No one knows this better than the Federal Reserve.
Quantitative Easing (QE) is the act of printing money to buy government bonds that support spending programs. Since 2008, the Federal Reserve has printed roughly $3.0 trillion, or roughly $9,533 per person, and it’s climbing each month by an additional $85.0 billion. The extra dollars pumped into the economy are supposed to spur growth. Unfortunately, it also has the reverse effect of shrinking the buying power of each dollar—the driving force of inflation. Since July of 2012, the U.S. dollar index has gone down more than five percent. As the U.S. dollar declines in value against other world currencies, goods imported into the U.S. become more expensive.
What has an influx of $3.0 trillion into the U.S. economy accomplished? It was supposed to increase lending, create more jobs and lower the unemployment rate. Instead, banks are sitting on a pile of cash and remain tight-fisted, fewer jobs have been created and the unemployment rate remains high. Read More