Lance Robert over at Zero Hedge says, “yes“:
The media has been replete lately with a variety of different government officials saying that there will not be a third round of Quantitative Easing. Even the great Ben Bernanke himself on April 27th spoke against the possibility of QE 3. This isn’t surprising, of course, because in order for something like QE to have the most effect it needs to be, well, a surprise.
However, I am throwing down the gauntlet and making the call – there will be Quantitative Easing, and a big one most likely, by the end of summer. There I said it; of course, I have actually been saying this for the last couple of months and it doesn’t take much of a real genius to figure it out considering that we are heading into a presidential election year. However, it most likely won’t be called QE 3 since the term QE is now politically and socially almost taboo…
I can’t dissent from that view, at all. The one thing the banksters and bureaucrats cannot handle is an economy in recession in 2012. To their way of thinking, Obama is a sure-thing unless the economy tanks (personally, I think a lot of people are putting too much stock in Obama…even if the economy is better in 2012 than in 2011, he’s very much beatable because so many Americans are growing contemptuous of him; but, we’ll leave that aside, for now) – and, so, they have to keep the economy from tanking. While Democrats talk up more stimulus, the fact of the matter is that the House GOP would have to become suicidal to agree to any such thing…and even if they did, there is no assurance it would get through a Senate filled with Democrats fearful of losing their re-election bids in 2012. Thus, classic tax and spend efforts to “cure” a recession are out…only thing left is to fire up the printing presses.
As the linked article notes, in order for any such printing to have a noticeable effect on GDP growth and employment, it would have to be a pretty large amount. The author guesses in the range of $2 trillion. I can’t say, myself…but if you do dump $2 trillion on the economy all of a sudden, it will have a big effect. The people doing it hope for a lot of short-term, good effect…with the bad stuff only showing up after Obama is safely re-elected. The last two rounds of money printing worked out just like that – short term boost to the economic numbers, giving the appearance of economic recovery, as long as you ignored such bell weathers as the price of housing, new home construction and labor force participation (most of which is rather arcane information that most Americans don’t know about). It certainly blew a hole in my predictions – I didn’t think Bernanke and the boys could keep it up nearly this long.
But will it work like that, again? I’m not so sure. Printing up money is, after all, a way of kicking the problem down the road. It doesn’t solve anything – and, in fact, in the long term it makes things much worse. While some good will be perceived, the fact of the matter is that more money printing will immediately cause oil and other commodities to spike in price, thus forcing consumers to pay more for essentials. Whatever “oomph” we might get from “free” money may be immediately eaten up by the “tax” of rising inflation. Maybe a quarter or two of improved numbers, but then a resumption of the crash – and at an accelerated rate. Do it in July and you carry us through to January…and we fall back in to recession right about the time Obama gives his acceptance speech to the 2012 Democrat convention (on the other hand, if they wait until January then we may be back in full-blown recession and Obama’s numbers may have so badly cratered that even if there is “recovery” by September of 2012, it will be too late). I don’t like the prospects of it – mostly because fiat money is just bad…but doubly bad this time as we might only be allowing the most speculative of money men to make a killing for a short while.
The thing is, if Obama were to change course right now and admit that stimulus and money printing don’t work – and then told us we’ve got four or five bad years to get through but if we get busy making, mining and growing things, then we’ll be back on our feet, he’d probably get re-elected. The refreshing honesty and the “let’s all get together to endure the rough times” would likely boost his appeal to an American people increasingly weary of big promises and small results from government. I doubt that Obama has the courage to make such a move – or, indeed, the wit to see that it is necessary. And all the banksters and bureaucrats can see is rank fear…fear that someone like Palin or Cain or Santorum will win and proceed to gut Big Government, including the “private sector” parts of it (ie, big corporations like GM, big banks like JP Morgan). Fear and ignorance…because make no mistake about it, the people who rise highest in corporate or bureaucratic America are the people least versed in how real life is lived. They simply don’t know what they’re doing – but the theory they were taught in college says spend, spend, spend your way to prosperity.
It’ll be interesting to watch out this plays out. Clueless people running a government off track and an economy which has been strangled. They want this dead cat to get up and walk, and the trick just can’t be done. Meanwhile, frustration and anger grow among the American people and revolution is distinctly in the air. 2012 will be the most crucial election since 1932…and at this point in time, no one can say what, really, will happen.
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