Wake Up Call: QE 2 Didn’t Solve Anything, QE 3 Won't Either

The only thing holding the market up is the hope for QE 3 from the Fed this Friday at its Jackson Hole meeting.

Let’s consider this situation objectively…

QE 2, which spent $600 billion, bought at the most, three months’ of increased economic data for the US (the data in the US started turning sharply downward in February 2011). Agricultural commodities, which lead the market rally going into QE 2, broadcast this loud and clear, topping out and beginning a steep decline in February:

So QE 2 bought three months of alleged growth. But remember, it 2 also blew up the cost of living in the US. If CPI data accurately accounted for real inflationary pressures, it’s not even clear that GDP and other economic data would have been positive during QE 2.

How can anyone look at this and think “success”? Especially when you consider that QE2 not only failed to impact the economy meaningfully, but it also made the Fed a political issue, thereby making it more difficult for the Fed to accommodate the markets.

In plain terms, QE 2 was a disaster in that:

1)   it failed to grow in the economy in any real way

2)   it increased inflationary pressures

3)   it made the Fed even more politically unpopular (2012 Presidential candidates are now jabbing at Bernanke)

This reveals QE for what it really was: just another “hit” for drug addict that is the global debt system. We’ve already passed the point at which the negative effect of monetary easing (inflation) outweigh its positive effect (markets rallying). This is similar to the state of drug addiction in which the drug barely creates a “high” but is ravaging the user’s system with health problems.

So the idea that QE 3 will somehow save the markets today is ridiculous. It might offer a short-term boost to the stock market, but this would reverse shortly. And QE 3 would absolutely trash the US Dollar and the US’s credit ratings.

In plain terms, QE 3 wouldn’t solve anything. All it would do is speed up the pace at which the US collapses. The US economy and markets will collapse regardless. All QE 3 would do is speed the process up. But the fact remains that the Great Collapse has officially begun.

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