QE2 Is Not A Recovery Plan, It’s A Stealthy Scheme To Prepare For The Next Bank Bailout
The Pragmatic Capitalist
Nov. 1, 2010
I’ve shown in rather elaborate detail in recent weeks that quantitative easing does not help the real economy generate a sustained recovery. This can be summed up as follows:
QE did not reduce interest rates in Japan and was ultimately deemed a failure by the Bank of Japan:
“QE’s effect on raising aggregate demand and prices was often limited” (Ugai, 2006)
QE has been shown to have had little to no impact in the U.K. (also see here).
While QE worked to ease the strains in the credit markets in 2008 and also improved bank balance sheets there was no change in interest rates during the entirety of the program in the USA and borrowing has remained very weak.