My simple mind won't follow the logic behind QE1 or QE2.
The idea that injecting massive amounts of paper money into the system, well not really into the system......more like right in the banks pocket, to lower interest rates..........infers that the big problem with the economy is that our interest rates are too high.
I really don't accept that unemployment is at record high levels because interest rates are too high, but then I wonder how a 50 Billion dollar "stimulus" package aimed at digging up roads and fixing sewers, was going to fix the problem either.
Are people unemployed because we have bad roads or leaky sewers?
As far as I can see, the only people who benefited from all those billions was the large road construction companies. It has been a boom for them, and their employees who probably number in the few thousands, but everyone has pretty well sucked wind. Unemployment was extended for a short period, so that helped a little, but many of those people have exhausted their benefits, received no retraining for another job, and are destined to sit on welfare for awhile.
The US housing debacle is in round 2 or 3........and it looks as worse as ever.
So, how does lowering interest rates to people who are unemployed, underemployed, are fearful of their jobs, owe too much debt, or have had their credit rating trashed so much they couldn't borrow money anyways, going to benefit from QE2?
I don't believe any of it. I truly believe that QE2 is going to turn out to be another massive handout to the banks to help them avoid a catastrophe from holding onto all those toxic mortgages and other derivatives. Obama isn't going on prime time TV and telling Americans, "yea, we have decided that we better give the banks another Trillion or so, because they got a lot of bad mojo on their books". They have to use sleight of hand to get it done, hence QE2 which is going to "stimulate" something that most Americans haven't got a clue about.
If any government wanted to truly stimulate their economy, they would do exactly what China did when they started to slow down. They gave each citizen vouchers to purchase products that were made in China. Need a new refrigerator......get a voucher. Need a new TV......get a voucher. China spend hundreds of billions on their stimulus package and it worked. People stayed working, factories kept humming along, and their economy is stable, relative to other economies.
These "stimulus" packages are nothing more than theft. They are stealling from everyday taxpayers and giving our money to the wealthy. Then those turkeys give themselves bonuses, because they are so smart.
Interesting that JP Morgan announced a pretty good year. Part of the reason was they took a couple of billion out of loan loss provisions and added it to the revenue line. When questioned on it, the CEO got hostile.
Of course, they don't have to worry about loan loss provisions. The government is going to buy all that crap from them at top price, so now they are good.
The US politicians need take care, or they will have a full scale revolution on their hands. The US populace is angry and they are armed to the teeth.
The Tea Party movement is merely a pre-cursor to the big events.