Demented QE

Ben Bernanke is all out of ideas, so he signs off on another round of quantative easing. After all it worked so well the last two times, right?

The Fed said it will buy $40 billion of mortgage-backed securities per month in an attempt to foster a nascent recovery in the real estate market.

Oh Lordy. Look, Ben, the USA's housing market collapsed because it was massively overvalued. So far, so good. But ultra-low interest rates induce asset bubbles, and so the housing market (along with gold, oil etc.) is rapidly re-inflating. You don't need QE to force house prices up, they're rising rapidly enough already.

If you want to fix the American economy, you have to reduce the costs to American small and medium businesses of doing business (the large businesses generally have good lobbyists and are doing just fine). The current administration's plans (Obamacare etc.) are having precisely the opposite effect; uncertainty and worry about the future costs of employment are making them pull in their heads and wait to see what will happen. In the meantime we get no economic growth.

I think Ben Bernanke has no idea what to do, and is pulling QE out of the hat in response to the famous "Yes, Minister" syllogism: "We must do something, this is something, therefore we must do it." I note that he's never had a job that involves employing people or trying to make a profit.