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BOJ Increases QE

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If QE stops, "confidence in the US dollar would rise. Money would flow into US investments, both supporting the US stock market and helping to finance the large US budget deficit."

"Gold and silver prices would decline. Negative dollar expectations would be squeezed out of oil and grain prices, although drought, flood and supply factors would continue to impact grain prices, and the administration's wars can impact oil prices."

Economist David Rosenberg calls excessive monetary easing "no panacea." It's "self-defeating." America's seeing diminishing returns. 

What's needed is "a coherent fiscal policy and the reality that a record 90 million Americans left the labor market entirely, and that 40% of the unemployed ranks have been out of work for over six months."

It's more than double the historic norm. It makes affected workers "increasingly unemployable." Inactivity "impedes their future productivity potential."

Tripling the Fed's balance sheet to $3.2 trillion did little to stimulate growth and create jobs. It hasn't prevented the ratio of new hires to job openings from returning to early onset fall 2007 recessionary times.

Crediting the Fed with housing's modest rebound doesn't wash. Institutional investor all-cash deals get full credit.

From a supply-side perspective, America's economy is moribund. It's dead. Soft demand checks inflation. When it's stronger, Rosenberg expects it to "return with much greater vengeance than has been."

It's because of the "increasingly inelastic shape to the US aggregate supply curve." It's early. In 2005, two years before America's housing bubble burst, Rosenberg warned it was coming.

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