The Fed’s dance with ‘heavy liquidity flows’ targeting Wall Street’s financial sector has not generated any type of meaningful economic growth. Results, in fact, have been ‘tepid.’
A Fine Fed Mess – WSJ Aug 22-23, 2015
The U.S. is still growing, but corporate profits are far from booming. Growth in the first half of the year came in at a paltry 1.5%, and so far the third quarter doesn’t look like it will rebound as smartly as it did in 2014. To put it another way, the long promised economic takeoff to a faster growth plane above 3% a year is still receding like a desert mirage.
One lesson here is that the Fed’s great monetary experiment since the recession ended in 2009 looks increasingly like a failure. Recall the Fed’s theory that quantitative easing (bond buying) and near-zero interest rates would lift financial assets, which in turn would lift the real economy.
But while stocks have soared, as have speculative assets like junk bonds and commercial real estate, the real economy hasn’t. This remains the worst economic recovery by far since World War II, and we’ll be watching to see if financial assets now fall to match the slow real economy.
The debt-logged world is starved for liquidity. It is time to ‘re-target liquidity infusions to recharge economic acceleration.
The Leviticus 25 Plan 2015 – $70,000 per U.S. citizen The Leviticus 25 Plan 2015 (1141)