QE3 – Trickling Down Nonsense

Yesterday, Fed Chairman Ben Bernanke suggested in testimony to Congress that QE3, a third round of quantitative easing,  may be required if the economy falters. The US stock markets immediately rallied with a gain of 100 points on the DJIA being typical. Easy money would continue from the Fed with no strings attached. The flawed thinking is stunning – banks and businesses have record profits and cash on hand to the extent of over $2 trillion and growing.  So cash on hand for the large banks and businesses is not what  is holding the US Economy back.

In fact corporations are now clamoring for importing some of the $1 trillion being held in foreign banks to the US with a tax holiday.But those moneys will be used for mergers and acquisitions, dividend payments, and stock buy backs not significant investments in operations or jobs domestically. Thus for the third year in a row, the US has a vivid  demonstration that  Supply Side Trickle Down policy  has failed to lift the Economy out of recession.

One of the major problems with the Economic Recovery has been  no  conditions on free money from the Fed   and other  Federal TARP related recovery programs. Banks were asked to lessen the the amount of payments due on mortgages but they have steadfastly resisted such efforts. So the Mortgage meltdown mess followed by the Foreclosure Fraud continues to hinder economic recovery. The availability of money is not the problem in the recovery, the problem is two fold:
1)the failure of banks to lend to small businesses and reduce the burden of foreclosure losses by reducing loan repayments levels by even a small % ;
2)the race to the bottom by corporations on salaries and wages by exporting/outsourcing blue and  white collar jobs overseas while allowing China, India  and other low labor cost countries to protect key industries from US exports or investment.
The net result is is a sluggish economic recovery exacerbated by two political parties trying to inflict maximum blame on the other with GOP easily taking the prize for most dirty tricks. Rots of Ruck with that Recovery!