Ben Bernanke has launched QE3, the latest effort to goose the economy with a constant infusion of freshly-printed cash. In related news, the US credit rating was downgraded to AA- the following day. One wonders why Bernanke would seek to print more money when the previous two printings demonstrably failed to get the economy rolling.
Though printing money doesn't do much good for the economy, it does wonders for the stock market. Yes, no sooner had the Fed Chairman announced QE3 than stocks began to climb. Though more people than ever before own stocks, the majority of them are still owned by a small slice of Americans in the upper income brackets. So, one might say this is a boon to the rich more than anyone else. But that's beside the point. The Dow Jones has long been associated with the state of the economy. If the Dow is climbing, the economy must be doing well. No, not necessarily but it makes for a great sound bite. It is easier to say the economy is roaring back if you can point to a rising stock market.
There is more than enough money already sitting out there but banks aren't lending it and businesses aren't spending it. There is too much uncertainty which is preventing the money from flowing. Taxmageddon - the expiration of the Bush tax cuts and the imposition of some Obamacare taxes - is just over three months away. Obamacare is not yet fully-implemented and the associated costs are still not known. In a recent speech, Obama promised to follow FDR's experimentation to repair the economy; FDR presided over the Great Depression and, despite what everyone on the left says, exacerbated it with his experimentation. Economic recoveries never took long until government tried to help.
In a funny scene in Around the World in 80 Days (the one with Jackie Chan), Phileas tries to help in a fight by offering advice. Jackie is getting beaten and finally cries, "Stop helping me!" That's what we need to say to government.
