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Fed Economist Asserts that QE Produced No Economic Results Anywhere

Sept. 19, 2017 (EIRNS)—St. Louis Federal Reserve Bank Vice President for Research Stephen Williamson produced a report, "Quantitative Easing: How Well Does This Tool Work?" covered by financial media today, which shows the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England "quantitative easing" (QE) programs—the real bailouts of the big banks—have had no positive results for the economies of the "Trilateral" countries.

Both by observing economic growth (or the lack of it), and by comparing the "QE" countries to industrial economies such as Canada and non-Eurozone countries in Europe which did without it, Williamson’s report shows no "benefit" whatsoever from QE. Overall economic growth remained extremely low; bank lending to businesses remained below pre-crash levels; productivity did not grow; employment grew at lower real wage levels; and inequality of wealth and income grew dramatically since the crash. The elusive "inflation" so prized by the central banks since the crash, has not reappeared. Only stock and bond markets have gone up.

The Federal Reserve’s Federal Open Market Committee (FOMC) is expected to announce tomorrow that it will start allowing its $4.5 trillion in QE assets to "run off"—i.e., redeem them at maturity—very slowly, at the rate of just $10 billion/month. It may plan to hold the level of QE at about $3 trillion indefinitely, according to reports—it it can get down to that level without triggering a financial blowout.

Since what Williamson examined was the non-result of the issuance of credit on the order of $14 trillion by these central banks, the lavishing of cheap credit exclusively on the bank sector did not work, and—a conclusion not drawn by Williamson—should not have been done.

The difference between QE and the large-scale issuance of credit for construction, industry and infrastructure by China’s public banks, is dramatic, despite the constant attempts to confuse them in the financial media.