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Jstock market under obama2/1/2024 ![]() QE has been an invisible tax on savers beyond anything Washington could have ever conceived.Įvery dollar that has benefited a borrower during QE has come out of the pocket of a saver in the form of a lower return on their assets. While the richest 1% of the US population has been loving the rise in stock prices and other QE amenities, Fed policy has been taxing on the masses of savers. Interest rates have remained so low for so long that investors have had no other choice but to move their money into the stock market, thus creating a bubble.Įven those adverse to risk were forced to chase the better yields in stocks, no matter how dangerous that was.īut for every winner in QE there are 99 losers. There’s one more thing that QE accomplished: it has made the stock market soar. While banks are been raking it in, they haven’t made loans more easily accessible to people and companies.Īnd, really, who can blame them! All that talk about financial disaster that helped the Fed sell the idea of QE should have made banks more conservative when it came to loans. And despite a recent upswing, job growth has been lackluster. The US economy hasn’t been growing by much since QE made its first appearance. ![]() All it has to do is claim you would be worse off without the drug. A drug maker doesn’t really have to prove efficacy. And US debt was already outsized, so the idea of spending our way out of trouble was unrealistic.īut ideas like QE are similar to new drugs. QE came into being at a time when Washington was convinced - and was convincing the nation - that the financial system was on the verge of collapse.Īnd it was a time when interest rates were already very low, so the Fed’s normal monetary solutions were useless. Supporters will even argue that QE saved the world financial system. QE has been an invisible tax on savers beyond anything Washington could have ever conceived. US government debt, already more than $17.7 trillion, would be substantially higher if the Treasury had been forced to pay normal interest rates to lenders over the past six years. It has also allowed Washington to pay less for the money it borrows. It has kept interest rates artificially low, allowed people to refinance homes at great rates and helped financial institutions earn an outsized profits without taking much risk. The shill is the Federal Reserve, which has been printing trillions in extra money to buy these government bonds.Īnd the patsy is anyone who has been competing with the Fed for those bonds since QE began in November 2008. ![]() The auctioneer in the case of QE is the US Treasury, which sells trillions of dollars of bonds each year to paper over the US government deficit. So the QE scam was foolproof, as long as other bond buyers were willing to play along. ![]() It’s a teeter-totter: Rates go down when bond prices rise, and vice versa. You have to know this much about the bond market before you keep reading: driving the price of bonds higher automatically reduces interest rates. I’ve just described US government bond auctions under what is called Quantitative Easing, or QE, which is ending soon after nearly six years. So this shill really doesn’t care what he pays. Plus - and this is what really irks you - you also know this other bidder has a printing press in his basement that he’s been using to churn out currency. You are bidding on a house, or a piece of art, or maybe a rare Honus Wagner baseball card and there’s a guy in the back of the room who keeps raising his hand to drive the price higher.Īnd you already know this much about the guy - he’s in cahoots with the auctioneer.
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