I don't quite understand why the Feds initiated QE3 because if you look at the past 2 QEs, it did nothing to help the economy. I've written about it in a post here last year. It is not useful at all for improving employment because you will never improve employment when all the companies are keeping all the cash in their banks due to the fear of uncertainty in the future since the Lehman Brothers collapse.
The Feds should work with government to give grants to businesses for workable business plans. The government can arrange for banks to provide the grants at low interest rates, and for the Feds to buy the bank bonds that have been loaned to the grant recipients. The government will then monitor the progress and provide support from the private sector when needed.
QE3 at this present form only helps to relieve the pain of the mortgage owners. It doesn't fulfill any of the Feds mandate; Neither managing employment rate nor inflation.
No comments:
Post a Comment