Mike Whitney has a good article in CounterPunch about the US Quantitative Easing policy and why it can’t get America working.
But rather than follow the tried-and-true method of Keynes, Bernanke has pinned his hopes on QE, which merely adds to bank reserves, lowers long-term interest rates and angers trading partners who’ve seen capital flee the US for better returns in their markets. This is backasswards way of addressing a rather straightforward problem; lack of aggregate demand. Oddly enough, Bernanke knows that his policy won’t work because he did extensive research on Japan’s Lost Decade and recommended coordination between monetary and fiscal authorities to end deflation. QE was tried repeatedly in Japan and failed.
So why would Bernanke et al pursue Quantitative Easing if they know it doesn’t work? While this poster would veer towards the ‘give financiers lots of cheap cash to mess around on the global commodities markets with’ answer, Whitney thinks it’s part of the ambitious export goals of the Obama administration.
The only way the US can double exports in 5 years is by reducing the dollar to fishwrap—which appears to be the policy.
