The question is not whether Larry Summers or Jannet Yellen who will be the one likely to succeed Ben Bernanke as President of the Federal Reserve. The question is what the monetary policy is doing to create Jobs in the drowned economy. The easy money policy, Economic Stimulus, bank Bailouts, Quantitative Easing, Money Printing did take up the stock markets only in terms of the Benchmark Indices Dow Jones, NASDAQ, ASX, FTSE, DAX and all other global stock markets but could not provide jobs and employment to the people. The list of unaccomplished works is extensive out of which the main is Employment. It is with this money that the spending power of the people increases. What happens when stock markets go up? As discussed earlier, the wealthy people get more rich, banks start getting their money back which was lost in the continuous downfall beginning Dot com crash to the Sub prime Crisis. People have very short memory, if people are well fed and kept entertained, no one brings out the crucial and critical issues facing the Global Economy. Not even when the Humanity is in Threat of extinction due to the dangerous policies of the Federal Reserve.

The Venture Capitals and the Private Equities have been one of the major beneficiaries of the bail outs along with the banking systems. The VC Funds and the Private equities have created trading platforms for all the stock markets, currencies, commodities and anything which can be traded on the exchanges. The funds of the bail outs are deployed in the platforms, and leveraged to buy stocks. Now news after news, if it is bad news, then Print Money, it is required. If it is good news then talks of tapering of Money Printing program starts. The market drops, and then Print Money, Money is required to keep up the stock markets. After the markets hit highs in August 2013, across the world, the rise was phenomenal in the most uncertain and most difficult times the world has ever seen.

The misconception that keeping the stock markets up will indicate that the global economy is improved and the crisis has now finished. The law makers do not understand that there are several voices raised and prominent economists, news, media all set to explode the defaulted economies and policies of the economy the world over. The under performance was due to continuing growth disappointments in major emerging market economies, a deeper recession in the euro area, and a slower U.S. expansion than expected. Financial market volatility increased globally in May and June after a period of calm since last summer. Emerging market economies have generally been hit hardest. Recent increases in advanced economy interest rates and asset price volatility combined with weakness in emerging market domestic activity led to some capital outflows, equity price declines, rising local yields, and currency depreciation in the latter.

The technique to keep the sock prices high and the world stock markets high is simple.

Bad News: Money is required, print Money, keep the stock prices as highest levels

Good news, Fed starts talks of tapering the Stimulus and Money Printing, stocks drop and then Money is required to keep the markets up. Print more money!

In general, should monetary policy easing thus be the first line of defense against downside risks? But real policy rates are low already, and capital outflows and the effects of further exchange rate depreciation on inflation may constrain further rate cuts. And many economies also face massive financial stability risks given threats to asset quality from weaker growth and earlier rapid credit expansion. Given these challenges, it may be necessary to upgrade regulatory and supervisory frameworks. Weaker growth prospects in emerging markets and new risks worldwide are challenging global growth, employment, and re balancing. There is need for policymakers everywhere to increase efforts to address these challenges and restore robust growth, at least start businesses, and start employment to begin with.

Let us turn to the pre Crisis era and prelude to the dot com crash, we saw lot of economies doing well without the stimulus, money printing, quantitative easing, the stock markets were up on their own, not from the bank bail outs and bailing out of Private Equities and Venture Capital Funds. Cool down the markets was the first advise of the G20 summit to all the nations who participated in latest G20 summit. Cooling down the markets will not be a desired effect as it will again lead to defaults. Today 83% of the US stocks are owned by 1% of the people, how much uneven can we get? People don’t want to own stocks is the clear message to the law makers, people need JOBS!

If you want the stock market to go up, just print money. All the other stuff like GDP, employment and confidence isn’t really relevant. But why does the stock market matter more than GDP, employment and confidence in the first place? That is a question economists have an answer for. It’s called the wealth effect. People who own shares that are going up feel richer and can spend more, but never do. As we discussed 83% of the US stocks are owned by 1% of the people. Does that improves GDP, employment and confidence? The bit we don’t understand about this wealth effect nonsense is that people need to get their hands on the money to spend it. While the rich people’s money is piling into the stock market, people can’t spend it and add to GDP. They have to sell their shares first. That will set the stock markets tumbling, since there is no buyer. There has to be buyer for every seller of the stocks

The amount of cash flowing in and out of the market has to be equal. So a levitating stock market can’t help consumption. Long story short, the wealth affect has it backwards and makes no sense as well. Apart from that, a rising stock market is the result of a healthy economy, not the indicator of one. If you goose stock market prices, you aren’t making the economy improve any more than messing with your speedometer improves your commute time. Despite its fabulous effects on the stock market, for some reason even the most ardent supporters of money printing reckon it can’t go on forever. So they’re waiting for good news from the economy to begin pulling back their money printing. Rather than relying on money printing, stocks will have to reflect economic reality. That’s going to be a rather rude shock. If the Fed tapers, as printing less money is known these days, stocks will drop. If they drop far enough, can you guess what the Federal Reserve will do? Print money in the name of the wealth effect, of course. That’s what it’s done each and every time tapering led to a fall in the stock market over the past few years. Around and around we go. In other words, even if the Fed does taper, it will be short lived. Economic reality is just too harsh. Making economic reality irrelevant to the stock market is just the kind of distortion that makes money printing so dangerous. It completely obfuscates the signals the economy relies on to function. In this kind of environment, the important thing is to look like you know what you’re doing. Nobody really has a clue anyway, so you might as well look the part. Sticking your head in the sand has never helped anyone, but putting your wealth in Gold is a proven strategy for preserving it.

Bail outs after bailouts and we cannot find any solution to the crisis as yet. The media has been completely ignoring and purposely covering the economic troubles faced to avoid any unpleasant scenes worldwide. The Lehman crash was followed by Real Estate Crash and Banking Crash. The intensity of sub prime mortgage crisis was so severe that it left many of the people world wide jobless, helpless and in banks, corporate in deep debts. The Private Equity and Mortgage Funds diverted the portfolio from Real Estate to Social Media swiftly and the craze of Facebook and Google Plus and all the social networking started. Well we have not yet touched the topics of Bailing out Freddie Mac, Fannie Mae, Wells Fargo and several other banks / Institutions directly involved with the downfall of the Global Economy. What does the bailout do and how does it work?

Why is the Fed not ending Quantitative Easing, Stimulus Program?

How much money is the total actual debt of US?

How much debt does every country owe? To whom do they owe the debts? Very Important, when will all the debts be cleared and where is the money gone?

Banks have been directly responsible for the downfall of the Global Economy, the pointers straightway point to the Banks who have in turn been bailed out by Government policies of Quantitative easing a sophisticated name for Money Printing. The loss of Banking and Finance jobs created a major dent in Global Economy and the Property, Real Estate and Housing plunged. More than 80% of the jobs which were easier to do after the 2000 – 2008 crisis are clearly at stake and almost gone. The question once again arises what next?

People want jobs

The effect of social media and social networking is so strong that the people have become insensitive to issues of Global Economy or Jobs. There is more negative effect than any positive impact the social media boasts of. The Social media themselves are finding it unsustainable economically and financially and the bubble can burst any time. The direct impact of joblessness was emerging of social media as a healing effect on mind than anything else. What has the industries who are found on the social network sites done to create the jobs? Answer is nothing and to be frank nothing ever can be achieved on the social network and social media for jobs creation.

The answer to all the problems is simple. End the Stimulus, Bond Buying program, Quantitative easing, Money Printing and divert all the attention to create jobs and growth in the economy, create more businesses. There are hundreds and thousands of businesses starving for funds than the stock markets. Why doesn’t the Federal Reserve understand this basic need? Or more rather I will say they do have the answer but they decided to take a easy route than take firms actions on failing bans and Mortgage Houses.

Regards,

Shrikant G. Shete

Gold Coast , QLD – 4215

Australia