Today I read a number of comments by mainstream economists who are now saying quantitative easing has failed. There are two reasons for quantitative easing. There is the ostensible reason and the real reason. Quantitative easing for the ostensible reason has of course failed. There has never been a reason why it would have succeeded. Quantitative easing has never been based on a complete theory and it was never has been tested.
But the real reason for engaging is quantitative easing was to protect the assets and income of the investor class. Quantitative easing is only the tail end of the program. Early in the George W. Bush administration government began managing the financial markets. By summer of 2006 financial markets were clearly becoming distressed. Henry Paulson was appointed as treasury secretary for the express purpose of building a consortium of financial players who would join the government in enhancing asset prices. Paulson’s efforts were monumental but the crisis of 2008 was unstoppable. TARP was initiated and quantitative easing has followed.
In 2008 the rich were taken off guard. This time when the market crashes, the big losers will be ordinary folks with IRAs. Ordinary folks have already lost the interest they would have earned in a free market setting. Now most will lose everything they have set aside for retirement.
Quantitative easing has been a tremendous success because its real purpose has been achieved completely. No one with a PHD from an Ivy league school really believes quantitative easing was anything other than a political initiative for protecting the investor class. Don’t expect any of them to admit that.
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