QE: Are You A Victim Of Its Myths? Get Help Here

QE money printing does not work it is a myth the pensive nugget collections

Spoiler alert: QE does not work as advertised.

The title of this Collection probably gave that away, but it bears repeating nonetheless. Why? Because of how much misunderstanding that surrounds this topic. Markets move wildly every time the words “Quantitative Easing” show up in the headlines, investors make forecasts decades out into the future based on the amounts of money QE pumps into the system; and traders see the ghost of more QE behind every poor data point and between the lines of every central banker’s statements.

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Have You Been Fooled By This Chart? QE vs Stocks

Mainstream narratives say that QE is money printing that causes stock prices to soar This is not true

The chart below has to be one of the most famous, and circulated, charts of the past decade.

Countless people have observed that both data sets dovetail nicely in an upward trajectory, and come to the conclusion that the stock market is rising because of the Fed’s massive expansion of bank reserves.

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Have You Been Fooled By This Chart? QE vs Gold

Has central bank QE really caused gold prices to soar?

Here is another famous chart, circulated widely around financial circles ever since the modern Fed first employed QE in 2009.

The chart shows gold prices soaring along with massive increases in bank reserves, the idea being that the Fed’s massive “money printing“ has led to the debasement of the USD relative to gold.

How true is this?

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How Has QE Made Inequality Worse? The Housing Perspective

QE has exacerbated inequality

QE has not created the desired kind of inflation that is a byproduct of robust, economy wide growth – the kind of tide that lifts all boats (or as many as possible).

Instead, it has exacerbated inequality, leading to inflation in other areas. Most notably US housing.

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QE Does NOT Weaken The Dollar. Here Is Why. 1

QE is supposed to debase the USD, but the USD has rallied for 10 years!

QE prints more dollars, this increases the supply of USD, and since higher supply = lower prices, USD will weaken. SELL SELL SELL!

Okay, simple enough linear logic that is easy to follow, but is this really what’s going on?

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QE Does NOT Weaken The Dollar. Here Is Why. 2

QE is supposed to debase the USD, but the USD has rallied for 10 years!

If QE is more closely linked to a stronger dollar rather than a weaker one, why then does the USD go through large initial sell offs while QE is happening?

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