Saturday, September 15, 2012

What Will Happen to all the New QE3 Money?

... So what will happen to all of this new money?
If banks and financial institutions use that money to make loans then it could have somewhat of a positive impact on the economy in the short-term. However, the truth is that it isn't as if banks are hurting for cash to loan out. In fact, right now banks are already sitting on $1.6 trillion in excess reserves. Just like with the first two rounds of quantitative easing, a lot of the money from QE3 will likely end up being put on the shelf...

And without a doubt the mainstream media will be proclaiming this to be "good news" for the economy in the short-term. But is QE3 really going to help the average person on the street? Well, first let's take a look at employment. We are told that one of the primary reasons for QE3 is jobs...

But did QE1 and QE2 create jobs? The answer is clearly no...

But what more quantitative easing is likely to do is to pump up stock market values because a lot of the money from QE3 is going to end up being put into stocks and other investments. This is going to help the wealthy get even wealthier, and it is going to make the "wealth gap" between the rich and the poor even larger in America. QE3 is also probably going to cause commodity prices to rise just like QE1 and QE2 did. That means that you will be paying more for gasoline, food and other basic necessities. So there may not be more jobs, but at least you will get the privilege of paying more for things. The inflation that QE3 will cause will be particularly cruel for those on fixed incomes such as retirees.

Excerpt from Original Source

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