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Subject A Response To:Why is the FED purchasing 85 billion per month. QE Explained.

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I just had a thought... What if, the new hundreds coming out were a new currency. You are paid in hundreds and instead of getting change after a purchase, you would have to spend it in it's entirety in one trip, or held as credit at places like gas stations, etc. Certainly large corporation's would benefit, as they will be able to have their cake and eat it too. It would shut down small business as well. A train wreck for the ppl. As a bonus, when the bill is burned, they will have gold as well. Just a thought.
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Only a financially comfortable person wastes time on such thoughts.

I'm about reality.
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Actually, I live on $800 a month, before expenses. Thoughts are not waste son.
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It's kinda like being in a war in a foxhole talking about what if we were invisible.
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Original Message The reason that the FED is purchasing 85 billion per month in bonds is to artificially "Float" the economy.

This is called Quantitative Easing. It is good if you are wealthy and horrible if you work for a pay check.

When liquidity(Money) is pumped into the economy because of these Bond purchases it INCREASES the money supply.

If you are wealthy and have alot of money this is great because even though the increase in money lowers the value of a dollar it also makes purchasing assets cheaper for YOU so you ca scoop up more land,houses,commodities etc. at a cheaper price.

This is how the Wealthy give the APPEARANCE that people are pending and that the economy is healthy when it is NOT.

If you are at the OTHER end and draw a paycheck to make your living this added liquidity into the economy is DEATH to your paycheck because more dollars in the system makes your limited dollar worth LESS and it make sellers have to raise prices in order to make a profit, this is INFLATION.

If the FED DID NOT purchase the Bonds then they would have to raise interest rates causing your credit card bills, mortgages and loans to go up but they would ALSO be hurt by a lowered dividend on their stocks.

So with QE or Bond purchases only YOU are hurt because of Inflation. Inflation doesn't hurt the wealthy because they have lots of cash to make up for the moneys lower value because of QE (Quantitative Easing).

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