Fed Stops Boosting Economy
Today, the Federal Reserve will wind down the $600 billion bond buying plan known as "Quantitative Easing 2" or "QE2". The point of the plan, according to Fed Chairman Ben Bernanke, was to boost the moribund economy, by (1) encouraging banks to lend the near-trillion dollars they hold in excess reserves; (2) prompt consumers to borrow and spend more freely; and (3) help companies gain confidence and use the cheap money to increase capital spending or to create jobs.
I grabbed a crew to see how regular people rated the Fed and Bernanke's efforts:
The Fed hasn't exactly lit the economy on fire--in fact, it has mostly failed to attain its three goals, with the possible exception of encouraging a bit more hiring this year, though that may have occurred without QE2.
So what has the Fed accomplished with its bond buying plan? As far as I can tell, the biggest beneficiaries of the plan have been stock investors, who saw the Dow rise from under 10,000 to over 12,000; borrowers, who were able to qualify for cheap mortgages; and companies who were able to lock in cheap rates on bond issues. Doesn't seem worth all the effort, does it?
