Posted: Nov 03, 2013 4:38 am
by Rick
Instead of playing around with definitions, I’d only note that more and more papers detail the futility of quantitative easing, quite apart from the distortions induced by way of ballooning asset prices and the ongoing flight of capital from developing nations. The central banks seem to be creating a new house price and share market bubble, in lieu of the struggle in generating real growth.

It furthermore exacerbates social inequality on the part of those who can least afford it. Thus the rich watch their shares (with the US market hitting record highs last week) and property assets gain in value, whilst the poor are encouraged to use the low interest environment as an opportunity to take on more debt, either to buy into the rally itself or to boost personal consumption - an inequality in part disguised by the enormous debt already carried by middle and low-income earners.

This brake on consumer demand, coupled to the endless glut of cheap consumer goods out of Asia, may explain, at least in part, why inflationary pressures remain benign despite ongoing stimulus.