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Wednesday, May 25, 2011

Did QE2 work?

QE2 cost the American taxpayers $600 billion.  And when overlapped with QE1, a total of $1.5 Trillion dollars which you and your children will have to repay, was injected into the stock markets.  Fed Chairman Ben Bernanke has said it has left the economy “moving in the right direction.”

Did it?   Let's see...

- Did it create any jobs as Bernanke said it would?

Yep.. created 700k full time jobs -- which averages to $850k per job.  And let's not forget that over the same period, the number of part-time workers has gone down by 600,000, basically shifting 600,000 or 700,000 workers from part-time jobs to full-time jobs.

- Did it help stabilize home prices?

Nope-  House prices are officially in a double dip and there's a bank over-inventory of about 2 million homes needed to be put up for sale by the end of 2011.  This doesn't count everyday people seeking to sell their homes.

Did you know April housing starts fell 11%.?  Also, did you know that according to the National Association of Realtors, the average price of an “existing” (i.e. used) home was $177,300 in August, 2010 just before QE2.

Today? It’s $163,700 — or 8% less.   That's a loss of $13,600 on ave. per home!

- Did economic growth pick up?

Nope-  GDP the last 2 quarters is around 2% which is anemic (its specifically 1.8% the last quarter) and the only reason its that high is due to exports since the American consumer is tapped out on debt and stagnant wages (assuming they have jobs)

- Did QE2 help curb inflation?

Nope- the opposite actually.  Bernanke Wanted inflation and QE 1 & 2 were supposed to ratchet it up.  Even with the rise in oil futures and pretty much all commodities from wheat to cotton, a couple months back, Bernanke said inflation was not high enough.

- Did it spark the stock market's rise?

Yep.. along with the fact that a saver gets nothing on his/her money when leaving it in a bank or CD, thus forcing investment into the riskier, shark-infested waters of the stock market.  But even this rise in the market is pretend- most of it is due to the decline of the dollar, another manipulation by the Fed.

What QE2 did was create a massive new bubble in dollar-based financial assets, from gold and silver to stocks, while at the same time having NO visible effect on the real economy.

In other words the US taxpayers saw  $1.5 Trillion dollars spent against their will on economic policies that gave them Zero benefit while the mainstream media, particularly the financial media applauded it in glowing terms.

The worst part is there will be a QE3 pretty soon..  the name may change to something less identifiable with QE 1 & QE2 but trust me, its coming.   This two-tiered (wealthy & everyone else) US economy will collapse without it.

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