Today the US Federal Reserve announced that it would be implementing QE 4: a policy of spending $45 billion per month buying Treasuries on the long-end of the yield curve until employment falls to 6.5%.
So between this and QE 3 which was announced just two and a half months ago, the Fed will be printing $85 billion per month.
First and foremost there is no evidence that QE creates jobs. Consider the case of the UK.
Since the crisis began, the Bank of England (BoE) has announced QE efforts equal to $598 billion in the UK. The UK’s GDP is $2.43 trillion. So the BoE has engaged in QE equal to over 20% of the UK’s GDP.
Despite this massive amount of QE, 2.53 million people are out of work today in the UK, up from 2 million at the start of the Great Crisis in 2007. Similarly, the UK’s GDP remains well below its peak.
In simple terms, QE fails to generate economic growth or jobs. End of story. The BoE spent 20% of the UK’s GDP on QE (a truly staggering amount) and more people are unemployed now than when it started. And GDP has yet to get even close to its pre-Crisis highs.
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