I am frequently critical of Republican's, but I share at least some of their doubts about QE3.
While QE3 is a bit of an opportunity for stock traders, I don't think the stock market leaping up in response to QE3 is really something to celebrate for the country. The stock market uptick in response to QE3 may turn out to be largely fake money.
Trading in stocks and bonds falls within the generic term "investing". But, although some investments produce jobs by investing in people creating food, shelter or other things necessary or useful, trading on stock markets is also often just gamblers shuffling money back and forth (with the more sophisticated picking the pockets of the unsuspecting) and producing nothing.
The hope is QE3 will produce the jobs kind of investment, but based on the initial stock market response I suspect the outcome will be a lot more of the gambling than production. To the extent investment turns out to be gambling it does long term damage to the economy by creating instability and uncertainty.
However, I am not critical about the Fed's choice. I think it was a tough call. I read a blog yesterday by a commentator arguing the Fed was doing QE3 because Congress has been unwilling to do anything and QE3 was the only tool available to the Fed to try to juice up the economy. Lot of truth in that I believe.
The hope is QE3 will produce the jobs kind of investment, but based on the initial stock market response I suspect the outcome will be a lot more of the gambling than production. To the extent investment turns out to be gambling it does long term damage to the economy by creating instability and uncertainty.
However, I am not critical about the Fed's choice. I think it was a tough call. I read a blog yesterday by a commentator arguing the Fed was doing QE3 because Congress has been unwilling to do anything and QE3 was the only tool available to the Fed to try to juice up the economy. Lot of truth in that I believe.
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