Quantitative Easing does diminish the yield on long-term US Treasury debt but lowers marginally, if at all, the asked yield on long-term corporate savings.
Those purchases maintain the demand for long-term asset in an unstable equilibrium.
When this disequilibrium resolves the Market turns chaotic.
This and other issues are explored in my tract: A Specific Application of Employment, Interest and Money (Plea for a New World Economic Order).
Abstract:
This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.
It shows that income / wealth disparity, cause and consequence of credit and of the level of long-term interest-rates, is the first order hidden variable, possibly the only one, of economic development.
It solves most of the puzzles of macro economy: among which Unemployment, Business Cycles, Under Development, Trade Deficits, International Division of Labour, Stagflation, Greenspan Conundrum, Deflation and Keynes' Liquidity Trap...
It shows that no fiscal or monetary policy, including the barbaric Quantitative Easing will get us out of depression.
A Credit Free, Free Market Economy will correct all of those dysfunctions.
Press release of my open letter to Chairman Ben S. Bernanke: Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work.
Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
1776 - Annuit Cœptis
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