the fed is innocent! - yeah, right...

a rather interesting article was posted on MW yesterday basically saying "it's not the FED's fault" under the name - you people don't know anything cuz you're dumb!

and it says things like "The Fed does not control the money supply" and "little of this money finds its way into the stock market" - and other blahblah made to feed people with in order to form an unrelated-to-this-business kind of perception of the FED... i suggest you read it - it's a hot topic.

and below is my comment to the article posted on MW (with minor corrections):

lets start with the fed "printing money" - it doesn't really print money! it creates it on the computer! out of thin air. 

when the fed BUYS MBS and bonds it PAYS with money. that money does not go back to the fed - it's ridiculous. only the fraction does, something like 9%. the rest of it, as correctly said in the article, does not go to lending - it all goes to buying equities! 

did the fed have the objective to make the USD as cheap as possible? - yes! Ben said it himself that one of the reasons for QE is to lower the dollar and make the american stuff more "compatible" (in order to increase exports and thus get the economy going)! the fed started the currency war with the rest of the world and let the EU to the edge of a break down. but of course the rest of the world thinks it was Greece's fault... 

banks own the fed. the game is played by their rules. this article is naive in trying to portray the fed as a savior - it's not. the fed is made to control the money supply. again, saying that the fed does not control the money supply is BS! 97% of money is ELECTRONIC!!! at least in GB... it's all typed in and stored in a computer. so the so called "real" money that banks loan is only 3% of the money supply. besides, they don't even loan the money in the strict sense - they use your IOU (your credit contract) to CREATE this amount that you borrow! QE is not even needed to create money for borrowers! the borrowers create their loans by themselves. and it is when these loans become "toxic" (they don't get returned) comes the FED with money created out of nothing and "buys" these loans to save banks from collapsing. loans disappear and banks get fresh money with a bonus - 00 interest rate... so where do banks invest the money they get from the fed? - they buy stocks, oil contracts, gold, etc... they are not so much into loaning anymore...

why is there no inflation? because the real money supply is not growing - banks don't loan out as much as they used to. wages are not growing. the inflation we see is speculative. when the disbalance between population's disposable income and expenses reaches its climax (which is coming rapidly with all the tax increases) we'll have a demand crisis and a huge recession! and in the end the rich will become richer and the common men - poorer...