This is factually incorrect. No funny money is put in by QE. QE is an asset swap, treasuries for reserves, and it nets to zero. The goal of QE is to lower the price of money in hopes that people will borrow more but they are not. All of the lending/borrowing aggregates are going sideways and down. The reason that the stock market is up is the expectation that QE will someday work to bring get the economy growing faster, but it hasn't happened in 10 years. The only thing that will get this economy ( and the rest of the world) back to where it needs to be is massive deficit spending ala world war II. You need to physically put money into pockets. Tax cuts on middle class and Jobs( via large scale infrastructure spending) will do that.
"The underlying problem is structurally deficient demand caused by thirty years of neoliberal economic policies that have undermined the income and demand generation process (Palley, 2009). However, rather than fixing this problem, policymakers are again turning to ultra-easy monetary policy in the form of QE. Viewed from this perspective, QE can be interpreted as a form of asset market trickledown whereby supporting asset prices is supposed to jumpstart the macro economy…From a political standpoint, this is an enormous change from the world of forty years ago. The New Deal policy paradigm of wage floors and household income supports has been replaced by one of asset price floors and asset market subsidies. Viewed through a political lens QE therefore represents the triumph of plutonomics, and that makes it an obstruction to the extent it obscures the challenge of repairing the income and demand generation process."
I wonder when we’ll admit wholesale that interest rate and money supply just aren’t very good economic levers in the absence of fiscal policy?
Re tax cuts, instead of tax cuts on the middle class, make wage increases tax deductible for corporations. As someone in the middle class, I don’t care what my rate is, I care what the take home is. Reward corporations for passing more money through to employees by lowering the taxes on their earnings.
Its not that complicated. We could just have the fed pay everyones payroll taxes including the corporations share. This would jack up the economy. The problem is getting this policy through congress. The entire macro-economic problem is a political problem.
sigh, probably. OTOH, unless we drastically cut government spending, tax increases on the rich and tax decreases on the middle class won't really help much. Maybe my armchair policy is a bad one, but providing the carrot to corporations to increase wages seems more rational than constantly providing them tax incentives to relocate to places where they can lower their effective tax rate. (see GE moving to MA from CT, e.g.). If you could achieve the same tax rate change by encouraging them to simply pay their workers more, some good might actually come of that policy.
depends what spending is on, government spending can be incredibly productive. Tax increases on the rich would work better if they actually paid them. This is a difficult problem, I certainly don't have the answer, and I'm not convinced there is a simple answer.
