Making the Poor Poorer

Yesterday the Federal Reserve announced that it would ramp up it’s war on the poor:

The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing.

The Federal Reserve said it will buy “additional agency mortgage-backed securities at a pace of $40bn per month”.

The central bank also said it could increase the size of its purchases if the economy does not improve.

The Federal Reserve is going to start printing a minimum of $40 billion a month for an indefinite period of time. Printing money inevitably leads to inflation, which is a decrease in purchasing power. If the entire economy was made up of $100 and the Federal Reserve printed another $100 it would effectively reduce the purchasing power of each dollar by half. What’s more insidious about this is that the devaluation doesn’t occur immediately, the first receivers of newly printed money enjoy it’s use at full purchasing power. It’s not until the money begins circulating that the reduction in purchasing power hit. Effectively the poor, being the last receivers of newly printed money, get hit the hardest.

With this latest announcement the Federal Reserve might as well have said, “Fuck the poor!” Those who are barely able to get by on the current purchasing power of their money will soon find themselves entirely unable to get by as prices increase due to dollar devaluation. If you’re holding Federal Reserve notes it would be wise to convert them to something tangible quickly.

One thought on “Making the Poor Poorer”

  1. “If you’re holding Federal Reserve notes it would be wise to convert them to something tangible quickly.”

    Even more so, as I hear Russia is going to start selling oil to China in yuan instead of dollars, meaning the international “heat sink” for inflationary policies is likely going to start collapsing back inward.

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