Featured Content

TRIPLE YOUR MONEY IN A MONTH!

TRIPLE YOUR MONEY IN A MONTH!

Still worried about the economy? Become an elite charter member of George's DAILY PROFITS and you could... TRIPLE YOUR MONEY IN A MONTH! George gave us the $2.8-billion IT infrastructure provider, up 4,745.20%; the $1.8-billion advertising agency, up 1,295.44%; and the $762 million business software company, up 1,213.19%. Only charter members can follow George daily. Learn how here!

Questions About Effects of Quantitative Easing Coming Into Play

By

Quantitative easing has taken a toll on the U.S. economy.

The effects are unseen now, but in the long run, they will show. Trillions of dollars in new money has been created to spur growth in the U.S. economy through quantitative easing, but what really has been achieved from it? At the very best, the stock market has gone up—on the other hand, the U.S. dollar has declined in value against other major world currencies, real inflation is rising, and unemployment is still an issue.

As time passes, quantitative easing could be doing more harm than good for the U.S. economy. The Federal Reserve has promised to keep printing $85.0 billion per month until the unemployment rate reaches 6.5% and the inflation expectation for one to two years out is 2.5%. But, despite the approximate $3.0 trillion by which the Fed has expanded its balance sheet since the credit crisis began, and despite the $6.0 trillion in new debt the government has put on since then, the average unemployment rate in the U.S. economy for the year of 2012 was above eight percent.

As for the buying power of the dollar, it’s down since 2009. What cost you $1.00 in 2009, cost you $1.07 at the end of 2012. (Source: Bureau of Labor web site, last accessed January 4, 2013.)

As readers of Profit Confidential are aware, I have been critical about quantitative easing; I believe printing money has no structural benefit to the economy, while actually causing long-term damage to the U.S. economy in the form of inflation, the deterioration of our currency, and eventually rising interest rates.

Even those who originally promoted quantitative easing in the U.S. economy are now showing concern that more printing will eventually lead to deeper issues.

For example, Federal Reserve Bank of Richmond’s President Jaffrey Lacker said early this year, “I see an increased risk, given the course the Fed has set, that inflation pressures emerge and are not thwarted in a timely way.” (Source: Robb, G., “Fed’s Lacker: upside risks of inflation in 2014,” The Wall Street Journal; MarketWatch, January 4, 2012.)

Quantitative easing hasn’t done much for the U.S. economy except take bad debts off the books of mismanaged banks—the same banks that caused the housing boom of 2004 to 2006 with their easy lending policies. All we need to do is look at the Japanese economy and the country’s failing attempts to boost economic growth by printing more money. It doesn’t work!

Where the Market Stands; Where it’s Headed:

I’m sticking with my prediction that 2013 will be a turnaround year for the stock market—the year the bear market rally that started in 2009 comes to an end. Why the top now? The global economy is suffering and the U.S. will not be able to escape being sucked into the global slowdown. U.S. corporate earnings growth has turned negative for the first time in 11 quarters. Each time the Fed announces a new form of quantitative easing, we get a weaker positive reaction from the stock market.

What He Said:

“The conversation at parties is no longer about the stock market, it’s about real estate. ‘Our home has gone up this much’ or ‘Our country home has doubled in price.’ Looking around today, it would be very difficult to find people who believe that one day it could be out of vogue to own real estate, because properties would be such a bad investment. Those investors who believe a dark day will never come for the property market are just fooling themselves.” Michael Lombardi in Profit Confidential, June 6, 2005. Michael started warning about the crisis coming in the U.S. real estate market right at the peak of the boom, now widely believed to be 2005.

Premium Content

Secret "New Swiss Bank Account" Safest Way to 44% Returns

Secret

It's the safest—but, until now, completely ignored—place for your money. Because these elite "bank accounts" pay guaranteed 5% cash payments per annum on top of returns on capital exceeding 44%... Learn all about them here.

About the Author, Browse Michael Lombardi's Articles

Michael Lombardi founded investor research firm Lombardi Publishing Corporation in 1986. Michael is also the founder and editor-in-chief of the popular daily e-letter, Profit Confidential, where readers get the benefit of Michael’s years of experience with the stock market, real estate, economic forecasting, precious metals, and various businesses. Michael believes in successful stock picking as an important wealth accumulation tool. Michael has authored more than thousands of articles on investment and money management and is the author of several successful... Read Full Bio »

Exclusive profit Confidential Presentation

Secret Retirement Plan Pays Up to $12,160 a Month?

Secret Retirement Plan Pays Up to $12,160 a Month?

A select group of Americans are retiring with a little-known retirement plan whose advertisement by its issuers is censored by Congress... Yet this plan enables Americans to potentially collect up to $12,160 in monthly income that's sponsored entirely by large-cap American companies. These secret Sponsored Retirement Plans are trumping social security by up to 10 times. And unlike mainstream retirement plans like 401(k)s or IRAs, SRPs are ideal for people who want to start with very little money. You could begin your SRP with as little as $10, $50, $100 or $400. To see real-life stories of folks who've built hundred-thousand-dollar portfolios thanks to SRPs and how to get your own plan started today, click here now!

×