From the editor
QE3 is a whole new beast
Years ago, back when all this first started, Bill Bonner and I talked about how it would play out. He said central banks would print money. Then they’d print more money. Then they’d get addicted to printing money. And then there would be inflation. You can make the crisis and its ongoing semi-resolution sound a whole lot more complicated than that if you like, but in the end that’s more or less what is happening.
America, as ever, is rather ahead of the rest of us. Its first two rounds of QE made some sense. The money supply was on the verge of serious contraction as the banks pulled back from lending. So to prevent deflation and depression the Federal Reserve stepped into the breach and printed just enough money to stop the overall supply of money falling. QE1 and QE2 were all about trying to mend the broken financial system.
But the US financial system is now more or less fixed with the supplies of credit and money growing. That makes QE3 something different altogether.
• Read the full editor’s letter here: QE3 is a whole new beast.
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