One Bank Explains Why QE No Longer Stimulates The Economy And Only Leads To Higher Stock Prices

• One Bank Explains Why QE No Longer Stimulates The Economy And Only Leads To Higher Stock Prices
  by Tyler Durden, https://www.zerohedge.com/
  Even some of the most ardent supporters of the fraud that is Keynesian economics now admit the entire modern economic system is on the verge of collapse for one main reason: the marginal utility of debt is collapsing, with ever more debt required to generate an increase in underlying GDP.
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  And tied to that, is another reason why any day now the current system may be the last: the marginal utility of every new QE is now declining to the point where soon virtually none of the money created by the Fed out of thin air will enter the economy and instead will be stuck in capital markets, resulting in hyperinflation for asset prices even as the broader economy collapses. Or, as BMO’s Daniel Krieter writes, “QE has fed through to the real economy in a slower manner than previous QE campaigns” and for each dollar the Fed’s balance sheet has grown, M1 money supply has increased about $0.32, compared to $0.96 and $0.74 in QE1 and QE2. “The expansionary policy thus far has mostly resulted in increased asset prices”, BMO writes concluding what had been obvious to us and our readers since 2009. Only now we are ten years closer to what is the inevitable endgame, one where the Fed has no impact on M1, which will also be known as the “game over” phase.
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