Will QE3 Destroy the Economy?


After searching “economy” on WordPress, I came across an interesting article called “QE3 Will Destroy the Economy, Use This Rally to Prepare for the Worst” (http://alternatenewsmedia2012.wordpress.com/2012/09/14/qe3-will-destroy-the-economy-use-this-rally-to-prepare-for-the-worst/).  I found this article particularly relevant because in my corporate finance class today we were just discussing what QE3 is and what it means for the economy. It also relates to the case study about Enron we just read in class last week and the previous recessions.  The author is not very optimistic about the state of the economy and says that “the reality is that we’re now facing a Crisis that will make 2008 look like a picnic”.

I think that the author does have a good point when he says that you cannot solve the debt problem with more debt.  Although the Fed is trying to boost unemployment and stimulate the economy, by agreeing to buy $40 billion dollars of mortgage-backed securities per month indefinitely they are only encouraging the problem.  There probably will be some kind of recession coming because it does seem like it is inevitable.  This QE3 plan does seem to be a form of a bailout for banks which will continue these banks to keep doing what they’re doing and increasing inflation.  The only question that I would have the author would be what he thinks is the solution for stimulating the economy because he only seems to criticize Obama without adding any input of his own.

Advertisements

5 responses to “Will QE3 Destroy the Economy?

  1. This sounds like a really interesting article! I have never really given any thought to the fact that we could be facing another recession–and so severe. It not only brings up the importance of the upcoming election but also the ethics of piling on even more debt. The government tries to protect its citizens, but is it really doing a good job?

  2. After doing some of the readings regarding the implications of the 2008 recession, I find this post to be extremely interesting. I think that you and your blogger make a good point, as many believe that the government’s stimulus plan is only a temporary solution. The thought of another recession is scary. I would have liked to see this blogger suggest a solution to, but I think that the problem might be too big for one person to tackle alone.

  3. “The author is not very optimistic about the state of the economy and says that ‘the reality is that we’re now facing a Crisis that will make 2008 look like a picnic’.” This is scary to think about especially considering how horrible things became during crisis in 2008. I never heard of the QE3 plan but this blog makes me want to look more into it. I would also like to here some input as you mentioned from the author instead of just criticisms.

  4. I agree with what Nicola, Mara, Tara and Bob have been saying regarding this issue, it’s easy to give reasons why the economy is not performing great, and reasons why it will not perform well in the future, but not giving any suggestions, in my opinion discredits the authors argument. Also, not to sound selfish, but I think mostly everyone in our class can agree that it is pretty horrifying that people are predicting a recession of similar magnitude in 2008 considering we’re all on the job search between now and when we graduate this May.

  5. I definitely see where you and the blogger are coming from. The main issue I have regarding QE3 is the timing of it. The Federal Reserve is supposed to be as apolitical as possible, so major decisions like an open-ended QE3 should not be made 2-3 months before the election. I think it will restore some sort of confidence in the US economy and I truly believe that the fate of our economy will depend heavily on the upcoming presidential and congressional elections. I think to say that we are heading toward a worse recession than that of 2008 is a bit extreme.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s