Money out of nothing

Nov 4, 2010, 9:53 AM | Updated: Mar 28, 2011, 3:48 pm

Listen to Dave Ross Commentary:

The insiders call it QE2. It stands for the second round of Quantitative Easing… which is a policy of the federal reserve bank designed to caffeinated the economy.

And the way it works is, the central bank deposits a sum of money to its own account which came from — how can I put this. Which came from nowhere.

Yesterday, the Federal Reserve Bank simply decided that it now has 600 billion dollars it didn’t have before — as if you simply wrote a check for $600 billion you didn’t have — and the bank honored it.

Of course YOU can’t do that, because you are not a trained economist. But Fed Chairman Ben Bernanke IS a trained economist, and he thinks this will help Entrepreneurs get all Entrepreneury again:

“That money flooding into the system has to go someplace, and right now the place its going is in risk assets, the stocks here in the US. Watch all these markets they’ve been on fire the last 24 hours.”

Jill Schlesinger. I know this scares some people. They think this is a sign of the end times.

But that’s only if you think of this as the printing of money backed by nothing, which it is, but I’d rather think of it as — suddenly finding a lot of gold.

If the Chilean miners, while jogging through the mine had found a pile of gold nuggets jarred loose by the collapse… they’d be rich, and we’d all be cool with that. Even though they didn’t invent anything new, weren’t more productive, didn’t start a business.

So just think of the Federal Reserve as a bunch of miners who get to discover gold whenever they need to.

Ross and Burbank

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Money out of nothing