{"id":2268,"date":"2010-11-09T11:28:27","date_gmt":"2010-11-09T16:28:27","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=2268"},"modified":"2018-08-17T09:09:04","modified_gmt":"2018-08-17T13:09:04","slug":"the-feds-quantitative-easing-is-a-show-of-national-strength","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/11\/09\/the-feds-quantitative-easing-is-a-show-of-national-strength\/","title":{"rendered":"The Fed’s “quantitative easing” is a show of national strength"},"content":{"rendered":"

I wrote last week about the U.S. Federal Reserve’s “quantitative easing.”\u00a0 This is the purchasing of billions of dollars of debt by the Fed in the open market.\u00a0 Each time they purchase some debt it adds U.S. currency to the global marketplace.\u00a0\u00a0The greater the supply of U.S. dollars, the lower the price of the U.S. dollar.\u00a0 So effectively QE is a way of weakening the U.S. dollar.\u00a0 The weaker, that is, the cheaper the U.S. dollar the more expensive are imports and the cheaper are exports.\u00a0 Not surprisingly then, the rest of the world is whining about the quantitative easing policy as their goods are made less affordable and hence their economies are made weaker.<\/span><\/p>\n

This week Russia, China and the eurozone have all complained publicly about the policy.\u00a0 But since World War II the U.S. has basically had in place a free-trade economy.\u00a0 That is, the barriers to trading with the U.S. are massively lower than they are for other nations.\u00a0 This open-door policy was put in place consciously at the close of World War II at the famous Bretton-Woods conference.\u00a0 Because most of the industrialized world had been devastated by the war, only the U.S. could afford to finance a rebuilding.\u00a0 It was in the U.S. interest to do this because we needed people to buy our goods and services.\u00a0 So one of the ways that we did this as a nation was to have a free-trade policy.\u00a0 U.S. markets were open to cheap goods.\u00a0 When we bought goods from Europe, China, Korea and Japan we were providing currency for these nations to rebuild themselves.<\/span><\/p>\n

Fast forward 65 years from the end of the war and these sorts of policies do not serve the United States.\u00a0 The economies of Europe, China, Korea and Japan have the ability to stand on their own without the need of the U.S. consumer.\u00a0 It is time for these nations to switch from reliance on the U.S. consumer to reliance upon their own citizens.\u00a0 The Federal Reserve’s quantitative easing will have a negligible effect on the actual quantity of dollars.\u00a0 However, it dramatically signals a very new approach to the global economy of the future.\u00a0 Let’s hope that this policy is continually implemented and gracefully.\u00a0 The net result will be a U.S. economy that hopefully is a net exporter, rather than importer.\u00a0 And that will mean that the U.S. starts to deleverage a portion of its gargantuan national debt.<\/span><\/p>\n

So quantitative easing is a show of national strength.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

I wrote last week about the U.S. Federal Reserve’s “quantitative easing.”\u00a0 This is the purchasing of billions of dollars of debt by the Fed in the open market.\u00a0 Each time they purchase some debt it adds U.S. currency to the global marketplace.\u00a0\u00a0The greater the supply of U.S. dollars, the lower the price of the U.S. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2268","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=2268"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2268\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=2268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=2268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=2268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}