Friday, February 4, 2011

Continuing QE = Increasing Cash Reserve

In my opinion, as long as US continues thinking they can use QE to reduce their jobless rates, they will be in for a long era of slow growth.

The evidence is for all to see. The fact is that the big companies are now keeping records amount of cash reserves. Productivity is also up in US.

All this points to only one conclusion, the QE's only purpose is to help generate revenue for the government in terms of taxes, but does little to reduce the jobless rate because frankly, there are no incentives at all for companies to hire.

Like it or not, there is no such thing as free market. The companies are not stupid. If the outlook is not certain and there are no incentives for hiring, the company will rather keep the profit for a rainy day.

Joblessness cannot be reduced by flow of money. Fact, as far as I am concerned.

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