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Here’s Proof Fed QE Is Great For Bubbles, For Jobs, Not So Much

The Fed’s QE has been great for bubbles. Since the Fed began publishing its open market operations daily starting in 2002, we’ve been able to see the correlations of the direction of the Fed’s System Open Market Account (SOMA) with 3 stock market bubbles,  plus the biggest credit and housing bubbles in history, and the creation of fake bubble jobs in 2005-2007.

When the bubbles collapsed in 2007 and 2008, the fake jobs disappeared.

The Fed has frantically tried to reflate the bubbles since 2007. It has had great success with bond prices, stock prices, and house prices. But the fake jobs haven’t come back. That’s because while asset prices have undergone massive inflation since the 2009 bottom, economic activity has merely mirrored population growth. QE has done absolutely nothing to stimulate additional economic growth. Meanwhile employers have wised up. They don’t need the fake jobs and they’re not going to hire people to fill them.

 

Fed QE Good For Bubbles, Not Jobs - Click to enlarge
Fed QE Good For Bubbles, Not Jobs – Click to enlarge

Fake bubble prices are back, but the economic activity that accompanied them the last go round isn’t. The fake bubble jobs haven’t come back. And the chances of them coming back anytime soon are pretty slim. The gravy train hit the end of the line. The institutional memory of the crash is still fresh. Businesses have found that squeezing their workers works to increase executive bonuses and to transfer wealth from labor to themselves. They’ll continue to do that until they’ve squeezed the lemon dry and the economy collapses because the vast majority of workers, not to mention the unemployed, can’t afford to buy the products and services that businesses provide. Businesses ultimately cannot survive on the sale of luxury goods to the top 7% alone.

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Read Here’s Some Evidence That Shows Whether US Manufacturing Is In Rebirth or Near Death

Read  Here’s Why Less Followed Services Measures Are Better Indicators Than Manufacturing

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1 Comment

  1. krisware

    This is correct and reality. FED is the real problem, that why we are not able to recover any time soon. Capitalism has a flaw written in its formula and the fix is easy …. to be able to default. But if we try to avoid defaults, than the formula does not work … we could call it even socialism … and this model definately does not work at all (like good friend Russia has shown to us)

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