Saturday, October 16, 2010

QE2? What did QE1 Accomplish


QE1 or Quantitative Easing one did nothing to decrease unemployment. QE1 boosted the stock market roughly 80% if you look at the S&P 500 averages going from 666 to 1220. The S&P 500 is a broad measure of the stock market because you have 500 of the biggest companies which comprise the average. The S&P 500 topped out at 1,576 in October 2007 and would still have to go up another 30% to make a new high. QE2 would give the stock market another boost before it's eventual fall to lows below the October 2009 low of 666. QE2 might even send Apple to new highs, maybe even $400 a share or more. QE2 is an extend and pretend practice which is really just electronic money printing. Deflation is baked into the cake. Debt can only be repaid or defaulted on. We can just hope that we don't have a full scale US dollar collapse. I don't think a dollar collapse will happen. I do feel the S&P 500 will go below 500 before bottoming out.