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QE Does Not Create Jobs. It Never Did. It Never Will.
I continue to read pieces in the media claiming the QE should not be stopped because it will hurt the recovery. I don’t understand this claim because there is literally no historical evidence that QE creates jobs in the first place.
The UK has announced QE efforts equal to an amount greater than 20% of its GDP and has not seen any meaningful job growth. Similarly, Japan has announced nine rounds of QE for a combined effort equal to 20% of its GDP over the last 20 years and job growth remains dismal there.
Now let’s look at the US today.
The official unemployment rate is highly charged politically as it is used by the media to gauge how well a particular administration is doing at generating job growth.
As such the unemployment numbers are routinely massaged to the point of no longer reflecting the true number of unemployed Americans. For this reason, I prefer to use the labor participation rate when gauging the health of the US jobs markets: this metric represents the number of Americans who are currently employed as a percentage of the total number of Americans of working age.
As you can see, the number of employed Americans of working age peaked in the late ‘90s. It has since fallen to levels not seen since the early ‘80s. Moreover, looking at this chart it is clear that job creation has failed to keep up with population growth.
This negates any claims of “recovery” in the jobs market.
In particular, I want to draw your attention to the last five years of this chart below. The US Federal Reserve began its first QE program, called QE 1, in November 2008. Since that time it has launched three other such programs, spending over $2 trillion in the process.
During this period, the labor participation rate has not once experience a sustained uptrend. Put another way, job creation has never outpaced population growth to the point of creating a significant turnaround in the jobs market. This has happened despite the recession officially “ending” in mid-2009.
The evidence here is clear. QE does not generate jobs in the broad economy. It failed for the UK, it failed for Japan. It’s failing here.
End of story.
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Phoenix Capital Research
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It was never intended to create jobs. Thats what they told the gulible citizenry so they didn't revolt. It's propose was always to bail out the banks, prop up the stock market and provide the liquidity for the fed to buy the debt so the governnment could continue to deficit spend. And there was nothing to stop them as has been demonstrated.
Graham... you are a one trick pony that needs to be sent to the glue factory.
QE is keeping literally millions of people in work - low interest rates and cash sloshing around are the only things that are preventing a tidal wave of layoffs.
You want to see 50% unemployment or higher? Just wait till QE is implodes the system and is stopped.
Enjoy the good times while you can - because when reality hits, university grads who are working in the Gap and at Starbucks are going to look back on those days fondly - because at least they were able to eat.
I am 100% for QE and ZIRP. Anything that delays the inevitable has my full support.
QE was never devised to provide jobs for America. That is the big lie. The Fed does not want $$ in the hands of the middleclass; they know that would create inflation, God forbid. QE is for the 1%, Europe and the EMs.
Haha, hey Phoenix dude -- how much were your clients whose "portfolios you prepared" for the pending collapse down this week?
doomer douche (not even) research
performance numbers? didn't think so...
You don't get it....Economy is greek for "Benefit Those in Power"
North Carolina (the state that Bank of America is headquartered in) drops welfare for the poor.
http://www.reuters.com/article/2013/10/16/us-usa-fiscal-northcarolina-id...
Not Wall Street.
Not Quantitative Easing.
But the poor.
Yup, Krogers or whatever they have over there should probably board up their stores by now.
QE is not about jobs or recovery. QE is about keeping interest rates artificially low so that governments can pretend they are solvent and don't go bankrupt.
I tried to explain this to the Chinese.
After screaming profanities at the Chinese government for buying up more US Treasuries at the China Daily online on the FB account, they finally blocked me.
They could've bought US private sector business backed assets to create jobs like Reagan's tax cuts did back in the 80's. (NOT QUANTITATIVE EASING, BUT TAX *CUTS*)
Los Angeles has a 20% U-6 unemployment rate. This is Obammy's country? You know the poverty pimping celebs that campaigned on his behalf?
Gas is $4/gallon.
The only people exporting to China are Chinese nationals.
The only Chinese/Taiwann companies don't hire outsiders that don't speak Mandarin or Cantoneese.
Mr. Obammy "Citizen of the World" FAILED to get China to remove their ban against the US financial sector. Clinton failed, Bush barely tried, Obama? Well nevermind. I KNEW he was going to be a disappointment. THe tragedy is that I couldn't get all of the ugly stupid hipsters around me to shut up about him.
They ticked me off so bad in San Francisco that I had to hide in the midst of non-English speaking Chinese population just to be left alone of it.
Although I speak ill of China, the Chinese AMericans are my saving grace.
Still they impose by financing corrupt politicians through US Treasuries.
OPEC is doing this too, secretly through London banks.
In the meantime, I'm FIGHTING (yes I am getting interviews. I'm paying horribly high rents and $4/gallon of gas just to go to these interviews)... my other option is to sleep in a tent in Compton?
I'm FIGHTING to get work that pays HALF or even a third of what I made in 2006 and 2007 and paying more in rent, out of my own pocket thanks to Robert Half (the interviers they send me to ask why I wasn't considered for a higher position. Robert Half in LA and SF are horrible).
I hate government assistance, but we're in a position of need.
it's nasty out there.
100% Correct
And the Fed knows this is true, but the Fed thinks it creates the fog so they can steal. Rob from the poor to give to the rich.
TBTF and TBTJ are beautiful policies. Let me tell you how great being KING is.
QE transfers wealth...as intended.
Transfers wealth to the rich and politically connected.
Fixed it.
Always has; always will.
Annotated it.
Yeah but it does create capital gains, which help pay for permanent disability and Obamaphones.
Most, almost all of the IRS revenue is from income taxes.
We can cut capital gains taxes to 0% to create market volume, REAL organic demand in the market...just like them Reagan years of high job growth!
And still be in the same spot but only better because people would rather get a living wage vs. fixed rate "assistance" in a banana republic.
Cutting Capital gains tax to 0% would actually result in a surge in income taxes from the previous years. We would also benefit by reinstating Glass Stegall and getting rid of deregulation, then fixing the Security Act of 1933-34 to make it possible for any investor to loan money to a start up or a small business pre-IPO without restriction or taxes.
But NO.
But not as much, because disability/unemployment doesn't make up most of the spending done by our government. The banks do. And so does the military, but as of now- it's mostly due to the banks.
The income tax could also be cut to 0 and Uncle Scam could cut back spending to what it brings in from tarrifs and duties.
Fuck you Uncle...thieving bastard!
Hey WC, you believe Obama cares about the poor and disabled?