… let us give due credit to the heroes of our time - Ben Bernanke, Mervyn King and those who stood by them against the mob of howling critics.
According to Ambrose Evans-Pritchard, QE central bankers deserve a medal for saving society. Saving society from the mess they made. Talk about job-security. Where to begin?
The final word on quantitative easing will have to wait for historians. As the US Federal Reserve winds down QE3 we can at least conclude that the experiment was a huge success for those countries that acted quickly and with decisive force.
How can the “final word…have to wait for historians” and at the same time AEP can “conclude that the experiment was a huge success”? Ambrose contradicts this “success” call again later in his piece:
It is too early to judge whether even the Anglosphere can really throw away its QE crutches. The risk of a relapse is obvious as the commodity nexus flashes global stress warnings. We may need QE4 after all.
And he already knows how to spend it:
…let us inject the stimulus directly into veins of the economy money next time, using it to build roads, houses and an infrastructure fit for the 21st century.
Is it now deemed a success to continuously print money? On what planet? Under what economic theory?
But, let’s pretend that it has been a success, as Ambrose states (while somehow being able to leave the final judgment for historians, as Ambrose also states). How is this success defined?
What we can conclude is that extreme QE enabled the US to weather the most drastic fiscal tightening since demobilisation after the Korean War, without falling back into recession. Much the same was true for Britain.
What fiscal tightening? In 2007, the US federal government spent $2.7 trillion; in 2013, $3.5 trillion. In 2007, the deficit (not the increase in total debt, but the deficit…I know, only the government can keep books this way) was $160 billion; in 2013, $680 billion.