It’s Taper Time!

The secretive central bank of the United States – the Federal Reserve – will ever-so-slightly scale back its money-printing in response to recent positive economic news.

This so-called “tapering” will begin in January.

Ever since last September, the Fed (which was roundly rebuked in this recent column by former U.S. Rep. Ron Paul) has been creating $85 billion in “new assets,” a process known as “quantitative easing.”  In January, that total will drop to $75 billion a month due to what the Fed called “cumulative progress toward maximum employment.”

Wait … what?  Is the Fed even watching the economy?  Are its managers – notably outgoing chairman Ben Bernanke – even remotely aware of the real employment situation in America?

The only “cumulative progress” we see is that of millions of working age Americans leaving the labor force.

For those of you keeping score at home, the first round of quantitative easing, known as “QE1,” took place from November 25, 2008 through March 31, 2010. Over that period, the Federal Reserve added $1.7 trillion to its balance sheet ($300 billion in Treasuries, $1.2 trillion in mortgage backed securities and $175 billion in agency bonds). The second round, dubbed “QE2,” took place from November 3, 2010 through July 1, 2011. Over that period, the Fed added $600 billion in Treasuries to its balance sheet.

Another so-called stimulus plan offsetting longer term securities with the sale of short-term debt (a.k.a. “Operation Twist”) began in September 2011 – and was extended in June of last year.

And of course last September, the Fed began its latest and greatest round of money printing – an open-ended commitment to create $85 billion in new assets each month.

All of this, of course, is fiat money – the monetization of government debt.  In other words, it’s generational theft … to the tune of $4 trillion and counting.

Don’t take our word for it, though. Just ask one of the money printers …