After 6 Years Of QE, And A $4.5 Trillion Balance Sheet, St. Louis Fed Admits QE Was A Mistake



Zero Hedge: “As you’re no doubt aware, the Fed is fond of using the research departments at its various branches to validate policy and analyze away bad economic outcomes. For instance, earlier this year, the San Francisco Fed came up with an academic justification for the now infamous double seasonally adjusted GDP print – they call it “residual seasonality.”

Then there’s the NY Fed, where researchers recently took to the bank’s blog to explain why, despite all evidence to the contrary, Treasury liquidity is “fairly favorable.”

Be that as it may, someone will occasionally say something really inconvenient – like when, back in April, the St. Louis Fed warned that the American Middle Class was “under more pressure than you think,” a situation the bank blamed on the diverging fortunes (literally) of the haves and the have nots in the post-crisis world.

The implication was that QE was effectively eliminating the Middle Class.”

Opinion: Bingo. In a recent conversation with a liberal family member, the topic turned to the huge gap between the rich and poor.

What is tragically humorous is that the very people complaining about the wealth gap disparity are the same people who voted twice for Barack Obama.

This president resided over the Bernanke Fed and then nominated a clone in Janet Yellen, Bernanke’s successor, to run the most important central bank in the world.

It was Ben Bernanke’s Fed that dreamed up quantitative easing, as a way to save the economy from a depression.

The Fed pumped $4.5 trillion newly printed money into banks. The banks used that money to pump up stocks, bonds and real estate prices creating the largest banking debt ever while MAKING THE RICH MUCH RICHER.

Had the US government let the economy correct naturally, depression and all, we would be coming out the other side stronger and with trillions less in debt.

Yesterday, the Fed announced that after 9 years, it would likely not be raising interest rates even a paltry .25% any time soon. The reason, that they will never admit, is that QE failed and the US economy is so weak, it could not handle the shock – QE 4 is on the way.

Picture debt this way:


The result of unsustainable debt provides the ideal setting for a future economic shock:

“When the Lamb opened the third seal, I heard the third living creature say, “Come!” I looked, and there before me was a black horse! Its rider was holding a pair of scales in his hand. Then I heard what sounded like a voice among the four living creatures, saying, “Two pounds  of wheat for a day’s wages, and six pounds of barley for a day’s wages, and do not damage the oil and the wine!” Revelation 6:5-6