Fed’s QE Infinity Can Be Bad for Economy
The Federal Reserve announced that it will implement another round of stimulus that targets the housing market, drive down unemployment and generate wealth. But all the money printing and price boosting can lead to bad things.
After the announcement, investors buy up stocks and metals and at the same time sell bonds and the US dollar. Analysts have been looking at the risks that the quantitative easing can bring to the economy and marketplace.
The Fed announced that the QE will be implemented for as long as it takes to improve the economy. It is one way that chairman Bernanke wants to tell Washington to be serious about fiscal reform and economic growth. At present, Congress and White House must work together to come up with the solution to avoid falling off the fiscal cliff of spending cuts and tax increases.
Because of the Fed policy, the dollar’s value will decline. Washington will remain in a gridlock and the dollar will become weaker until things are resolved by Congress. Analysts expect the fiscal cliff issue to be resolved after the November election.
Moral hazard rewards bad behavior. The Fed will support the stock market no matter what. At present, the Standard & Poor’s 500 and Dow Industrials are nearing their historical highs. The latest Fed action spurred the increase in the stock market even if the economy remains on life support. The investors met the latest QE announcement with a 200 point increase on the Dow Thursday and more Friday. It is difficult to get out than getting in.
Once the QE Infinity is implemented, the Fed’s balance sheet will go past $3 trillion. It can reach the $4 trillion mark before it is completed. It is good to see that the Fed is trying its best to improve the economy.
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a one year high of $63.82? On May 15th?
What a nonsense, the shares were at $77.11!
I want to throw up every time I hear of the Fed trying to help. It would be more effective to drop the green stuff from the helicopters, Ben.
I’m not sure I understand the post. What’s the point trying to be made? That stimulating the economy is bad? Well, it kinda stagnated since the end of QE2. Something has to be done to create jobs. Inflation might be bad, but unemployment is worse. What’s your solution?
I must agree with JettaRed that I’m baffled by this “article” because it says little, and what it says is contradictory.
Long-term, the rounds of QE will be very, very bad for the economy because they have created huge market distortions that will take many years to correct. Also, QE’s inevitably will lead to massive inflation and, when interest rates are hiked to control inflation, a very deep recession and very high unemployment.
Also, extremely low interest rates are destroying a whole generation of retirees’ savings and pension funds. For that alone, the Fed Board of Governors should be forced to resign for their gross fiscal recklessness.
Where are the carpenters who are really into what they are doing for a living? Has managing perception taken up all their time by now?
Here lies the issue. The culture of work.
Etsy and Custommade vendors to the front, but they are not even a small drop of water on a hot stone.
The QE3 is good to the economy and the stock market as well there is no contradiction. S&P won’t stop before it reaches the 1700 points. This is going to be to strongest rally ever, banks are going to be the main beneficiary.