CAUSES AND EFFECTS - CONT'D
QE jobs creation - Intended
We have mentioned before that one of the indirect effects sought by QE is the increase of jobs. To a degree this has been accomplished.
QE jobs stagnation - Achieved
However, this has only been the case in US and even this is dubious considering how US measures jobs. It may all be a statistical mirage. On the other hand, there has been no significant job creation in UK, Japan, Europe and Scandinavia, all of them engaging in formal QE.
QE reduction in systemic risk - Intended
One of the big propaganda pieces of Central Bankers is that through the purchases of "toxic waste" from companies "too big to fall", the systemic risk of a "cross cascading default" event has been significantly diminished. Basically, we are now more resilient if (when) the next 2008 event appears.
QE increase in systemic risk - Achieved
The sentence above is quite comical. As we have seen through the support of moral hazard and what is essentially free money, QE has achieved a widespread culture of gambling in financial instruments, assets, derivatives and junk bonds. Financial institutions are now far worse than they were when 2008 hit.
QE GDP growth - Intended
Through the economic "stimulus" nation's GDP begins to grow.
QE Real GDP drop - Achieved
The problem with measuring the effect of QE on a GDP is that the GDP counts printed money as "wealth". As such it is idiotic to equate GDP growth to economic activity. In order to know if there actually is and increase in economic activity we would have to calculate a different parameter altogether (see GDP Keynessians Vodoo Economics). A real GDP (if such a thing could even be calculated) would show that QE had no effect on the economy at best and a negative effect at worse. We must also point out that such calculations can only be performed on a multi-year basis because QE and normal free market clean-up process (if allowed to operate) take time.
LETS RECAP
This is what we have so far.
|
Intended Effect |
Achieved Effect |
|
Economic stimulus (local) |
Very poor economic stimulus (local) |
|
Re-capitalization of banks by purchasing "toxic waste" |
Banks de-capitalized by purchasing other "toxic waste" |
|
Moral hazard effect minimized in terms of financial institutions |
Moral hazard effect maximized in terms of assets |
|
Mild inflation created |
Mild inflation instead of deflation was created at the cost of future financial devastation |
|
Generalized inflation |
Asymmetric inflation appears in assets creating local bubbles |
|
Market clean-up averted |
Market clean-up averted thus mega-sized inefficient, ineffective and dangerous financial organizations continue to operate |
|
Good inflation created |
Good and stable inflation won't last. Eventually economies will go into oscillating bouts of inflation followed by recessions. |
|
No hyperinflation |
No hyperinflation - yet - but unavoidable |
|
Bond markets managed for the greater good |
Bond markets destroyed |
|
Stable economy |
QE is setting the world for the biggest boom and bust in the history of humanity |
|
Currency devaluation helping exporters |
Currency devaluation hampering importers, creating currency wars, exporting inflation and developing a protectionist environment |
|
Helping debtors |
Sinking creditors thus destroying capital |
|
Some trade-offs |
Destroying pension funds and savings organizations |
|
Revive local economies through re-capitalization |
QE "capital" exported into other countries creating non-local asset bubbles |
|
Helping local workers |
Making rich people richer to the detriment of poor people |
|
Local job creation |
Local job stagnation |
|
Reduction in systemic risk |
Increase in systemic risk |
|
GDP increase |
Real GDP decrease |
As you can see, QE produces some mild benefits locally at the expense of gigantic local and non-local economic issues, issues that will become catastrophes in the mid to long run.
CONCLUSION
QE is more of the same but at a massive scale. More mumbo-jumbo and voodoo economics from the same usual suspects that brought you the "managed" economy, "managed" markets and that continue to "manage" your life into oblivion. QE is nothing more that the continuation of politicians' jobs through other means. You don't count. Your family does not count. Your opinion is irrelevant. Your economic future has been assimilated and your resistance if futile. Evolve or die… in misery.
Allow us to simplify:
Quantitative Easing is al cons! F&P
But then again there is always the other point of view. Maybe you believe that your government is here to help. That your job was somehow created for you by your government. That your wellbeing was somehow given to you by your government and not through your efforts. That's all right. It's your choice to be in gross error. We won't hold it against you. Just one thing, we recommend you frame that low, low denomination bill you are keeping in your pocket. When the real catastrophe starts, you may want to have a memento pointing out where it all started.
Note: please see the Glossary if you are unfamiliar with certain words.
