RICHARD KOO: I Can’t Find Anyone To Refute My Argument That America Is In A ‘QE Trap’
The QE tapering that never happened from a few months back sits in the back of our minds still as we sit here and wonder when will it happen, for now as the way things look, 2014 looks likely to be another year of continued easing and low rates world wide and Richard Koo here has put out a few good arguments stating that this may be the case for the next few years. Regardless its still something we have to be aware of.
Demand then falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of the central bank absorbing excess reserves, long-term rates surge in a repetitive cycle I have dubbed the QE “trap.”
Source: Business Insider
Ray
The only way out of this mess is the QE be directed strictly at job growth in the states.
You got more people working you got more tax income and buying more.
What they have done at this juncture was to support banks and the markets world wide,
Corporation are sitting on mountains of cash and yet are not hiring, That would be caused more by politics then QE.
Direct that money to highway an bridge repair and you get more jobs. all that money every month and we still don’t have a budget. QE as it stands now is no longer doing what is really needed