When you hear statements like "Quantitative easing" and whether the government will start “QE 3” or continue "printing money", most people have a hard time understanding it.
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But more importantly, they have a hard time understanding how these events impact them.
Let me help. Regardless of whether it’s money, tickets to a game, lumber, paper, salt, sugar, etc., when more of anything is produced, the value of it is reduced.
When the government announces that it is printing money to stimulate the economy, you should interpret that as “the cost of what I use every day in my life just got more expensive.”
“The cost of what I use every day in my life just got more expensive.”
This is a very important topic because it directly affects all Americans, instantly. The printing of money means that there are more dollars into the economic system, which means that the ones you have are worth less and the items you purchase will cost you more.
There is certainly more to this, but that is a very easy way to understand it. Who does this hurt more? Without question the printing of money through quantitative easing programs hurt the middle class disproportionately harder because that group spends more of its income proportionally on products such as food and energy. These items are often imported from outside of our country and their costs rise when our dollar drops.
The government has other ways to try to stimulate the economy rather than to print money, but this administration has chosen to ignore lowering taxes – which would help -- and is actually about to increase them!
The fiscal cliff which is threatening to further destroy the economy is looming. The middle class doesn't realize it, but the policies of this administration negatively affect them more than any other group. The combination of the assault on the dollar along with the fiscal cliff is, and will continue to be, a tax on the middle class for years to come.