American Economy is in Intensive Care (ODT)
But with rates now at zero, money printing — or quantitative easing as it is called in polite circles — is all they have left.
It’s cash that’s being created out of thin air.
And a huge portion of it is being poured straight into stock markets regardless of what is happening out there in the real world.
The graph above tells the story. In the past few months, America’s central bank has bought more than $US3 trillion ($4.37 trillion) worth of “assets”.
These include US government debt, mortgage debt and other debt securities, using cash it has generated out of thin air, simultaneously driving interest rates down and flooding the economy with cash.
It has spent more than double the amount outlaid at the height of the global financial crisis. And, it appears, we’ve only just begun.
The biggest side effect, however, is that wealth becomes more concentrated among the already wealthy.
If you own a house or stocks or bonds, you’ve become rich without even trying.