Quantitative Easing (QE) has come under fire from many sides; it is charged with lowering capital expenditure and productivity, inflating pension costs, discouraging saving and widening inequality. The central banking alumni of Goldman Sachs, alias the vampire squid, have had enough, embarking on a crusade to “set the record straight” on QE.
Under Mario Draghi’s tutelage, six authors have collaborated in a heavyweight ECB working paper entitled Monetary policy and household inequality and, Bank of England deputy governor Ben Broadbent delivered his take on “The history and future of QE” a few weeks ago. Cutting to the chase, both papers conclude that “monetary policy in recent years benefited most households and did not contribute to an increase in wealth, income or consumption inequality.”
The core argument is that QE has boosted aggregate demand and reduced unemployment, helping the poorest households who have little or no financial wealth. The authors also claim, in Europe at least, that real house prices have not risen materially, and real equity prices have not recovered to their 2007 peaks.