Here we go again. Under the third round of the Federal Reserve's "quantitative easing" program, the bank will spend $40 billion more a month for 12 months ("Markets rally on new Fed stimulus," Sept. 14). Together with the $45 billion already committed to the end of this year that totals $85 billion through December.
The stated reason is to stimulate housing. But housing prices need to find their equilibrium through supply and demand, not through Fed funny money. That is how we got into trouble in the first place.
The Fed's tab for the QE program is now over $3 trillion. And most of that new money went to buy government debt — not to "stimulate" the private sector. Our total debt is now over $16 trillion. That is more than $50,000 for every man, woman and child in the U.S.
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At a time when median household income fell 1.5 percent last year, to $50,054, and is now down 8.1 percent from 2007, a record 46.2 million Americans are living in poverty — nearly 15 percent of the population.
So what exactly does $3 trillion in newly printed Fed dollars — with nothing to back it up — actually do? It raises prices. Food and energy prices are now at all-time highs. Remember that the next time someone tells you there's no inflation.
So why do it? Because the Treasury must find buyers for the bonds that finance the deficits. The private sector won't buy them — the interest rates are too low, and they'll stay low at least through mid-2015, the Fed says.
Or could it possibly be due to the November election when the sitting president's foe has said he would not rename Federal Reserve Chairman Bernard Bernanke to his post when his term expires?
The government's addition of $1 trillion a year to our nation's debt hangs over this economy like a dark cloud, keeping entrepreneurs and big businesses alike on the sideline. Come January 2013, Americans — especially entrepreneurs — will be socked with a tax hike of almost $1 trillion.
That's why the economy's dead, not insufficient Fed money printing. The only way to end this isn't more government stimulus. It's to downsize government permanently and put those resources back to work in the private sector. Everything else is wastefulness.
Benedict Frederick Jr., Pasadena