The United States Federal Reserve’s recently announced that it’ll continue “Operation Twist” by buying an additional $267 billion of long-term Treasury bonds during the following six months. That means they’ll have bought a total of $667 billion for 2012. So far, this policy has had virtually no impact on interest rates or equity prices. Those markets failed to respond. That means that monetary easing is no longer a useful tool for increasing economic activity.
The fed’s policies during the economic crisis that began almost five years ago have been extremely helpful in bailing out rich, but remarkably dumb investors, but the policies have been lacking in bailing out the 99 percent. That’s the purpose of the Federal Reserve.
Of course, the federal government has followed the same path; bail out the 1 percent, to hell with the 99 percent.
Don’t expect the Federal Reserve or the Federal Government to deal with the massive redistribution of income and wealth (that has been legislatively created by the Federal Government) from the 99 to the 1 percent during the last thirty-one years. That’s the real problem with the economy. The demand for goods and services is lower than 30 years ago because the 1 percent now receive 27 percent of the total national income compared to about 8 percent thirty years ago. That means the 99 percent has less cash to buy stuff. And that means the demand for goods and services will continue to be weak.