Concerns are rising about the US Federal Reserve's weird plan to put a defibrillator on the dysfunctional US economy and get into what economists politely call "quantitive easing" or QE. It's code for printing money. What the Fed is talking about is to purchasing US treasury bonds by printing money to lift inflation from super-low levels. That's the way it wants to jumpstart the US economy.
It's not going to work for one very good reason – there's no demand out there. People aren't buying when they are losing their jobs and homes.
The problem with the US economy is a lack of demand, not a lack of liquidity.
Indeed, Bill Gross, managing director of Pimco, the world's biggest bond house, says the Fed is actually perpetrating a Ponzi scheme. It's just printing money to create the illusion of growth and liquidity.
Will it help? Absolutely not. This is the kind of stuff they have been doing in Japan and the economy there remains completely screwed.
Until the US government creates demand, and the best way to do that is to rein in unemployment and stop the foreclosures, the US economy will be like Japan's.
no comment untill now