Analysis - Endless QE? $6 trillion and counting

[dipsydoodle]

(Reuters) - Many more years of money printing from the world's big four central banks now looks destined to add to the $6 trillion already created since 2008 and may transform the relationship between the once fiercely-independent banks and governments.

As rich economies sink deeper into a slough of debt after yet another wave of euro financial and banking stress and U.S. hiring hesitancy, everyone is looking back to the U.S. Federal Reserve, European Central Bank, Bank of England and Bank of Japan to stabilise the situation once more.

What's for sure is that quantitative easing, whereby the "Big Four" central banks have for four years effectively created new money by expanding their balance sheets and buying mostly government bonds from their banks, is back on the agenda for all their upcoming policy meetings.

Government credit cards are all but maxed out and commercial banks' persistent instability, existential fears and reluctance to lend means the explosion of newly minted cash has yet to spark the broad money supply growth needed to generate more goods and services.

http://uk.reuters.com/article/2012/06/13/uk-economy-qe-idUKBRE85C07420120613

[marmar]

1. Flooding the world with funny money.......

Today's currency is tomorrow's papier toilette

[DCKit]

2. That's "freedom paper" to you, missy.

[kenny blankenship]

4. Flooding the world's equities and commodities markets anyway

We here in the world have yet to see a dime.

Now if they had taken those trillions and given it to ordinary people who BUY ACTUAL STUFF instead of swapping paper assets, and who have to spend almost all the money they get their hands on on necessities, it would have stimulated the real economy and employment. Once employment was back up, demand would be back up, and the stimulus could be withdrawn.

[Mustellus]

3. Another BonD Vigilante..

The interest rate hikes are coming!!! The interest rate hikes are coming!!!

Interest rates are at zero, since the savings rate is far too high, and the market has absolutely no profitable way to invest the tidal waves of cash seeking any outlet... except for paying a decent wage.

With no demand, this is becoming the economy of Pre-Revolutionary France. Jaguars for the Masters of the Universe, and a pittance for the peasants.

Quantative Easing???? Why not pay your taxes and get rid of the deficit?

[fasttense]

5. Supply does NOT create DEMAND

"The explosion of newly minted cash has yet to spark the broad money supply growth needed to generate more goods and services."

No wonder it is not working to improve the economy. Giving away money to the uber rich so they can make more stuff that NO ONE CAN afford to buy ain't the way to a recovery.

NO rich man ever created a job just for kicks and grins. The uber rich create jobs when there is such a large demand for their stuff that they have to hire more people to make more stuff to meet the DEMAND.

Without DEMAND there are NO Jobs.

So the FED should look at creating DEMAND and NOT supply. They are bass ackward.

[bemildred]

6. Sort of a positive feedback loop.

I wonder how this winds up?