Felix TV: Why QE isn’t working

By Felix Salmon
November 16, 2010

There are things which could go right with quantitative easing. But on the other hand, there are big things which could go wrong too. And right now corporate America seems to be more worried about the downside than it is certain about the upside. Which is why there’s a real risk that QE is going to cause more harm than good.


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Corporate America is worried? The same corporate America that is scared to death of socialist presidents and tax increases while they have their biggest earnings season in ages? Really?

Look, if they are worried, this thing is working. We want them to think that what they are doing now (sit in cash, do nothing) is not going to work, as inflation chips it away. If they move their money to Brazil, fine – lowering the value of the dollar works for us, as well. The current cycle of “inaction is safe” needs to be broken – and nothing will do that better that making cash burn in your pocket.

Posted by Egocrata | Report as abusive


Bernanke is not causing this uncertainty.

Fundamentally it comes from the unsustainablility of Chimerica, with its imbalances and currency pegs (across Asia).

That means growth over the next five years can’t come from the sources it came from over the previous five years.

It’s specious to blame this on QE2.

On the contrary, QE2 may signal the turning of the imbalances ‘titanic’ – in a constructive sense. We need to move, there is resistance in all directions except this one. Yes, hairy. But in the medium term, constructive and necessary. (You really should read Michael Pettis).

Posted by nyet | Report as abusive

Another great video, I like how the content is easy to understand.

Posted by Developer | Report as abusive

So ok the US exhuberance is cute, but I still think Robert Peston should sue

Posted by zinkus | Report as abusive