Did the Bank of England Just Kill the QE Trade?
In case you missed it, something of major import occurred today.
That something is the Bank of England announcing that it is suspending its QE efforts because of questions relating to its “potency.”
This is a heck of a statement from a Central Bank. And it’s coming from the one that has even outdone Bernanke’s QE efforts.
Since the crisis began, the BoE has announced QE efforts equal to $598 billion. The UK’s GDP is $2.43 trillion. So the BoE has engaged in QE equal to over 20% of the UK’s GDP. By way of comparison, the US Fed has announced QE equal to about 12% of the US’s GDP (I’m not counting Twist here).
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.
And yet, the US Federal Reserve continues to believe that QE is the answer to our economic prayers. At this point they’re not only ignoring history, but they’re ignoring real world examples (the UK), which show that QE fails to aid the economy or jobs in any meaningful way.
Meanwhile, the cost of living continues to spike around the world. Workers have demanded wage hikes everywhere from Chicago to Germany to China. Food prices continue to rise as does energy.
There is a word for this… it’s called stagflation. And it never ends well. Which is why I strongly urge everyone to prepare for tings to get much much worse before they get better.
Now more than ever, investors need to get access to high quality guidance and insights. There sheer magnitude of the issues the global financial system is facing is enormous!
For that reason, we have lowered the price of an annual subscription of my Private Wealth Advisory newsletter to just $249 (down from $300).
Private Wealth Advisory is my bi-weekly investment advisory service tailor made for individual investors who want to stay informed of the real story in the global economy and outperform markets.
To whit, my clients made money in 2008. And we’ve been playing the Euro Crisis to perfection, with our portfolio returning 34% between July 31 2011 and July 31 2012.
And this incredible newsletter is now on sale at $249 for the next 12 hours (until tonight at midnight).
So if you’ve been holding off on subscribing to Private Wealth Advisory for whatever reason, this is your one chance to subscribe now, and lock in a price of $249 for the lifetime of your subscription.
To take advantage of this Special Offer… and start receiving my hard hitting, global market investment commentary delivered to your inbox every other Wednesday…