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Quantitative Easing, The People And The Damage Done
There is an excellent analysis of the effects of the (85 billion per month) QE programme up at Naked Capitalism.
I still think QE is grand theft on a massive scale. Surely this topic belongs on the agenda of "economically populistic" democrats.
But that is not at all how QE has persistently been presented to the people. It’s presented both by Bernanke and by his footsoldiers as an effort to heal the American economy and create jobs. For which there is so little evidence that they get away with throwing ever more money at the by now too bloated to fail banks, and always under the same guise. And as the American people seem to believe them, banks and investors are just happy with all the free money and low interest rates. It’s as if nobody pays, and if someone does pay, who cares, they don’t raise their voices, do they?
By 2012, Americans had lost $630 billion just in net interest income, some $2000 per capita. Today, that amount is undoubtedly higher. And Janet Yellen, faithful puppet of the architects of America’s worst ever financial crisis, will do her best to make sure it keeps on rising.
Why doesn’t America recognize the failure of QE and try something different? $85 billion a month, over $1 trillion a year, is about $3000 for every American, or close to $10,000 per household. If that were handed not to banks, but to these households, and it could achieve the same economic efficiency that foodstamps have, i.e. they create $1.7 worth of – primarily local – economic activity for every $1 they’re worth, the average household would have $10,000 extra to spend, and the benefit to the economy would be $17,000. That couldn’t fail to create jobs.
It’s theoretical, of course, and things being as they are, it’s almost certain that it will remain a theory only. But even if you would take just, let’s say, 10-20% of the amounts presently spent to relieve too big to fail but already failed anyway banks of their mortgage debt risk, that would still do a lot more to revive the economy than all of QEs relief does. Not that that’s hard, mind you, since QE has only made matters worse for the people. That’s what that graph from McKinsey tells us.
By 2012, Americans had lost $630 billion just in net interest income, some $2000 per capita. Today, that amount is undoubtedly higher. And Janet Yellen, faithful puppet of the architects of America’s worst ever financial crisis, will do her best to make sure it keeps on rising.
Why doesn’t America recognize the failure of QE and try something different? $85 billion a month, over $1 trillion a year, is about $3000 for every American, or close to $10,000 per household. If that were handed not to banks, but to these households, and it could achieve the same economic efficiency that foodstamps have, i.e. they create $1.7 worth of – primarily local – economic activity for every $1 they’re worth, the average household would have $10,000 extra to spend, and the benefit to the economy would be $17,000. That couldn’t fail to create jobs.
It’s theoretical, of course, and things being as they are, it’s almost certain that it will remain a theory only. But even if you would take just, let’s say, 10-20% of the amounts presently spent to relieve too big to fail but already failed anyway banks of their mortgage debt risk, that would still do a lot more to revive the economy than all of QEs relief does. Not that that’s hard, mind you, since QE has only made matters worse for the people. That’s what that graph from McKinsey tells us.
That graph from McKinsey is this one:
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