QE Forever

Quantitative easing (QE) is the Federal Reserve Bank's attempt to stimulate our economy.  So far QE has boosted the stock market but not employment enough.   The strategy of running inflation higher than interest rates for an extended period, in an effort to reduce government debt loads in real terms, is policy makers' "Plan A."  Inflation helps paper over problems in a debt-dependent economy.  Inflation has proven to work for heavy borrowers like us.   Between 1945 and 1955, the U.S. was able to reduce its public debt-to-GDP ratio from 126% to 62% with the help of persistently high inflation and relatively low interest rates (GDP is the value of everything the U.S. produces in a year).  We just went over 100% again for the second time in the country's history.   So the Fed is at it again with more quantitative easing called QE3.  They're buying house mortgages so the lenders can lend the...(Read Full Post)