Most analysts are expecting the FED to taper in September, significantly reducing their $85 billion per month in asset purchases. While it is easy to throw around dollar amounts such as $85 billion, we should put this number into context. $85 billion per month is over $1 trillion per year and is equivalent to over 20 million new jobs paying $50,000 per year. It is enough to end world hunger 30 times over or send every high school student to a four-year college. Yet, despite spending this unfathomable amount of money on quantitative easing, the economy only grew at 1.7% during the second quarter. Can you imagine the condition of the economy today if the FED was not buying $85 billion in bonds per month? Interest rates would skyrocket, the stock market would collapse, the housing market would collapse, credit markets would freeze up, unemployment would skyrocket and foreign nations would very well accelerate their dumping of U.S. debt.
Posted on: Tue, 03 Sep 2013 05:31:46 +0000
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