Crickets: Fed Official Finds No Evidence That $4.5 Trillion in QE Accomplished Anything

Imagine if, in 1987, a Federal Reserve official could have pointed to a poorly performing economy and said, "Gee, this supply-side economics hasn't worked out very well." The press would surely have treated the story as a front-page item and ensured that it got air time on the Big Three networks' then-dominant nightly news broadcasts. Of course, there was no such credible report, because the economy under Ronald Reagan boomed.

Fast-forwarding 28 years, the author of a July Federal Reserve white paper on the Fed's Keynesian-based "quantitative easing" program contends that "There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity." In other words, there is no evidence that $4.5 trillion in funny money with which the economy has been saddled has accomplished anything. In the establishment press, only CNBC's Jeff Cox has covered it (bolds are mine):

St. Louis Fed official: No evidence QE boosted economy

The Federal Reserve is putting some of its post-crisis actions under a magnifying glass and not liking everything it sees.

In a white paper dissecting the U.S. central bank's actions to stem the financial crisis in 2008 and 2009, Stephen D. Williamson, vice president of the St. Louis Fed, finds fault with three key policy tenets.

Specifically, he believes the zero interest rates in place since 2008 that were designed to spark good inflation actually have resulted in just the opposite. And he believes the "forward guidance" the Fed has used to communicate its intentions has instead been a muddle of broken vows that has served only to confuse investors. Finally, he asserts that quantitative easing, or the monthly debt purchases that swelled the central bank's balance sheet past the $4.5 trillion mark, have at best a tenuous link to actual economic improvements.

... as for spurring inflation, reducing employment or otherwise generating sustained economic activity, the results, particularly for QE, are "at best best mixed." In addition to muted inflation, gross domestic product has yet to eclipse 2.5 percent for any calendar year during the recovery, while wage gains, and consequently living standards, have been mired around 2 percent or less.

"There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation," Williamson wrote.

... The primary place where QE seems to have worked is in the stock market, where the S&P 500 has soared by 215 percent since the recession lows in March 2009. Elsewhere, though, deflation fears have permeated and interest rates have remained low.

Translation: At best, if "best" is the right word, QE has benefitted Wall Street and done nothing for Main Street.

White paper author Williamson is being too kind. The results aren't "mixed." The results comprise the worst post-World War II economic recovery on record, with no realistic end of annualized 2 percent or slightly higher growth in sight — if we're lucky.

Only a few center-right blogs have taken note of the St. Louis Fed's report. As to the estalblishment press, searches on the term "quantitative easing" (not in quotes) returned nothing relating to the St. Louis Fed's white paper at the Associated Press, New York Times, Washington Post, and Los Angeles Times. (searches went back to July 1 in every instance except AP).

Almost three decades ago, the press did all it could to discredit the phenomenal success of Ronald Reagan's supply side-driven economic expansion. Since they couldn't argue with the growth results — from 1983-1987, it averaged 4.6 percent — it resorted to dishonestly whining about "hamburger-flipper" jobs even as real incomes were swiftly rising.

Now a Fed official is admitting that he can't find any evidence that Ben Bernanke's and Janet Yellen's QE, and by extension the explosion in deficit spending under President Barack Obama which made it necessary, have done anything to boost the economy — and the press doesn't care. Nothing, not even abject failure, can be allowed to shake their dogmatic faith in Keynesian economics.

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