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Qualitative Easing

Fed Drives S&P 500 To Record Levels, Economic Fundamentals Still Soft

Holiday sales look flat. While online sales were up, sales at traditional retailers were lackluster. Penney’s, Kohl’s, L Brands, Macy’s, Urban Outfitters, Bed Bath & Beyond, all reported lower sales vs. a year ago. Meanwhile, in what looks to be a “frugality” or “trade down” movement on the part of the consumer, same store sales at Walmart, Costco, and Target rose. The Wall Street Journal reported that nearly 40% of exchange listed companies lost money in …Read More

The European Central Bank would be wise to avoid QE

The ECB’s go-slow approach to the establishment of a QE program is both rational and laudable. Read: ECB will prime quantitative easing, but far from pulling trigger yet The QE experiments in the U.S. and Japan are far from over.  While “low” inflation is cited as a reason to keep the money creation experiment alive, the definition of inflation that is used is highly questionable.  If the definition of “inflation” …Read More

What’s Inflation? It Depends on the Definition

One of today’s economic myths is that the money that the Federal Reserve has created through its quantitative easing programs has not found its way into the money supply, and, as a result, no significant inflation has occurred. The theory is that QE has only resulted in bank reserve creation, but little new money. Money and Banking 101 takes students through the “money multiplier” concept, where $1 of excess reserves …Read More