Yesterday, the Dow opened at 16,000 for the first time ever. Wow, that’s awesome, right? Many in the media reported this as something exciting, and some reported that investors attributed these “gains” to Janet Yellen, who is likely going to be the next Chairman of the Federal Reserve. That is absolutely correct – these “gains” can be attributed to Yellen’s future chairmanship of the Fed. But that doesn’t mean anything positive for you and me and other regular Americans. It just means that Wall Street is excited about Yellen’s promise to continue to print money. In order to confuse us regular folk, this policy of digitizing new money out of thin air has a cute name: “quantitative easing” (or QE).
About three weeks ago I penned an article for this site about how Wall Street & the Fed was screwing Main Street. You can read that article here. Last week, Andrew Huszar, a former Federal Reserve official who worked on the Troubled (read Toxic rather than troubled) Asset Relief Program (known as TARP), wrote an OpEd piece in the Wall Street Journal apologizing to America for his participation in the “never ending quantitative easing”. Huszar called this program the “biggest back door Wall Street bailout of all time”. You can read Huszar’s OpEd here.
Huszar’s piece describes how he was asked to rejoin the Fed to help with this program. He states about the QE program:
It wasn’t long before my old doubts resurfaced. Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.
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