The Federal Reserve ended quantitative easing, their latest program to improve the economy. N.C. State University economist Mike Walden gives the program a mixed review.
“And effectively what that was, was the Federal Reserve printing money. Now, they do that in the background. We don’t necessarily see it. It’s all done to the banking system, but they did print about a $.5 trillion of additional money over the last six months. And they had three goals: One, they hoped that this would stimulate spending by you and me and the economy. They hoped that it would boost the stock market quite well. And they also hoped that it would prevent deflation prices going down. They were very fearful that we were in a deflationary period.
“Well, we can stand back and evaluate this and say they probably got two out of three things. Clearly, we’re not now in an deflationary situation. In fact, now if anything people are now worried about too high of inflation. And so if the Fed wanted to reduce the elements or the chances of deflation and put inflation in our minds, they succeeded.
“Secondly, we did have a boom in the stock market. Now it’s very interesting since quantitative easing ended, the stock market has been moving sideways if not down. So, there seems to be a link there.
“I think where the Fed was perhaps disappointed is we did have a little bit of a jolt in spending around Christmas, but as soon as gas prices went up, that kind of ended. And we’re clearly not seeing a big boom in jobs. So, I think the Fed gets mixed marks here. They did create wealth. They did prevent deflation, but we’ve not seen jobs and spending really increase.”