"A Complete Failure": The 7 Things QE2 Won't Do

Posted Nov 12, 2010 12:40pm EST by Aaron Task in Investing, Recession

Since the Fed launched QE2 last week, there's been a lot of talk (maybe, maybe too much talk, as Bono might say) about what the $600 billion program will do for (or to) the economy, the dollar and Ben Bernanke's credibility.

Michael Pento, senior economist at Euro Pacific Capital, has a different take on things, as he is wont to do. In a recent report, Pento outlined the five things QE2 won't do:

  • -- Lower U.S. corporate tax rates.
  • -- Reduce regulations that are "crippling" U.S. firms.
  • -- Make U.S. workers more competitive vs. foreigners.
  • -- Improve the U.S. education system.
  • -- Lead to a balanced budget.

In the accompany video, Pento calls these items "credible, cogent steps to bail out this country" -- in stark contrast to QE2, that is.

Not content with five, he added a two more things QE2 is not doing: Stop long-term interest rates from rising or lowering the employment rate.

"It's a complete failure," Pento says. "And there's no exit for Ben [Bernanke]. We're going to get the inflation he's so intent on creating. And is then a good time to sell hundreds of billions of Treasuries on top of the foreign selling that's coming? Is he really thinking about this?"

In the end, all QE2 will do is "wreck the dollar" and spur double-digit inflation, he says. "That's going to be really pernicious for this economy."

Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoocom

Earlier:

U.S. of "Irony and Hypocrisy": We're No. 1!...At Currency Manipulation, Pento Says 

Ireland Is the 'New Greece'; Japan and U.S. Next in Line for "Catastrophe", Pento Says

Pento: Deficit Commish's Proposal DOA, But Make Congress Vote On It Anyway

194 comments

  • 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    JohnL 3 hours ago Report Abuse
    There are actually genius that believe depreciation of our currency actually wipe out debt? How wonderful, I didn't know that. So if dollar devalue to the point on par with Yen, our problem will be over, right? No wonder you will only see foreign students in America's graduate school these days. Americans are so smart, school is just a waste of time, they've all dropped out of high school and worked for GM.
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 6 users disliked this comment
    David 4 hours ago Report Abuse
    Wrong on three points.
    1, A devalued dollar makes our products cheaper and more competitive. This will bring growth and more employment.
    2,The 11% devaluation wipes out our deficit of 1.3 trillion . Can anyone calculate 11% of 14 trillion?
    3,The 11% has brought no inflation, in fact, it has fallen from 1% to .6%. What happened? China, Thailand ,et al. should be asking 11% more for their goods. WMT is not raising prices. This means that WMT and/or China is eating the 11%. They can eat more. And will. They? I suspect WMT isn't eating much. It's profits are still high.
    I no longer believe I am the greatest living economist. I am the only economist.
    Growth and jobs trump the dollar. Don't plan a visit to Paris. We are beggaring our neighbors with devaluation.
    Pinto predicts inflation. Inflation occurs when demand cannot be supplied. I don't think this possible. Cars, wheat, tomatoes. Name something we can't supply three times as much of.
    What kind of statement is this: QE2 won't help education, reduce taxes or eliminate crippling regulation. This insults our intelligence. Only legislation on these subjects can do this. This implies that guests read the postings here and conclude that we are all retarded.
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 2 users disliked this comment
    Mike 6 hours ago Report Abuse
    When everones out of a job in America, thats when things will change.
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    Johnson Jones 8 hours ago Report Abuse
    Look at the difference between a corporation of people that want to sell you a product and the corporation of people in the government who want to force you to buy their product.
    One of them has to convince you to come out of your hole once every 2, 6 and 4 years to vote for him or her. All they have to do is look at the poles to take the temperature of the public. Tell Joe Public what they want to hear. "the evil corporation wants to control you", "the Tea Party members are sick", "we all need better health care" and on and on.
    The other corporation of people have to do market research to see what you want and then convince you to get out of your hole every day. They must have what you want on the shelf when you decide to purchase. Think about it.
    What's more, one of them holds a gun to your head, can you guess which one?
  • A Yahoo! User
    3 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 5 users disliked this comment
    A Yahoo! User 8 hours ago Report Abuse
    If you remove government, even though the U.S. government is mostly already the servant of the rich and the coporations, all you do is put the rich and the corporations in power. The idea is to elect someone like Ralph Nader, who will increase government and create good government that gets rid of the influence of the corporations and the rich, and favor the common interest.

    The best countries are the largely socialistic ones like Norway. I wonder why?
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 9 users disliked this comment
    Flyer1 8 hours ago Report Abuse
    Tell me there isn't a class war going on here.
    Make poor people poorer and we will all be better off. This is the kind of nonsense the right wing pushes out on a daily basis and stupid people eat it up like candy. Makes me proud to be an American.
    Comment hidden due to low rating. Show Comment
  • A Yahoo! User
    5 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    A Yahoo! User 9 hours ago Report Abuse
    A Yahoo User 5 hours ago -- ?? "Well, since America's military presence has coincided with America ripping off the wealth of developed countries ..." ??

    Oh. You mean like in World War I and II and their aftermaths. You mean like the following countries which America supplied and rebuilt, fought and died in and for, and then slipped quietly away, heading back home, those that still could anyway:
    France, England, Belgium, Holland, Spain, Portugal, Italy, Germany, Austria, Hungary, Poland, Russia, Japan, China, Burma, South Korea, Australia, New Zealand, Panama, and on and on. And now Kuwait, Malaysia, Haiti, Iraq, and Afghanistan (we hope) ... but who's counting?

    Not America. And guess who it will be again next time?

    Have a great day and rest easy ... knowing that wherever you are, whichever country you call home ... if the sky falls on YOU someday, you can count on somebody coming to help. America.
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    Johnson Jones 9 hours ago Report Abuse
    I think you are wrong about us being at the mercy of other countries. We just need a congress that will trash some of the regulations and Federal agencies. The spending problem could be solved overnight by reducing taxes and promoting free trade with other countries. Start building Nuclear Power Plants, ditch the green subsidies, farm subsidies, release the oil in the Pacific, Gulf, Alaska, and Atlantic. You would see growth like never before.
    This is simple common sense. There are too many that think life is as good as it is due to subsidies and government regulation. I think they are wrong. Just like a worker doesn't know his market value until he is forced to find another job. We will never fully realize our potential while supporting this massive government bureaucracy.
  • A Yahoo! User
    7 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    A Yahoo! User 10 hours ago Report Abuse
    QE2 = QS2

    Quantitative Screwing 2
  • A Yahoo! User
    7 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 2 users disliked this comment
    A Yahoo! User 10 hours ago Report Abuse
    A Complete Failure... sounds like an obama biography

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