The Diminishing Effects Of QE Programs

Tyler Durden's picture

Submitted by Lance Roberts of Street Talk Live blog,

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PT's picture

Sorry to repeat myself but anyways:

How strange.  The people with no money don't buy anything.
How strange.  The hole keeps getting deeper but the dirt around it keeps piling up higher.  Everyone knows you need dirt to fill in holes.  I'd better keep digging. 

GVB's picture

keynesian economics vs austrian economics. Who'll win. It's the same as asking how a drunk man should sober up the morning after. Should he drink water and ruin his day or have another beer and party on. The analogy with addiction is astonishing. 

I am Jobe's picture

Nice going Bendonkey, Timmy, Draghi and all of u fuckers.

PT's picture

Bendonkey Carn?  Who's gonna save us?  Super Maxkeiserio?  Maybe it's time for me to go to sleep.  Way past my bed time.

cosmictrainwreck's picture

Well - just my opinion - I think Benny & Jamie and Llllllloyd & et al know full well diminishing effect. They give a fuck. Will pump until effect = ZERO, maybe -1%, -5%.... algos working overtime to compute precise exit points at scenarios A, B, C, whatever. Biggest game of "chicken" ever played, and it's simply a numbers/rate-of-return/acceptable "loss" [failed gain] computational scheme, with pre-set triggers, no doubt. Prolly got $100 B/mo,  $200 B/mo etc in formulas, too. Should be interesting....

Hohum's picture

Mr. Roberts,

Growth is dead. QE is working fine; it continues to redistribute income upward.  What's the problem?  /sarc

tao400's picture

i was one of those wealthy but i did not get richer because i read this site and sinclairs site and did not put money into the market, though i did buy real estate. it was the mistake of a lifetime. i should have at least listened to farber a couple years ago. he said 25% metals, 25% stock, 25% bond and 25% cash. he is the one who got it right before the crash, during the crash and probably after the crash.

ZerOhead's picture

Strange... other than missing an entirely fabricated rally... I haven't done that badly with raw land & PM's...

Even discounting for the price suppression gold has performed quite well over the last 5+ years and with so much global uncertainty out there still promises to outperform in the future...

tao400's picture

i havent either. however, we could have done better. yea, we didn't get everything but we should have gotten more.and that is not greed. it is simply a realization that the fed was telecasting what it was going to do.

Unknown Poster's picture

Central planning for central planners. SSDD.

ak_khanna's picture

The only thing the Fed can do is print money and hand it over to the too big to fail banks in the form of QE which lead to lower standard of living for all the citizens of a country except for the beneficiaries of the bailouts. The poor people in any country live hand to mouth and do not contribute to tax revenues. The others who earn their living by small businesses or salaries pay taxes at a much higher rate than the rich individuals or big businesses. This is due to the loopholes in the taxation system which enable them to declare maximum profits in countries which have the least tax rates. So effectively in the long run the governments route the money collected as taxes from the middle class of people to the banks so that the bankers can enjoy enormous bonuses. We are in times of privatizing the profits and socializing losses for those who are well connected to the governments and the law makers.

The money which TBTF banks get in the form of QE is used to speculate in currency, stock, commodities and bond exchanges. None of this reaches the main street and hence recovery in the actual economy is not possible through QE. Moreover speculation in commodities like Oil and agriculture products lead to higher prices thus making the lives of the common citizen miserable.

Solarman's picture

It is important to understand what QE is about, and only what it is about.  It is a fiscal tool of the Federal Government to buy the bonds from deficit spending that will not be absorbed by the market, and to protect the balance sheets of the banks by creating a demend for housing to off load the housing assets fro the banks.  This is, and never is about employment.  Employment is a by product of the hoped for velocity thrugh deficit spending and homepurchase knock-on spending.  The Keynsians also are trying to increase velocity by healthcare and clmate change regulation and taxation to force more money into circulation.

Banks aren't lending it out, because they are acting rational (no worthy borrowers), and the inflation that will be released is velocity dampening as it will immediately cause defaults and debt liquidation, which ends the era of Central Banks.

So they will chug along and continue to buy until food and oil end the game.

Dr.Engineer's picture

I believe, at some point, the banks will be forced with a survival decision to either lend to anyone who breathes or to go bankrupt.  At that point the velocity of money and liquidity will increase simultaneously and we will have hyperinflation.  Because the banks are sitting on the trillions of dollars that the Fed has used to buttress their balance sheet, there has been a small amount of inflation (compared to what their should be).

For the moment, the shadow banking system is deleveraging and decreasing liquidity which is what the Fed is trying to counteract (hats off to Mish for pointing this out).

Now what would cause the banks to lend to anything that moves ... survival trumps intelligence.  It might be the Fed starts charging to keep the money and not pay interest.  It might be that the Fed goes neutral and doesn't pay interest.  It might be that the derivatives mountain is about to collapse and the the banks figure "What the hell, it might work ..."

Fail2Deliver's picture

You are going to need more ice in that bucket of cold water and a MUCH larger bucket to compete with the FED

Crash Overide's picture

The invisible hand, in the end like a hand up your ass... :(

HowardBeale's picture

The "Federal" Reserve is truly destoying the entire planet. The eventual blowback from their policies can only be something horrific; I would imagine the streets of New York and D.C. are eventually going to be the sights of daily Boston Marathon-like events. Daily.

Bear's picture

The Boston Event was a religious protest ... Economic protests can't seem to muster the same passion. If Corzine can walk away with hundreds of millions and everyone yawns, the intense passion is not there. People's fiscal crises seem to mollify too quickly to flow out in violence. 

q99x2's picture

The government must be running out of money because I've been going into debt at a slower rate than any time in my past.

Make_Mine_A_Double's picture

I can't really point to anything concrete that I can see as the result QE1, 2, 3 or 4 in terms of the real economy. Had it been allowed to crash and re set in 08 we would have had a sharp contraction followed by historically 4% annual organic growth. However, Mullah Obama and the Bolsheviks killed that in the cradle with ACA, mountains of regs and an anti biz climate not seen since FDR.

We are long since beyond the time anyone could argue with a straight face any residual benefit to QE other than not collasping the global economy. It has exported commodity inflation and bubble assets all over the world and hasn't done a rat's ass for this country other than phantom housing and equities (O&G exploration, recovery and related support is only real growth area).

In point of fact you could well make the case it is causing global 3rd world instability by driving up food prices that make up roughly 1/2 of the average peasant's take home pay. Look closer at Egypt and what is driving that is primary food and fuel costs. 


Orly's picture

Love me some Lance!


impermanence's picture

It's a bitch when even counterfeiting doesn't work anymore.

BlackVoid's picture

You totally miss, the point. The goal is not to improve the economy, but to save the big banks.

QE works perfectly.

Goldilocks's picture

The Archies - Sugar, Sugar (Original 1969 Music Video) (3:02)

tawse57's picture

Judging by the bank of england and the european central bank today they have no intention of stopping QE - how long has this site been predicting doom and gloom for? 5 years now.

Print, print, print.

orangegeek's picture

Government is accountable to no one.  This is the core problem.


Government tells us that voters make the choices and they do.  But once elected, rules and laws are broken without enforcement.


QE?  Just another pile of shit created by government to justify their current existence in size and cost.