Bank of America/Merrill Lynch has done a study of some effects of seven years of global QE — including 660 consecutive interest-rate cuts by the trans-Atlantic and Japanese central banks — and found that the entire policy helped Wall Street, while damaging the real economy. The surprising thing is that the bank put the findings out, in a report by its chief investment strategist.
Michael Hartnett says “the results represent a clear victory for Wall Street over Main Street. Zero rates and asset purchases of central banks have proved much more favorable to Wall Street, capitalists, shadow banks … than for workers, savers, banks and the jobs market.”
Some of the report’s findings about investment:
* For every job created in the U.S. this decade (since 2010), companies spent $296,000 buying back their stocks.
* “An investment of $100 in a portfolio of stocks and bonds since the Federal Reserve began quantitative easing would now be worth $205. Over the same seven years, a wage of $100 has risen to just $114,” or 1.5%/year.
* For every $100 of U.S. venture capital and private equity funds raised at the start of 2010, they are now raising $275; but for every $100 of U.S. mortgage credit extended five years ago, just $61 was extended this year.”
* “Commercial real estate [values] gained 168% compared to a 16% increase of all U.S. residential property.”