Quantitative easing didn’t revive the economy

The Federal Reserve System pumped billions of dollars into failing banks by buying up their toxic assets, and pumped up the stock market by holding down interest rates to as near as zero as possible.

This benefited Wall Street and the big banks, but, as the chart above demonstrates, it didn’t help the real economy much.

The top line on the graph shows the amount of money the Fed pumped into the banks.  The next line shows the amount of new money that actually went into circulation.  The third line shows the amount of loans the banks made.  The line in the second chart shows the rate of inflation by the most conservative measure.

A lot of individual savers bought stocks and bonds because their banks wouldn’t give them any interest on their savings accounts.  This would have been a good thing if the money that went into the financial markets had been invested in starting or expanding businesses, but this didn’t happen.

Corporations are sitting on trillions of dollars in cash.  They understand that the speculative boom sparked by qualitative easing is bound to crash.

LINK

The Chart That Explains Everything by Mike Whitney for Counterpunch.

Fed at Fault: What Goes Up Must Come Down on the Deconstructed Globe.

Why Are the Largest Corporations Sitting on Trillions in Cash? by Gaius Publius for Down With Tyranny!

Big Short Genius Says Another Crash Is Coming by Jessica Pressler for New York magazine.

Tags: Financial markets, Interest Rates, Qualitative Easing, Wall Street