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What Money Printing Looks Like …



We all know that the Federal Reserve – America’s secretive central bank – is printing trillions of dollars worth of new “assets” in an effort to stimulate an economic recovery in America.

This process – known as “quantitative easing” (or “pump priming”) – hasn’t worked. Sure it has sent the U.S. stock market soaring to record heights, but for the rest of us it has done nothing but devalue the two nickels we’re working so hard to rub together.

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 that offset 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.

Last September, the Fed unveiled “QE3” – an open-ended addition of nearly $85 billion in new asset creation (a.k.a. money printing) each month.

The results? As of last week, the Federal Reserve’s balance sheet now stands at a record $3.646 trillion – an increase of $813 billion (30 percent) over the last year. Of course the American economy remains decidedly “unstimulated.”

Something consumers are beginning to figure out …