"Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank's bond purchases had been an absolute coup for Wall Street. The banks hadn't just benefited from the lower cost of making loans. They'd also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed's QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.
"You'd think the Fed would have finally stopped to question the wisdom of QE. But think again. Only a few months later--after a 14% drop in the U.S. stock market and renewed weakening in the banking sector--the Fed announced a new round of bond buying: QE2. Germany's finance minister, Wolfgang Sch????uble, immediately called the decision "clueless."
"That was when I realized the Fed had lost any remaining ability to think independently from Wall Street."
Billionaires have admitted that they are the beneficiaries of QE. For example, billionaire hedge fund manager Stanley Druckenmiller said the following about QE:
"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."
"Who owns assets--the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday."
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed's policy is that the rich will spend their wealth and create jobs--essentially betting on "trickle-down economics."
Indeed, government policy for years has focused on redistributing wealth from the average American and Main Street to the Wall Street tycoons.
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