It is now five years since the Lehman crash and the commencement of the Fed’s bond-buying policy known as QE. Since Lehman, the Fed has bought $2.8T trillion of bonds from banks, quadrupling its balance sheet from $800B to $3.6T.
Today’s topic is: How successful has QE been in delivering strong money growth, sustained economic growth, full employment, and 2.0-2.5% inflation? Answer: unsuccesful. Today, the Fed has zero credibility when it comes to market confidence in its ability and commitment to fulfill its twin mandates.
Here is the current data (percent change from year ago):
This is because the Fed has not pursued a consistent policy of monetary expansion since 2008. The trillions that the Fed has supposedly “pumped into the economy” are nowhere to be found; they are sitting on deposit at the Fed as sterile and useless excess reserves. They are not "in the economy" and they have had no impact on money growth, inflation expectations or economic growth.