Richard Werner (economics professor at University of Southampton) is the inventor of quantitative easing [9] (QE).
Werner previously said [9] that QE has failed to help the economy. (Former long-time Fed chair Alan Greenspan agrees [10]. Numerous academic studies [11] confirm this. And see this [12].)
But Werner is now taking off the gloves …
He said [13] recently:
- It’s easy for central banks to take steps which would quickly create “full-blown recovery” for the economy
- But the central bankers are instead choosing to act in a way which creates massive profits for the big banks, instead of stabilizing the economy. Werner blames the revolving door between central bankers and private bankers
- The central banks have twisted the whole concept of easing … pretending that they’re trying to help the economy, when they’re doing something else entirely
- Credit should be extended to the productive economy – businesses which create goods and services – and not to financial speculators or high levels of consumer debt. Extending credit to small businesses former creates prosperity; lending to financial speculators only leads to economic instability and soaring inequality; and when too high a percentage of lending goes to luxury consumer consumption, it’s bad for the economy
- Banks create money and credit out of thin air when they make loans (background [14])
- It’s a myth that interest rates drive the level of economic activity. The data shows that rates lag the economy
Indeed, economists also note that QE helps the rich … but hurts the little guy [15]. QE is one of the main causes of inequality [16] (and see this [17] and this [18]). And economists now admit [19] that runaway inequality cripples the economy. So QE indirectly hurts the economy by fueling runaway inequality.
A high-level Federal Reserve official says QE is “the greatest backdoor Wall Street bailout of all time” [20]. And the “Godfather” of Japan’s monetary policy admits that it “is a Ponzi game” [21].
And – as counter-intuitive as it sounds – QE actually hurts the economy and leads to deflation [22] in the long-run.