Posted on 06/07/2011 7:22:41 AM PDT by Slyscribe
The Federal Reserve's current round of asset purchases, due to expire June 30, is being bookended by economic soft patches.
A logical question is whether the central bank's $600 billion in Treasury buys merely provided a short-term artificial boost.
Wild cards from Japan to the Middle East make it impossible to judge with certainty if the Fed's latest aggressive efforts have failed. But the most telling data point — no gain in real private-sector wages —
(Excerpt) Read more at investors.com ...
First, much of that $600b is sitting in the central banks’ vaults, undistributed. That is a good thing, because if they released this paper into the system, your morning bowl of oatmeal is worth $30.
Second, everyone knows it’s just paper. Businesses aren’t going to go on hiring or investment sprees if they know that the economy is propped up with funny money and reality is coming down the tracks.
I’m reminded of the book “The Forgotten Man” by Amity Shlaes. I remember a chapter in the book where one of FDR’s “best and brightest” wanted to force prices higher during the Depression to increase wealth. It’s like they reversed cause and effect. It is much the same now. The Fed thinks it can manufacture “wealth” out of thin air by printing money. Money is just the reflection of real wealth; actual goods and services. Printing it does not make “wealth” spring into being.
Not only has it not increased wages, it has DESTROYED accumulated wealth. Our lifelong savings are deteriorating much faster than the returns on any investments except gold and silver.
“Fed’s QE2 Policy Has Failed To Lift Real Wages”
Wow...imagine that. I’m spending like crazy so I can be a billionaire. That’s what they tell me what happens—if I spend money I don’t have.
The only option left is QE3.....that'll fix EVERYthing.
WHERE? The central banks' (plural) vaults are not in the U.S. but in foreign countries. That was the point of QE1 and QE2, to reassure the holders of U.S. securities. No wonder we did not see an economic expansion in the U.S. due to growth in the money supply, the expansion was not in the U.S.
With too many people for the jobs we have, wages aren’t going to even keep pace with inflation. Real wages will decline unless or until we unleash our economy again.
QE2? Lift REAL wages? For Who? The Bankers?
QE2 is a massive hyper-inflation scheme to make debt cheap. It degrades savings, and lowers salaries because companies are slow to give raises when costs increase and they don’t increase the prices to follow. The rising tides are uneven. Expect waves and unequal market movements in price, cost, and salary.
WHAT, QE2 was suppose to lift wages and create jobs? From my point of view all QE2 was put money into the pockets of the political elite and their good friends.
QE was never designed to boost real wages. The Fed was relying on the Keynesian belief that the cure for unemployment is LOWER real wages. So they’ve been hard at work lowering real wages for the past decade or so to meet their mandate for low unemployment. Of course, it’s total crap and always was.
Actually, it’s failed to lift anything except stock and commodity prices — always the first sign of inflation.
Raising wages comes from inflation pressure which is caused by too few workers for the prevailing wages and increased demand for goods and services
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.