Hurry up and taper! So say the consensus of pundits now, morphing from months of fearing the Fed ending quantitative easing’s bond buying would crush stocks and the economy. Now they claim QE must end to tame soaring energy prices they now fear will crush global growth. Wrong and very wrong! QE cutbacks won’t calm surging commodities—and needn’t. Price pressures will ease as supply problems subside, sooner than most think. Here is why.
Last month, I showed you why fables of past “tantrums” made 2021’s QE taper fears false. QE never, ever stimulates. It flattens yield curves, saps banks’ loan profitability and discourages lending. Still, misunderstanding the Fed’s 2013 and the ECB’s late-2016 tapers had folks everywhere sweating QE’s demise.
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