cents an ounce. That's a 33% price increase. Most of the other chips have either directly increased price per bag, or made the bags smaller.

I keep seeing all sorts of items that are either smaller in quantity or higher in price, but for some reason the government can't seem to see any inflation there...

Yep, going to see a lot of ... (Below threshold)
GarandFan:

Yep, going to see a lot of "repackaging" in the next several months. Face it, its the only way companies can "raise" prices without actually "raising prices". Less for the same price.

But I'm sure Barry will have a word for it. And it won't be "inflation".

Just one more of that 'smart economic' team that was going to save the economy and the country. Yeah, let them drive. They've done so well, haven't they?

They didn't need Greenspan ... (Below threshold)
Jim Addison:

They didn't need Greenspan to know that pumping more currency into circulation than the economy demands is going to weaken the dollar, which wasn't all that strong when they started.

I understand their goal - every recovery since WWII has been led by the export sector. Weaker dollars help exports. But the amount of weakening the FRB attempted, and the ham-handed method, invited countermeasures. So the main result was commodity inflation, made worse in the food and agriculture industries by poor harvests and conditions around the world at a time when we are moving much of our corn crop into ethanol with subsidies.

Even worse, after it didn't work the first time, they did it again! Brilliant!

What they forgot was that exports lead us out of recession, but it can't be ONLY exports. Right behind them is housing and construction and after the bubble created and burst by foolish Democratic policies, that ain't happening for another three years or so, no matter what government does.

Obama inherited a bad situation which had not been properly addressed in the waning months of the Bush Administration (in particular the auto bailout urged by Obama was dumb, as was the second part of TARP, which ended up being squandered by Obama, too). But he proceeded to make it an utter and enduring disaster with the sort of policies which have never worked anywhere and have always failed wherever tried.

The man is a complete incompetent. He's in way over his head.

Bernanke had the resume, but failed to bring the chops. Greenspan wasn't the genius many believed him to be, not by a long shot. But compared to Bernanke and Obama, Greenspan and Bush are looking smarter every day.

Given that the political... (Below threshold)
JLawson:

Given that the political leanings of a great swath of America doesn't lend it self to the acknowledgment of the existence of our dire national economic and financial straights, then how will America ever arrive at the resolution which you (and I) advocate?

Brucepall - as you and I well know getting knocked on your ass by a DI (or TI in my case) has a great tendency to focus your attention on the lesson at hand. I think a good many people who used to believe that government was always the answer to any problem are realizing that it can, at best, be something to TEMPORARILY take care of an issue.

And we've got too many problems where government was used to provide permanent solutions. Big Government is adequate for Big Issues. (National defense, the FDA, interstate highways - I'd even grandfather in Social Security and a limited medical system.) For smaller issues - leave the money at the state and local level. It may be we're going to have to have a real crash in order to learn the hard lesson coming - that we simply cannot depend on the Beltway Bastards to take care of anything but THEIR own interests.




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