Outside the Box

All QE2, All the Time

John Mauldin

September 27, 2010

Everywhere I turn is another article about Quantitative Easing Part 2. Will they or won’t they? My question last week was will it make any difference? After I sent my letter out, I came across this missive from the always fascinating Ed Yardeni. I like to read Ed because he is not afraid to take an out of consensus call. He is his own man, something of a rarity in the world of economists.

He highlights a report from the Fed on the problem with the money multiplier. It has gone away. (Really? You think?) If you took Econ 101 this was a basic staple.

He writes: “Fed officials are clueless about how quantitative easing is supposed to impact the economy. They aren’t even sure if it has any effect on the economy. The Fed study cited here confirms this known unknown.”

I include the rest of his letter to let you know what type of material he does daily, as some of you might want to take a closer look at his service. ( www.yardeni.com). I really liked his take on housing. This is an excellent choice for Outside the Box.

I am starting to adjust from the travel. Have a great week!

Your ready for some NBA basketball to start analyst,

John Mauldin, Editor
Outside the Box

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All QE2, All the Time
Why QE Doesn’t Work

By Ed Yardeni

BULLET POINTS: (1) Fed study buries textbook money multiplier. (2) The Treasury’s lap dog. (3) Kohn’s exit speech admits Fed is clueless. (4) In 1988, Bernanke questioned money multiplier model. (5) The fiscal multiplier is also baloney. (6) The administration’s stimulators are jumping ship. (7) Profitable companies, not bloated governments, create jobs. (8) No double dips in Earnings Month. (9) Double dip…

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