The Phaserl


Why QE Hasn’t Stimulated the Economy

by Clif Droke, Financial Sense:

After the Fed’s latest 2-day policy meeting it announced on Wednesday that it would continue its $85 billion per month asset purchase program. The major indices fluctuated from positive to negative throughout the day, as is typical of a Fed meeting day, before closing basically unchanged.

Many investors wonder why the Fed’s QE3 program hasn’t boosted the economy more than it has. After all, $85 billion in monthly asset purchases would be, in a normal economy, inflationary. This isn’t a normal economy, however, and as we’ve argued many times in past commentaries the deflationary long-term cycles which are down through 2014 is one reason why inflation remains subdued despite the Fed’s best efforts.

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