First, I'm not aware of any plan to QE the economy. This is just a thought. Why does quantitative easing elicit such a strong reaction? The mere mention of QE causes some people to become visibly agitated and aggressive. We've all seen the pattern. Money slowly drains out of the economy. Money gets increasingly tight, recession, weaker companies start to default, and then QE saves the day. After QE, various stimulus programs get the economy hopping again. Then, slowly over time, money becomes increasingly tight. Quantitative easing is the process that takes inflation to the next step. One of the reasons to prefer assets over cash is inflation. As investors, we should welcome QE. How come we don't seem to?
People's behavior is peculiar my friend- it just blows my mind that I just quiet myself and just make money out of it, Prior 1900's if you look at the history of the Dow - it was crazy (you may search "American railroad stock on st. Louis Fred archives" for the data) as you had Dow going up making new highs only to be met -30% afterward. It was boom and bust on its finest and this calm up and down trains will be met by a sudden sharp uptrend (new highs) in the 1920's. Now to my point: What can go wrong - will go wrong so you want to have a financial system that can have floor/put when everything goes down 1. If we are on gold currency we cannot print money out of thin air thus if you had a big decrease on M2 expect you will have a bank run 2. If we are on digital currency same as question as above in case there is a widespread crash and M2 is affected then the same scenario as above So you want to have some "put protection" and QE is a good way to make a floor - interestingly the Fed can just create unconventional tools in case we have another credit crisis and not just relying on interest rate mechanism
QE gets business owners and entrepreneurs annoyed because they understand what QE is suppose to be about. People that don't know what it's function is just go along with their 9 - 5 day and are just happy to get their pay cheque. QE is basically a swap of bonds to cash between the Feds and banks and in turn what the banks then do is use the cash for trading rather than releasing the cash into the economy to create jobs etc. So obviously QE isn't working because of the swaps so no inflation or stimulation is created.
