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QE Inflated Wall Street, Screwed Main Street—Says Wall Street

Nov. 4, 2015 (EIRNS)—Bank of America/Merrill Lynch has done a study of some effects of seven years of global Quantitative Easing—including 660 consecutive interest-rate cuts by the trans-Atlantic and Japanese central banks—and found that the entire policy helped Wall Street, while damaging the real economy. The surprising thing is that the bank put the findings out, in a report by its chief investment strategist.

Michael Hartnett says

"the results represent a clear victory for Wall Street over Main Street. Zero rates and asset purchases of central banks have proved much more favorable to Wall Street, capitalists, shadow banks ... than for workers, savers, banks and the jobs market."

Some of the report’s findings about investment:

  • For every job created in the U.S. this decade (since 2010), companies spent $296,000 buying back their stocks.

  • "An investment of $100 in a portfolio of stocks and bonds since the Federal Reserve began quantitative easing would now be worth $205. Over the same seven years, a wage of $100 has risen to just $114," or 1.5%/year.

  • For every $100 of U.S. venture capital and private equity funds raised at the start of 2010, they are now raising $275; but for every $100 of U.S. mortgage credit extended five years ago, just $61 was extended this year."

  • "Commercial real estate [values] gained 168% compared to a 16% increase of all U.S. residential property."