Is ‘quantitative easing’ a biblically unjust economic policy?

Last week Federal Reserve chairman Ben Bernanke announced a positive outlook for yet another round of quantitative easing (commonly abbreviated QE3 since it is the third round). According to a report from Rueters,

The euro slipped against the dollar on Monday but was still close to a near four-month high hit on Friday when disappointing U.S. jobs data fanned speculation the Federal Reserve may launch more monetary stimulus this week.

Heightened expectations that the Fed could announce another round of quantitative easing, known as QE3, after a two-day policy meeting ends on Thursday were likely to support the euro and riskier currencies like the Australian dollar in coming days, traders said.

“Launch more monetary stimulus” is news speak for “quantitative easing.”

It says something, I think, that central banks around the world are hoping for QE3, although it will hurt Americans in the process (see this article from Indonesia’s Jarkarta Post, and this post from Forbes on China’s desire for QE3).

Ben Bernanke

Ben “The Ben Bernank” Bernanke, Chairman of the Federal Reserve Bank [Image credit]

The three short videos below attempt to explain quantitative easing in lay terms. The first two are cartoons that use a digitized vocal track making them sound like really jacked up Teddy Ruxpins. They are satirical, humorous and woefully on target. The third is from the senior editor of Marketplace.org, Paddy Hirsch. Though Hirsch seems sympathetic with the goals of QE he admits the Federal Reserve essentially prints money out of thin air (also called “fiat” money). He also admits that quantitative easing devalues the dollar.

And what, dear children, happens when the Federal Reserve injects billions and trillions of dollars into the economy? That’s right, your dollar will buy less goods and services while international purchasers will enjoy lower prices. And who gets hurt most by each QE and the devaluing of the dollar? People who live on cash–specifically, the poor.

Quantitative easing does not affect the wealthy as much as the poor because the wealthy generally have the option of investing in non-cash assets that appreciate when cash is devalued: gold, stocks, art, and the like. They are not living week-to-week, hand to mouth and can take advantage of downturns in the economy and fluctuations in currency. The poor are not like that. They live paycheck to paycheck putting their money in a checking account that pays no interest, watching helplessly as the buying power of that money is whittled away every time another round of QE drives up grocery prices, gas prices, utility prices, etc. (Here is a site that summarizes the Fed failed and failing strategy for handling the economy.) Each dollar buys less gasoline, less groceries, less clothes and on and on. And, since the largest portion of working Americans have enjoyed no effective buying power increase over the last 30 years, each round of quantitative easing sinks them lower and lower into financial hardship.

The Bible warns over and over against the exploitation of the poor (Deut. 15:7, 24:14, Amos 2:6, 7, James 5:4, 5, et al) with a blistering indictment recorded against Israel in Isaiah 10:1, 2:

Destruction is certain for the unjust judges, for those who issue unfair laws. They deprive the poor, the widows, and the orphans of justice. Yes, they rob widows and fatherless children!

And what is it called when laws or policies like quantitative easing reduce the buying power of honestly earned money? It is called theft. Or it should be.

Biblically, it appears to me, that QE3 and the QEs preceding it are unjust by biblical standards. Agree or disagree?

Quantitative Easing (from 2010)

Quantitative Easing Revisited (from 2012)

Quantitative Easing (from 2008)

Marty Duren

Just a guy writing some things.