Well, not really “nothing.” I mean, it’s actually been quite effective as a scheme to enrich cronies in exchange for a later collapse in the currency and inflation that will essentially end the US economy. Which is a tradeoff their willing to make.
So let’s not be too quick to judge. NetRightDaily: [my emphasis]
“[W]e estimate that the second LSAP program, known as QE2, added about 0.13 percentage point to real GDP growth in late 2010 and 0.03 percentage point to inflation.”
That was the San Francisco Federal Reserve’s take on the impact the central bank’s second round of quantitative easing, totaling $600 billion of U.S. treasuries purchases.
At the time $600 billion comprised about 3.9 percent of the entire then-$15.2 trillion economy. Yet it only produced three hundredths that amount of growth, and seven thousandths that amount in inflation.
Yet, the Fed has the gall to still pretend that “The program’s goal was to boost economic growth and put inflation at levels more consistent with the Fed’s maximum employment and price stability mandate.”
[…]
In reality, the Fed’s claim of statutory authority to pursue the bond purchasing program is entirely self-serving — nothing more than legal cover for an otherwise ineffective program at restoring growth, reducing unemployment, or achieving much of anything else was said about it.
Except for bailing out banks, that is. Since August 2007 when the crisis began, the Fed has increased its balance sheet by $2.7 trillion — purchasing $1.3 trillion of mortgage-backed securities and $1.4 trillion of treasuries.
That money winds up directly on bank balance sheets, and about 75 percent of it has been simply stockpiled as $2.03 trillion excess reserves by financial institutions. There it earns 0.25 percent interest from the Federal Reserve, or about $5 billion. Easy money.
In the meantime, banks got to unload a lot of risky assets they might have otherwise taken major losses on. For example, a 2010 Fed audit revealed that of the $1.25 trillion of mortgage-backed securities the central bank purchased after the housing bubble popped, some $442.7 billion were bought from foreign banks.
According to the Fed, the securities were purchased at “Current face value of the securities, which is the remaining principal balance of the underlying mortgages.” These were not loans, but outright purchases, a direct bailout of foreign firms that had bet poorly on U.S. housing.
They included $127.5 billion given to MBS Credit Suisse (Switzerland), $117.8 billion to Deutsche Bank (Germany), $63.1 billion to Barclays Capital (UK), $55.5 billion to UBS Securities (Switzerland), $27 billion to BNP Paribas (France), $24.4 billion to the Royal Bank of Scotland (UK), and $22.2 billion to Nomura Securities (Japan). Another $4.2 billion was given to the Royal Bank of Canada, and $917 million to Mizuho Securities (Japan).
According to the New York Fed’s website, the purpose of the program was to “foster improved conditions in financial markets.” Now we know by that the Fed meant in foreign countries, too.
In that context, the program had almost nothing to do with boosting growth or improving the economy — it was to prop up the privileged few power elite.
Would that be, like, the 1%?
Sometimes I forget who I’m supposed to hate hate hate: is it the small business man who isn’t paying his fair share? Or the ruling class client base, who seems to do quite fine despite being filthy rich thanks to government / private sector partnerships.
Which we used to all fascism.
Oh, how the lines have blurred! Or, as we used to say in less surreal times, you need a program to tell who the players are nowadays? Or at least, which team they’re playing for.
So it’s like that village again, eh? (hi there, Detroit!) We have to bail it out to burn it out.
I suggest Quantitative Easing involve the freeze on pay to all persons in Congress, including staffers, until they produce a budget.
The MIT [fiscal] Engineers.
All our recent policies, domestic, fiscal, foreign seem to have one thing in common, they came from the leftist taken over academe of the late 70s early 80s.
Say what you will about the Ruling Class, but they make sure to look out for each other.
Gotta learn that secret handshake one of these days…
Which is a tradeoff they’re willing to make.
“Tradeoff” implies that one of the options is not favorable to them.
On the front end they make their bux, and when the economy collapses they are the only ones left standing.
win-win
I suggest Quantitative Easing involve the freeze on pay to all persons in Congress, including staffers, until they produce a budget.
Levin proposes increasing their salaries if they’ll vacate Washington and never come back.
That works also.
In Modern Times, Paul Johnson, relying primarily upon Murray Rothbard, makes a pretty good case that the Fed caused the Great Depression.
Actually, that’s not accurate. The Fed caused the monetary bubble which resulted in the stockmarket collapse. The Keynesians in the Hoover and Roosevelt administration caused the Great Depression.
My mistake.
Somewhere I’d got the idea that Bernanke’s own studies of the Depression had led him to believe that monetary contraction by the Federal Reserve was a highly significant contributor to kicking the collapse into a higher gear. But that wouldn’t account for the idiotic policies of the Roosevelt administration to follow later, prolonging the whole ordeal by squeezing the life out of commerce.
it made the stocks go more higher
wealth effect fuck yeah
bubble bubble toil and trouble
This below is a sidebar to the piece I linked which I copied from the original paper.
Their ideas may have had some relevance in the late 70s economic environment but the world of finance now is not the one of 1978 any more than an Apple II is a modern computer system.
‘ Quantative easing = making you p0or and destroying the value of your liquid saving gradually instead of doing it in one abrupt cataclysmic jolt. It’s about easing us down to the new sucky normal (which supposedly gives us time to adapt and change our plans), not easing our economic suffering. It’s about reducing the impulse of the drop not halting the descent. You still end up at the lower notch/bottom at the end.