Bilow,
I know that is the logic that Bernanke and the Dems use to convince you that these low rates are helping the 99%, but let's stop and really look under the covers for a second. First of all, you make a good point that owning a house is a primary way of increasing the 99%'s net worth. So to figure out if QE has helped the 99%, then we need to see if the 99% has increased their home ownership enough to offset the loss of wealth prior to 2008. So what has happened since 2008? Well, the shadow inventory (abandoned but not foreclosed homes) of homes has come down a bit and that's good, but who's been buying all these inventory? It's not the 99%. Even though mortgage rates were at record lows for a few years, it was the big hedge funds and corporate buyers like BlackRock who have bought up most of this inventory across the country. Why? Because banks tightened up their lending standards. Basically, unless you have immaculate credit, a job, or cash to buy, then you are out of luck.
Now what has QE done to housing pricing? Well, it has increased housing prices quite a bit as these large scale corporate buyers bid them up. Housing across the nation is up 11% YoY. That's a staggering increase. So any benefit of low mortgage rates in lowering the 99% mortgage payment is now obliterated by the increase in the price of the house itself. So new buyers are not finding that buying a house is more affordable than in 2008. Quite the contrary. Then to add salt to the wound, rents are up. So can't buy a house and can't afford the rents. Then to make matters worse, incomes are stagnant to down for the 99% since 2008. They are fucked in almost every regard.
The fact of the matter is that when it comes to monetary policy, it turns out that common sense actually works. When you print money, you create massive distortions. The # 1 rule of monetary policy is that the group of people who get first access to the monetary largesse, through QE or ZIRP, are the ones who get 99% of the benefits of those policies. In this case, that would be the top 5 banks in this country and their executives.
The 99% has been left out in the cold and they've been sold a bill of goods. Bilow, don't buy what they are trying to sell you. Go study the mechanics of the transmission mechanism of QE and you'll see that I'm not bullshitting you. Most people aren't skeptical enough of these Keynesian policies because they want so much to believe that it will all work out in the end. But if it seems too good to be true that printing more money will help our economy, it's because it is too good to be true. It's never worked in history and it won't work this time for the US either. |
