What am I missing? The Fed pumps $85 billion per month into the economy. That extends out to about a $1 trillion per year. The country runs a deficit of about $1 trillion annually (maybe a little less this year). So let's say, we are talking about ‘stimulus’ to the tune of $1.75 trillion. GDP growth, as reported today ran about 1.7% in the second quarter, couple with a revised 1.1% for the first quarter. So lets say 1.4% growth for the year. 1.4% of total GDP of 15.8 trillion GDP works out to about $220 billion. Stimulate with $1.75 trillion, get growth of $220 billion. What does this say about the underlying, non-stimulated economy?
Buy air bladder stock.. the sea levels are rising yaknow..
Well, you are double-counting, for one thing. The Fed is buying U.S. debt from Congress’ budget.
The Fed money isn’t going in to the economy at all. That’s just the bookkeeping trick for the printing of the money for the federal budget deficit.
...and of that federal budget, a third or more is interest on prior debt.
So instead of your double-counted $2 trillion, we are “only” talking about $660 Billion ($1 Trillion budget debt - $340 Billion interest on old debt). I didn’t bother looking up the interest figure. Might be more, might be less.
...and of that $660 Billion, a couple hundred billion was paid to foreign entities as part of our Iraq/Afghanistan/Syria/Libya/Yemen/Sudan/Somalia war efforts where locals provide basic things like water and gasoline and contractor help.
Leaving about $300 Billion in new money left in the U.S.
...which starts to get mighty close to the 1.7% GDP growth for the 2nd Quarter of 2013.
*If you don’t count the private credit that the new money printing killed.
Once you count that loss, you are left with oilfield fracking, hyper-farming, and Web 3.0 propping up the U.S. economy.
That’s how you grow an economy from “the Middle Out”, dontcha know? /s