Campaigning in the Tampa area yesterday, GOP Vice Presidential candidate Paul Ryan strongly criticized the Federal Reserve for trotting out a new so-called economic stimulus plan because it helps big Wall Street banks but not middle-class families.
“Just yesterday we heard the Federal Reserve is coming with a new bailout,” Congressman Ryan said. “We don’t need sugar-high economics,” Mr. Ryan said as reported by the Washington Times.
The Fed’s latest economic plan, known as “quantitative easing” (and in this iteration QE3), is a scheme whereby the central bank will buy up billions in mortgage-backed securities until the economy (theoretically) improves.
Speaking at the Florida campaign rally, Ryan referred to the Federal Reserve plan as insidious, CNN reports:
“One of the most insidious things a government can do to its people is to debase its currency. We want honest money; that means we want honest government. It’s one and the same. Now the secret to prosperity is not more money printing.”
…We don’t need synthetic money creation. We need economic growth. We want wealth creation. We don’t want to print money. We want opportunity and growth. And when they do this to our money, it undermines the credibility of our money.”
In downgrading the US credit rating from AA to AA- this week, the Egan-Jones financial ratings agency explained in part:
[T]he FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities…The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power.
Do you think that this Federal Reserve bailout will succeed where the previous ones have failed?