Recently, European Central Bank (ECB) policymaker Jens Weidmann said the strategy of printing money was not the solution to the eurozone crisis. (Source: Carrel, P., “Printing money not the way out of crisis: ECB’s Weidmann,” Yahoo! Finance, November 20, 2013.) Ya, no joke!
Of course, Weidmann was not referring to the Federal Reserve, but to thoughts from within the ECB that perhaps buying assets was another tool to use. He may as well be talking about the Federal Reserve’s quantitative easing strategy, though. I’m sure he’s been looking at the Federal Reserve’s massive money printing and its overall ineffectiveness; he’s likely studying the U.S. situation and realizing that the act of simply printing money is not the end-all for achieving success in rebuilding an economy.
There’s that old saying that you learn from other people’s mistakes—that’s what we have here.
The Federal Reserve continues to balk at stopping the money printing. Current Federal Reserve Chairman Ben Bernanke expressed his disappointment in the recent jobs market readings in a recent speech, saying there were insufficient reasons to stop the quantitative easing.
Five years of quantitative easing by the Federal Reserve and, while it clearly helped the country from a much deeper recession and breakdown, the benefits are stalling.
So I say to Weidmann, fight against the use of quantitative easing via printing money in the eurozone, as it will simply cost the eurozone hundreds of billions of euros and would likely do very little for the economy. The already historically record-low interest rates in the eurozone will suffice.
The same thing should be the case on this side of the Atlantic. … Read More
I’m calling it; that’s enough talk about Janet Yellen and the Federal Reserve’s likely strategy to continue printing money until the economic renewal picks up steam.
America has spent trillions to save its housing, financial, and auto sectors, and in the process, it has likely crippled the future generations with its massive build-up of national debt.
Yet at the same time, across the Pacific Ocean, China has seen decades of economic growth that has driven the country to surpass Germany and Japan to become the second-largest economy in the world, trailing only the United States. But unlike good old America, the Chinese have also managed to build up reserves of over $3.5 trillion.
And while there are still many in the United States who dish on China, I’m not in that camp. Having traveled to China, I can tell you the growth there has been staggering and it is reflected in the building of massive super cities that make New York City look small.
The money and wealth creation in China from the rural areas to the urban centers has driven the domestic consumption, and I expect this trend to continue.
And while the focus here was on the Federal Reserve and its suspect quantitative easing strategy, the Communist Party in China was meeting to discuss the future of the country.
At the core of the massive reforms in China will be major changes to its current policies as the country gets set for what will likely be another 20 years of growth superior to the United States and other Western countries. China doesn’t want its economic engine to stall…. Read More
One of the most amazing things occurred the other day: a former Federal Reserve official apologized for being part of the quantitative easing program!
Andrew Huszar was an integral member of the Federal Reserve team put in place to launch the most aggressive, unprecedented quantitative easing program in the history of America.
Much of what Andrew stated won’t be news to my readers, as I’ve highlighted many of these points before.
But now that an actual Federal Reserve official is publicly stating what I’ve said all along—that the quantitative easing is only helping Wall Street, not Main Street—perhaps this can help gain traction in trying to put pressure on the Federal Reserve to come back to reality.
At the very least, I’m glad that Huszar is now publicly stating what we already know, that the quantitative easing program implemented by the Federal Reserve is “the greatest backdoor Wall Street bailout of all time.” (Source: “Confessions of a Quantitative Easer,” Wall Street Journal, November 11, 2013.)
Huszar’s inside assessment of the Federal Reserve’s program is that quantitative easing does not help the average American; instead, he says, “Wall Street was pocketing most of the extra cash.” (Source: Ibid.)
It doesn’t take a rocket scientist to understand the true impact (or lack thereof) of the Federal Reserve’s quantitative easing program.
Think about it: trillions of dollars have been pumped into the economy, yet how much has the U.S. economy really benefitted? Very little, I would say.
Most of the benefits of the trillions of dollars have gone to build new bubbles, such as the bond market and now the stock market.
The … Read More