QE3: The privatization of money-print

My yesterday's prognosis was entirely crushed by FED that announced the QE3. Anyway the prognosis is semi-right as it was based on other principles. The prognosis was right because it said that at the moment the Government does not need the money-print start. It will be needed at the end of the year. So there is no logic of FED to intervene. And in fact FED will not intervene on government bonds markets. So the prognosis as a logic was right.

 The mistake was that I never expected such an absurd to happen - money-print in favor of private assets. FED decided to buy mortgage debt that de facto means the newly printed dollars will go to private companies and investors, and not in Government. This de facto is a privatization of the money-print that is a financial absurd with no equivalent in history.

It doesn't matter who will take the money first - Government or private sector. In both cases inflation will occur. But the idea of money-print is to be profitable for the one that takes the money first. He will use it before the inflation brings the devaluation. I.e. the first in money-print is always the winner. That's why money print is usually made by Central bank buying government bonds and this way making the Government the first receiver. I.e. the Government creates new money and uses it in its own favor. This is an exploitation of Government's money-issue monopoly.

A money print used to buy private assets makes the Government second, third and much later receiver. I.e. it puts the Government among losers.

This is an absolute absurd and shows the confusion that has seized the global leaders. They simply don't know what to do, so start doing mad moves. This random and panic move means only one - very soon the money will have no any value. No any. Its value will become 0. So my advice is to invest in gold (physical), silver(physical), property and generally real material assets. It will be a time of big financial earthquake.

Sept 13th 2012

Interesting sites: Добри Божилов