Under “The worst of both worlds”, Columnist Gil Smart writes in “As noted last week, the whole idea of [Quantitative Easing] was to boost asset prices, which was supposed to make Americans feel more financially secure. QE has also boosted stocks, meaning your 401(k) looks a lot healthier than it did a year or two ago, and this is supposed to trigger the ‘wealth effect’ — you feel as if you’re worth more, so you spend more, and that gets the economy moving again.
“It’s a fine theory, except it isn’t working because home prices remain depressed, and so do wages. In other words, we’ve got the worst of both worlds, a combination of depression and inflation known”
WATCHDOG: A wag of the tail, except for: “Or as one reader put it last week, inflation in the things you need (like food), deflation in the things you want.” Perhaps it should have been “Deflation in what you got; inflation in what you need.”
No, Gil got it exactly right.
Things you NEED – food, gas, heating oil – are going up at a time when you can least afford them to, due to futures speculation flooded with QE money.
Things you DON’T need (but may want) – Anything made in China or Pakistan – are going down due to globalization and out-sourced manufacturing.