That doesn’t square with soaring U.S. stock prices and company profits that have emboldened investors. Bond buying that pushed the Fed’s balance sheet to a record $3.21 trillion and other unprecedented actions by Chairman Ben S. Bernanke “saved the world,” David Blanchflower, a former Bank of England policy maker, said in response to Stockman’s assertions.
“The reason that stocks have erased all their losses is entirely because of QE,” said Blanchflower, who teaches at Dartmouth College in Hanover, New Hampshire, and served on the BOE’s Monetary Policy Committee from 2006 to 2009. “To argue that that’s independent of the actions of the Fed shows no understanding of what the Fed is doing and what they did.”
He did eh?
QE destroys purchasing power both on a forward and present-terms basis.
Shooting up heroin may mask the fact that you’re not performing any real work and make you feel really good, but the fact of the matter is that statistical facts are what they are.
Where is the saving, of the world or anywhere else?
More to the point: How does, in the intermediate and longer term, business continue to make “record corporate profits” except by impoverishing everyone when there is no return on saving and no actual job growth?
And if you impoverish everyone by forcing them into penury and at the same time you try and fail to restart the borrowing leverage machine what happens to asset prices when the market figures this out?
Oh sure, it may look like it’s working for a while, but you’re simply digging a bigger hole! Rather than recognize the failures that already happened forcing more and more previous economic surplus into the current economy to maintain the illusion makes the economic destruction you must face worse.
This isn’t a zero-sum game, it’s a negative-sum game. Crooning because stock prices are up is idiotic; what matters to the intermediate and long-run economic prosperity of the nation and her people as a whole is the ability of people to produce economic surplus which they can then choose to spend on things like retirement and education or they can invest it in new ventures, powering forward jobs and the common economic condition.
QE does exactly the opposite — it powers economic profligacy by government through making government deficits appear “sustainable” when in fact they are not while destroying both direct purchasing power and return on saving, forcing saved funds into the economy to cover current costs. It therefore enables and causes the shifting of personal economic surplus to economic deficit and dependency while at the same time destroying the tax base that makes paying those handouts possible.
This is the best-telegraphed train wreck in the last 100 years and we’re headed right for the gorge with a missing bridge!
You can argue politics but you can’t argue the facts when it comes to arithmetic.
Math doesn’t care what political party or persuasion you might follow.