Fed Chairman's grand scheme, QE2, has failed miserably.
Facing the grim reality that the original "stimulus" was not bringing the U.S. economy back from the recession as hoped, on November 3, 2010 Federal Reserve Chairman Ben Bernanke launched a bold (some would say foolhardy) plan to help stabilize the increasingly shaky financial sector. Quantitative Easement v.2, QE2, was proposed by fed "experts" as the only viable means to slow the precipitous drop in value of the dollar and subsequent loss of faith in the U.S. government's ability to cover its massive debts.
In short, the Fed's plan to buy $600 billion in Treasury securities was an attempt to speed up the slow (perhaps nonexistent) economic recovery and make investors happy again.
So, in light of the ever deteriorating economic conditions we are still experiencing, the obvious question would be, how'd it work?
The truth? QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy.
Take jobs. According to the U.S. Labor Department, since last August the number of full-time workers has gone up by just 700,000, from 111.8 million to 112.5 million.
At a cost of $600 billion, that's $850,000 a job.
The picture's even more meager. Over the same period, the number of part-time workers has gone down by 600,000. In other words, we've basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs.
Housing is double-dipping. Big time. According to the National Association of Realtors, the average price of an "existing" (i.e. used) home was $177,300 in August, just before QE2.
Today? It's $163,700 - or 8% less.
Economic growth has slowed. It was 2.6% last summer. It's a miserable 1.8% now.
Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.
Great job Mr. Bernanke. So glad you're in charge of the U.S. money supply. Actually Ben, why don't you do us all a huge favor and "quantitatively ease" yourself out of our wallets and bank accounts before you come up with another stellar idea, like QE3.