Confessions of a Quantitative Easer: “I can only say I’m sorry”

Admitting his role in the largest ever embezzlement from Main Street to the banking sector in human history must be personally cathartic for this former Federal Reserve member. But with confirmation hearings now beginning for Greenspan 3.0–Janet Yellen–the question is what can the 99.9% do to get democracy, justice and free market principles out from under the bankers and captive regulators and back serving humanity? Read the whole confessional op-ed from the Wall Street Journal yesterday here: Confessions of a Quantitative Easer

Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history.

And the impact? Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn’t really working.

Unless you’re Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.

As for the rest of America, good luck…”

Also see: 12 questions Senators should ask Janet Yellen at her confirmation hearing Thursday and The Uncertain Future of Central Bank Supremacy

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