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The Feeble Economic Impact of the QE4 Boost August 10, 2013

Posted by geoff in News.
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I thought I’d depress you by pointing out some comparative numbers with regards to the $45 billion/month QE4. Just so we’re starting on the same page, I’ll note that we already had QE3 (which was absorbed/replaced by QE4), which was pumping $40 billion/month into the economy, and in January we added QE4 for a total of $85 billion.

That $45 billion/month is about $540 billion/year, or about 3% of the US GDP.

  • Despite increasing the subsidy of the US economy by 3% of GDP at the beginning of the year, our annual growth rate is less than 2%
  • Median wage in the US is $40,350/yr. QE4 could support well over 13 million jobs. Obama’s been bragging about adding fewer than 2 million/yr.
  • QE3 and QE4 combined could support almost 25 million jobs
  • Why didn’t the rich protest Obama’s increased tax rates more strongly? The additional amount they’re paying out this year is equivalent to one month of QE4. They’re doing very well. It’s the people who had a moral objection to the increased tax rates (i.e., the conservative middle class) who were most upset.

So the two burning (but pretty much rhetorical) questions are:

  • How can you add this much money to the economy and have this poor a result?
  • What happens when we take that money away? (No fair looking at the stock market tumble when Bernanke announced the end of QE4 might be near.)

Comments»

1. Mr Black - August 10, 2013

Am I correct in assuming that if 3% of GDP is being added via debt spending, and growth is 2% of GDP, then ACTUAL growth is -1%? Is that how it works (roughly speaking).

2. geoff - August 11, 2013

That’s about it.


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