By now everyone knows that as part of QEternity, Uncle Ben is currently monetizing $40 billion in MBS per month, a number which as we first forecast hours after its announcement [7]and which everyone is now piling on to reaffirm, will rise to $85 billion in outright, unsterilized monetization beginning January 1, 2013 (as anything less would be seen as impllicit tightening in a market which now needs $85 billion in Fed Flow monthly simply not to collapse). This is fungible money which is going solely to benefit the banks, whose reserves with the Fed swell, and which proceeds can be used for virtually any purpose - from buying MBS (which they are doing) to 300x P/E stocks like AMZN - but not to be lent out to those desperately seeking loans? Why: one simple reason - the banks are already mired in legacy litigation from loans made during the last housing bubble (just see the hundreds of mortgage-related lawsuits Bank of Countrywide Lynch is a defendant in, and the just announced $1 billion lawsuit against Bank of America by the US and you will get a sense of how bad it is) and the last thing they need is a repeat of that. And while the Fed has only one monetary easing pathway, which always goes through the banks, we wish to demonstrate to our readers what, in a thought experiment ignoring all the obvious practical considerations, the equivalent benefit to the general population would be if instead of being held by the banks and used to make the rich even richer, this money would bypass the banking syndicate and go straight to the US job seeker...
For perspective purposes, below is a crate supporting $100MM in cash.
The graphic below then shows how many minimum wage jobs this $100 million could fund (labor supply and demand and other "practical" stuff aside). In short, it takes 3500 minimum wage American workers one year to make $100 million.
So how many minimum wage jobs could one week, forget one month, of the current $40 billion in QE 3, prefund?
This much.
[8]
[8]
[9]
And this is just one WEEK of QE 3.
To visualize how many jobs the Fed could fund in one year starting with its outright monetization of $85 billion/month in January, in one full year, take all the groups of people shown above, and multiply by 100!
And this is why America is not enamored with the Fed or with its bankers...
graphic courtesy of Demonocracy [10]