U.S. second wave of quantitative easing policy (QE2) was launched on November 3. Group at a time when G20 launched QE2 will meet in Seoul, Korea, U.S. policy has been strongly criticized in some countries. Looking back at the Fed in March 18, 2009 when the first implementation of QE, the world although there are a lot of people criticize the delivery of its large-scale monetary policy, but the mainstream is this identity, and then almost all the economies in the global management have followed the Fed’s loose monetary policy. But the QE2 officially published, although there are some economies before and after taking a coded loose monetary policy, but the voice of the majority is expressed doubt. Bernanke claims that the future does not exclude the implementation of QE3, which had made the world and countermeasures foreseen in advance.

First of all, to understand the Fed in the end it will launch the third wave of quantitative easing monetary policy. QE2 in the early November launch, the Bernanke has stated that the future economy based on the specific situation of the 600 billion U.S. dollars of new debt to buy a modest adjustment program. At this meeting, the U.S. announced major economic indicators, optimistic than pessimistic data data. Therefore, when the Fed minutes of the meeting in accordance with the spirit of the Federal Reserve may reduce the future size of the share debt. However, 3 December night, the U.S. Labor Department reported the U.S. November employment data, including net non-farm employment is only 3.9 million, far less than the expected net increase of 14.0 million people. And 11 months of unemployment, a sudden increase from 9.6% to 9.8%, to let the market by surprise and disappointment, after 3 consecutive months was maintained at 9.6% level. Therefore, in order to promote employment as the goal of the Fed easing monetary policy, no matter that they have no use (the Federal Reserve believe that useful), it will inevitably continue to the United States appears sustainable employment data, the trend of significant improvement in the situation later. Now the U.S. employment data the momentum of the rapidly deteriorating again, then the Fed to implement QE3 (ie coded scale of easing) the probability of the increase. Due to globalization and the U.S. dollar the de facto international reserve position, QE3 for countries around the world have different effects, so that economies need to plan ahead for the U.S. QE3.

Secondly, the United States QE, in the end there is no role for the United States, this issue requires a clear understanding, while for the rest of the world economy in the end have any impact, but also need to clear. Intuitively, the Fed implemented QE3, is to increase the funds to buy government bonds, so the impact of supply and demand, prices of U.S. Treasury bonds will rise, so the yields will fall. The U.S. credit interest rates, which greatly affected by the U.S. Treasury, so the U.S. will certainly be QE bank credit interest rate repression. That is why the Fed was hoping to drive down market interest rates through the QE, prompting U.S. companies to expand investment and production, and thriving commercial activities, etc., which led to an increase in employment. However, QE1 to the QE2 of the situation, the formal implementation of the scheme, the U.S. 10-year bond yields are higher, and 6 month yields only QE1 decline occurred after the announcement. So, the Fed did not achieve the first objective, the same, prompting enterprises to expand credit in order to enhance the purpose of commercial activities has not been achieved.

According to the U.S. 10 year Treasury yield and 6-month difference of view, the Fed’s QE overall impact of policies on the economic results would be ineffective. The difference from trough to peak levels, can often see the situation the U.S. economic cycle. When the margin to the bottom, is often the time when the economy is the most prosperous, and then the economy will turn downhill trend. The difference in the peak level, often the time when the economy is the worst, followed by the economy are often better. However, in QE1 later, this difference of 2.5% from the level continues to rise around, in June 2009 to April 2010 between the firm at 3.0% -3.7% level. This shows that the U.S. economy in the second half of 2009 after the recovery is the pseudo-recovery. In early November 2010 after the Fed released QE2, the difference again upward trend, rising from 2.33% to 2.80% around the vicinity of the situation after the duplication of QE1, that the U.S. economy deteriorate again. Therefore, the introduction of QE policy, the liberal policy is actually inspired some confidence just like the leading indicators index for the improvement, and thus promote the slight improvement of physical indicators, and not fundamentally driving the real economy to improve, so policy in the QE signs of economic recovery after the release, are very fragile, in fact, false.

So, from the QE policy can only short-term, weak positive effect, its main role is actually negative. In essence, the central bank to buy government bonds from the quantitative easing monetary policy implementation, so that public debt is actually transformed into a base currency, the “debt monetization.” Then, expanding out of the currency, as the scarcity of investment opportunities in the real economy, it is bound to be financial institutions, to blow out the financial bubble, the U.S. and other developed economies, the real economic situation and virtual economic imbalances become more severe.

This “debt monetization” of things, for the U.S. economy in addition to the adverse effects other than for some of the world economy also have some negative effects. Objectively speaking, the implementation of QE Fed policy, but for solving the difficult problems the United States itself had to do, not because of “conspiracy theory” as speculated by those who intended to harm, but because of globalization, the policy led to spillover , then through the “currency debt” and must make the bonds that hold billions of dollars the institution, the value of holdings of U.S. Treasury bonds to reduce weight and deterrence, the United States so you can live more active position, so that overseas holders The gold content in the hands of U.S. Treasury bonds fell.

Therefore, the Fed out of its functional requirements, regardless of the validity of its policy in the U.S. economy’s future prospects of the situation, may indeed continue QE3. And the policy will undoubtedly increase the rest of the world economy policy more difficult.

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