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Doing it won't help homeowners. Bank balance sheets won't change nor will circulating money amounts. QE takes "something on the asset side of" bank balance sheets (MBS or other toxic junk) "and replaces it with electronically-generated dollars."
They become excess reserves. They're not spent or extended in loans. They're mostly "lent to other banks that need reserves"."
In other words, money sitting in bank reserves can't stimulate growth. Since QE I, the monetary base rose, but circulating money supply increased no "faster than in the previous decade." At the same time, loans declined.
QE II was no different. Why expect QE III to turn around failure. At the same time, workable alternatives aren't chosen. What about QE for small business, troubled states and municipalities, low-interest student loans, and help for troubled homeowners.
Get it in the coffers and pockets where it's most needed and will do the most good. Imagine the difference these alternatives could make. Whenever they're adopted, or variations thereof, they work as intended. Why not now.
Money into the economy in any amount for growth and job creation has little if any effect on inflation. Why not do what works. It's not rocket science. It's simple truth, and Bernanke knows it.
Of course, he's Wall Street's man. They hired him. He does what he's told. His concern is their interests. Serving them leaves ordinary people high and dry. Don't expect that leopard to change its spots, except perhaps when the house he built collapses if he's still around and accountable.
On September 21, the London Telegraph quoted former Fed chairman Paul Volker saying QE III won't work. Nor will ECB money madness. He addressed a Gleneagles, Scotland conference.
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