You're a believer in smoke and mirrors, CI. And you haven't answered my question.
The following is taken verbatim from
Marketwatch
Outside the Box Archives
Nov. 21, 2013, 1:58 p.m. EST
‘Taper’ or not, QE3 isn’t working
Commentary: It’s time for something different
By Anthony Mirhaydari
What do you think about the recovery so far?
Like so much in life, it depends on your perspective. For well-to-do investors and spendthrift politicians, as well as the megabanks, it’s been a ball. The Federal Reserve stimulus that’s been driving this hot mess of an economy forward has overwhelmingly benefited them.
It’s a subject worth discussing as the Fed comes back to the idea of tapering its ongoing $85-billion-a-month bond-purchase program in favor of a “forward guidance” strategy just as current vice-chair Janet Yellen prepares to take the helm.
The S&P 500 has climbed 170% from its bear-market low. Too-big-to-fail bank balance sheets and profits have exploded. And the cost of the Treasury’s borrow-and-spend addiction as a share of GDP has fallen to a level not seen since the 1960s — despite the fact the national debt now totals $17.1 trillion.
Yet things aren’t so good for regular, wage-earning Americans.
The dichotomy was brought to life for me by a trip to the Las Vegas MoneyShow earlier this year where fellow speakers and panelists were practically foaming at the mouth at the unbroken rise of stocks like Johnson & Johnson JNJ -0.02% and Tesla Motors TSLA +0.19% ; while the gondolier at the Venetian, after learning I was there to speak about the economy, said the state of affairs could be easily summed up in two words: “It sucks.”
Sure, home prices are back to mid-2004 levels and are up 23% from the lows. But the homeownership rate is down, and we’re still off 21% from the 2006 peak. And while stocks are up, middle-income Americans, who only own $12,000 worth of stock at the median according to Fed data (vs. $268,000 for the top 10% of income earners), aren’t exactly getting a huge boost. Gallup polling shows only 52% of American adults are in stocks at all — down from 65% in 2007.
Yet the job/wages/spending overhang is still there. The fact that Fed’s monetary base has swelled from less than $800 billion pre-recession to $3.7 trillion now — with $1.9 trillion of that simply sitting in the vaults of major Wall Street banks as excess reserves receiving interest payments from the Fed — thanks to QE1, QE2 and QE3, hasn’t fixed the problem.
Where we stand
The structural issues plaguing the economy aren’t related to the price of money. In fact, according to Stanford economist John B. Taylor, the Fed’s ultra-low-interest-rate policy could actually be holding the economy back by diminishing the incentive for banks to make loans and assume credit risk.
We’re still down 5.6 million full-time jobs from where we were before the recession hit. At the pace we’ve been creating them, from 2010 it’ll take nearly four years to close the gap. After accounting for the growth in the working-age population, the gap is more like 14 million jobs.
Meanwhile, real median household income has fallen to mid-1990s levels around $51,000. That’s down from a peak of $56,000.
So it’s no surprise then that spending, represented by personal-consumption expenditures, is growing at such a pitiful rate that it’s been associated with the last three recessions and is at roughly half the level we saw during the go-go days of the housing bubble.
Any way you want to look at it, things suck.
It’s not for a lack of trying.
