QE2 Tanks
As Big Ben winds down the second round of so-called quantitative easing, MarketWatch’s Brett Arends takes an objective look at what dumping $600 billion of phantom currency into the market has accomplished:
Turns out the program has created maybe 700,000 full-time jobs — at a cost of around $850,000 each.
House prices are lower than before QE2 was launched. Economic growth is slower. Inflation is higher.
Yes, it’s sparked a massive boom on the stock market. Ordinary investors have started piling back into shares again … But even the stock market boom hasn’t been what it appears. An analysis shows that most of the rise in the Standard & Poor’s 500 Index under QE2 has simply been a result of the decline in the dollar in which shares are measured.
The truth? QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy.
….
Housing is double-dipping. Big time. According to the National Association of Realtors, the average price of an “existing” (i.e. used) home was $177,300 in August, just before QE2.
Today? It’s $163,700 — or 8% less.
Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now.
Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.
Another huge stimulus package, in other words, that has done little to nothing to actually stimulate, that has in fact done the exact opposite. So much for central banks rescuing the economy by buying up national debt with phantom money created out of thin air.
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