Getting high, if it wasn’t fun, why would so many people do it? The only problem is that the high doesn’t last forever. The come down is often a crash, back to reality, damnit there’s still the law of gravity. Oh no, the stash is gone. What to do? Face life and the world as it is? Okay, but only for as long as it takes to get the next hit.
The sky was falling in the fall of 2008. Not just millions, not just billions, but TRILLIONS of dollars evaporated from the global economy. The wound wasn’t just opened, it was hemorrhaging blood. What to do? Let the free market run free until it corrected itself? Use taxpayer money to try and plug the leak? Bomb another middle eastern country?
Desperation causes people to do things that they don’t fully understand. Under intense stress and scrutiny many human beings seek a temporary escape from reality in mind or mood altering chemical substances produced naturally or artificially known to many simply as drugs. Coffee, cigarettes, alcohol, marijuana, molly, mushrooms, lsd. cocaine, heroin, meth, crack. Those who shake their head and thumb their nose at drug users often substitute adrenaline, food, binge screen watching, and other socially accepted mind altering reality escapes in place of the illicit stuff, but it’s all the same.
The federal government and federal reserve bank of the United States of America is run by human beings. Human beings susceptible to the same highs, lows, pros, cons, disciplines, and vices as you and me. In the midst of panic, desperation, and catastrophe a series of steps were taken to stop the economic bleeding, stabilize the markets, and attempt to spur future growth. However, the policies were all nothing more than reality escaping substances on a meta scale.
First came TARP. Then came the auto industry bailout. Those got the headlines and the public ire or support depending if you’re a political elephant or jackass. However another, much less sexy, but equally if not more important was the Federal Reserve Bank’s $85 billion per month bond buying program known as Quantitative Easing.
There have been three waves of QE from 2009 through present, it is expected to end in 2015. But if it’s expected to end clean, at a predetermined time, why the drug analogy?
So the withdrawal pains, in the form of inflation and higher interest rates, could cause a relapse into recession or worse for both the US and global economy. QE has been like an alcoholic going to rehab and starting a two pack a day cigarette habit. Our recovery has been artificially enhanced by QE. We haven’t quit cold turkey, we’re on synthetic drugs. It isn’t until all the meds are out of our system that we’ll know if the economy has recovered or not.
Where does QE go from here? I’ll cover that in part 3…