If Quantitative Easing Works, Why Has It Failed to Kick-Start Inflation?

QE Has Failed to Spark Inflation

Quantitative easing (QE) was supposed to stimulate the economy and pull us out of deflation.

But the third round of quantitative easing (“QE3”) in the U.S. failed to raise inflation expectations.

And QE hasn’t worked in Japan, either. The Wall Street Journal noted in 2010:

Nearly a decade after Japan’s central bank first experimented with the policy, the country remains mired in deflation, a general decline in wages and prices that has crippled its economy.


The BOJ began doing quantitative easing in 2001. It had become clear that pushing interest rates down near zero for an extended period had failed to get the economy moving. After five years of gradually expanding its bond purchases, the bank dropped the effort in 2006.

At first, it appeared the program had succeeded in stabilizing the economy and halting the slide in prices. But deflation returned with a vengeance over the past two years, putting the Bank of Japan back on the spot.

So why didn’t quantitative easing work in Japan? Critics say the Japanese central bank wasn’t aggressive enough in launching and expanding its bond-buying program—then dropped it too soon.


Others say Japan simply waited too long to resort to the policy.

But Japan has since gone “all in” on staggering levels of quantitative easing … and yet is still mired in deflation.

The UK engaged in substantial QE. But inflation rates are falling there as well.

And China engaged in massive amounts of QE. But it’s also falling into deflation.

Indeed, despite massive QE by the U.S., Japan and China, there is now a worldwide risk of deflation.

So why hasn’t it worked?

Traders Weigh In

Financial commentator, trader, and inventor of high-frequency trading Max Keiser has argued for months that QE’s failure can be explained by the following 4 steps:

(1) QE throws easy cash at the zombie banks

(2) The big banks use the easy cash to speculate instead of becoming more stable … or lending out to Main Street

(3) The speculation and lack of lending decreases the vitality of the real (Main Street) economy

(4) This leads to deflation, rather than inflation

There’s some evidence that Keiser is right.

Forecaster and trader Martin Armstrong writes today:

The evolution of the monetary system of Rome illustrates how empires rise. It also reflects that the dominant economy’s currency is ALWAYS used by surrounding nations. Consequently, history demonstrates WHY in fact QE1-3 failed to produce inflation for the dollars created were absorbed globally. Theories that only view the dollar from a domestic isolated perspective are incorrect and will always fail for that is not what history teaches us if we take the time to listen.

In other words, Armstrong argues that QE falsely assumes that printed money will stay in the national economy … but printed dollars end up abroad. He explained earlier this week:

The expansion of the money supply of dollar has FAILED to produce any inflation BECAUSE the old theories have failed to take into consideration the global nature of the world economy and its demand for the currency of the current Financial Capital of the World.


The US cannot print enough money to meet the world demands.

There’s some evidence that Armstrong is right.

Economists Weigh In

Neither Keiser nor Armstrong are trained economists.  But several high-powered economists have weighed in on the question.

Ed Yardeni – a former Federal Reserve economist who held positions at the Fed’s Board of Governors and the Treasury Department, who served as Chief Investment Strategist for Deutsche Bank, and was Chief Economist for C.J. Lawrence, Prudential Securities, and E.F. Hutton – notes that economists including Ben Bernanke have known for 20 years that there is no transmission mechanism by which QE stimulates the real economy.

The Telegraph noted in June:

The question is why the world economy cannot seem to shake off this “lowflation” malaise, even after QE on unprecedented scale by the US, Britain, Japan and in its own way Switzerland.


Narayana Kocherlakota, the Minneapolis Fed chief, suggested as far back as 2011 that zero rates and QE may perversely be the cause of deflation, not the cure that everybody thought. This caused consternation, and he quickly retreated.

Stephen Williamson, from the St Louis Fed, picked up the refrain last November in a paper entitled “Liquidity Premia and the Monetary Policy Trap”, arguing that that the Fed’s actions are pulling down the “liquidity premium” on government bonds (by buying so many). This in turn is pulling down inflation. The more the policy fails – he argues – the more the Fed doubles down, thinking it must do more. That too caused a storm.

The theme refuses to go away. India’s central bank chief, Raghuram Rajan, says QE is a beggar-thy-neighbour devaluation policy in thin disguise. The West’s QE caused a flood of hot capital into emerging markets hunting for yield, stoking destructive booms that these countries could not easily control. The result was an interest rate regime that was too lax for the world as a whole, leaving even more economies in a mess than before as they too have to cope with post-bubble hangovers.

The West ignored pleas for restraint at the time, then left these countries to fend for themselves. The lesson they have drawn is to tighten policy, hoard demand, hold down their currencies and keep building up foreign reserves as a safety buffer. The net effect is to perpetuate the “global savings glut” that has starved the world of demand, and that some say is the underlying of the cause of the long slump. “I fear that in a world with weak aggregate demand, we may be engaged in a futile competition for a greater share of it,” he said.

The Bank for International Settlements [the “central banks’ central bank”] says the world is suffering from addiction to stimulus. “The result is expansionary in the short run but contractionary over the longer term. As policy-makers respond asymmetrically over successive financial cycles, hardly tightening or even easing during booms and easing aggressively and persistently during busts, they run out of ammunition and entrench instability. Low rates, paradoxically, validate themselves,” it said.

Claudio Borio, the BIS’s chief economist, says this refusal to let the business cycle run its course and to purge bad debts is corrosive. The habit of turning on the liquidity spigot at the first hint of trouble leads to “time inconsistency”. It steals growth and prosperity from the future, and pulls the interest rate structure far below its (Wicksellian) natural rate. “The risk is that the global economy may be in a deceptively stable disequilibrium,” he said.

Mr Borio worries what will happen when the next downturn hits. “So far, institutional set-ups have proved remarkably resilient to the huge shock of the Great Financial Crisis and its tumultuous aftermath. But could (they) withstand yet another shock?” he said.

“There are troubling signs that globalisation may be in retreat. There is a risk of yet another epoch-defining and disruptive seismic shift in the underlying economic regimes. This would usher in an era of financial and trade protectionism. It has happened before, and it could happen again,” he said.

The Economist reported last year:

Is QE deflationary? Yes, quite obviously so. Consider:

  • A central bank that is deploying QE is almost certainly at the zero lower bound.
  • QE will only help get an economy off the zero lower bound if paired with a commitment to higher future inflation.
  • If a central bank is deploying QE over a long period of time, that means it has not paired QE with a commitment to higher future inflation.
  • Prolonged QE is effectively a signal that the central bank is unwilling commit to higher inflation.
  • QE therefore reinforces expectations that economic activity will run below potential and demand shocks will not be completely offset.
  • QE will be associated with a general disinflationary trend.

Don’t believe me? Here is a chart of 5-year breakevens since September of 2012, when the Fed began QE3, the first asset-purchase plan with no set end date:

(The article then goes onto say that QE can be deflationary or inflationary depending on what else the central bank is doing.)

Michala Marcussen – global head of economics at Société Générale – believes that QE may be deflationary in the long run because:

Excess capacity is deflationary and the means to deal with it is to shut it down. Indeed, we expect China [which also engaged in massive QE] for now to exert deflationary pressure on the global economy.


Unproductive investment is by nature ultimately deflationary. This is a point also worth recalling when investing in paper assets fuelled by QE liquidity and not underpinned by sustainable economic growth.

Prominent economist John Cochrane thinks he knows why. As he explained last year:

Here I graphed an interest rate rise from 0 to 5% (blue dash) and the possible equilibrium values for inflation (red). (I used κ=1 ρ=1 ).

As you can see, it’s perfectly possible, despite the price-stickiness of the new-Keynesian Phillips curve, to see the super-neutral result, inflation rises instantly.


Obviously this is not the last word. But, it’s interesting how easy it is to get positive inflation out of an interest rate rise in this simple new-Keynesian model with price stickiness.

So, to sum up, the world is different. Lessons learned in the past do not necessarily apply to the interest on ample excess reserves world to which we are (I hope!) headed. The mechanisms that prescribe a negative response of inflation to interest rate increases are a lot more tenuous than you might have thought. Given the downward drift in inflation, it’s an idea that’s worth playing with.

Bloomberg noted in November:

Now, the Neo-Fisherites [including Minneapolis Fed President Narayana Kocherlakota] have been joined by a very heavy hitter — University of Chicago economist John Cochrane. In a new paper called “Monetary Policy with Interest on Reserves,” he explains a mechanism by which higher interest rates raise inflation. Unlike Williamson’s model, Cochrane’s model obtains a Neo-Fisherian result without appealing to fiscal policy. In fact, he finds that in some cases, raising interest rates can even stimulate the economy in the short term! He concludes succinctly:

The basic logic is pretty simple: raising nominal interest rates either raises inflation or raises real interest rates. If it raises real interest rates, it must raise consumption growth. The prediction is only counterintuitive because for so long we have persuaded ourselves of the opposite[.]

Cochrane has a simple explanation of the model’s key predictions on his blog. He hypothesizes that now that the Fed pays interest on the reserves that banks hold with the Fed, monetary policy will be even more Neo-Fisherian — i.e., even more perverse.


Cochrane’s arguments are based on simple equations that are at the heart of most modern macroeconomic models. If the Neo-Fisherites are right, then everything the Fed has been doing to try to stimulate the economy isn’t just useless — it’s backward.

Now, the overwhelming majority of empirical studies tell us that QE, and Fed easing in general, tends to raise inflation in the short term. But what if that’s at the cost of lower inflation in the long term? Japan has been holding interest rates at zero for many years, and its economy has been in and out of deflation. Massive QE has noticeably failed to make the U.S. hit its 2 percent inflation target. What if mainstream macroeconomics has it all upside down, and prolonged periods of low interest rates trap us in a kind of secular stagnation that is totally different from the kind Harvard economist Larry Summers talks about?

It’s a disquieting thought.

One of the main architects of Japan’s QE program – Richard Koo – Chief Economist at the Nomura Research Institute – explains that QE helps in the short-run … but hurts the economy in the long run (via Business Insider):

Initially, long-term interest rates fall much more than they would in a country without such a policy, which means the subsequent economic recovery comes sooner (t1). But as the economy picks up, long-term rates rise sharply as local bond market participants fear the central bank will have to mop up all the excess reserves by unloading its holdings of long-term bonds.

Demand then falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of the central bank absorbing excess reserves, long-term rates surge in a repetitive cycle I have dubbed the QE “trap.”

In countries that do not engage in quantitative easing, meanwhile, the decline in long-term rates is more gradual, which delays the start of the recovery (t2). But since there is no need for the central bank to mop up large quantities of funds, everybody is no more relaxed once the recovery starts, and the rise in long-term rates is far more gradual. Once the economy starts to turn around, the pace of recovery is actually faster because interest rates are lower. This is illustrated in Figure 2.

costs of qe Indeed, things which temporarily goose the economy in the short-run often kill it in the long-run … such as suppressing volatility.

Postscript: Quantitative easing fails in many other ways, as well …

The original inventor of QE – and the former long-term head of the Federal Reserve– say that QE has failed to help the economy. Numerous academic studies confirm this. And see this.

Economists also note that QE helps the rich … but hurts the little guy. QE is one of the main causes of inequality (and see this and this). And economists now admit that runaway inequality cripples the economy. So QE indirectly hurts the economy by fueling runaway inequality.

A high-level Federal Reserve official says QE is “the greatest backdoor Wall Street bailout of all time”. And the “Godfather” of Japan’s monetary policy admits that it “is a Ponzi game”.

Note: Financial experts have been debating since the start of the 2008 financial crisis whether inflation or deflation is the bigger risk. That debate is beyond the scope of this essay. However, it might not be either/or. We might instead have “MixedFlation” … inflation is some asset classes and deflation in others.

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  • clarioncaller

    Derivatives are to banking and finance, what Obamacare is to healthcare.

  • QE – otherwise known as throwing good money after bad.

  • goingnowherefast

    Has it not become clear by now that we need a new economic paradigm in order to survive and thrive? Enough of this BS.

  • jadan

    QE truly is throwing good money after bad. It is part of the life-support that maintains our zombie financial system. No economist likes to admit the system is kaput because there are no economists who reject the private central banking that controls the nation’s money supply. The Fed is a failed enterprise. QE keeps it functioning and not because it is in the public interest. The elite that own the Fed do not like to admit they have failed to manage the national economy. It is an inconvenient truth for the elite to realize they are a group of incompetent poop-brains. They seized control of the nation’s money back in 1913 and we’ve been flirting with calamity ever since. The rich must understand money because they are rich, right? Wrong. They do not understand money, but they do understand how to gather it all for themselves. The TARP and QE are last ditch attempts to fend off the emergence of populist solutions to elite incompetence. The NEED Act, for example, introduced in the last congress by Dennis Kucinich, would have eliminated the Fed as we know it. But the debate goes on over how this failed Fed system can be tweaked. Forget it. There is only one question economists must concern themselves with; how to get money into the hands of the hoi poloi, lumpen proletariat, or “the people”, as we are variously known to the elite. That is the only relevant topic. If they wish to bloviate among themselves and produce all sorts of colorful and complex graphs, that’s fine, but only once they have figured out how to boost the middle class with good wages & salaries and plenty of disposable income.

  • Tom

    The “savings glut” supposedly leading to weak demand may have several other causes (none of them mutually exclusive):
    1. People are fed up walking into stores and seeing nothing but Chinese junk and walk out empty-handed; after that’s happened a few times they stop going in.

    2. Between the Social Security trust fund being looted and other pension plans targeted next, a lot of baby boomers are in a panic about how to cover their retirement within a very short time, so they stop spending even when their income is still good.
    3. People are so angry about watching the US become a police state that they just stay home, stop spending, and work as little as possible.
    4. As increasing numbers of people strive for the greatest degree of self-sufficiency as possible (preppers, if you will) they can maintain a perfectly comfortable standard of living while spending much less to do so.

    • zimscooter

      Bang on the money Tom

  • Scaramouche

    QE doesn’t create money; it only prevents money that has already been created from being destroyed by writing down bad debts. Apparently, this money is sitting in company coffers or being moved offshore via unsound investments; it’s not getting into the hands of the general population or bread-and-butter businesses, so it’s not forcing up prices.

    The only way to increase inflation is to increase the money supply flowing to the rank and file, and the only way to do that is to get them to borrow. But for all the bs we’ve been and continue to be subjected to, there Fed and the banks have no way to persuade people or businesses to borrow when they know they can’t pay it back, except for encouraging asset bubbles that always make things worse than they were before.

  • Eddie

    Japan is shrinking. Literally. Age to dependency ratio is 62% (compared to 50% in USA) and growing every year – just 10 years ago it was 51% (USA’s was 49%).

    Given this fact, I think the Japanese have done extremely well, considering they’ve managed to keep GDP per capita and most other indicators the same, even though a far larger proportion of their population than before is retired.

  • zimscooter

    Give every tax payer a cheque for $100,000 and you will have inflation…especually if its redeemable only by spending in the issuing country!
    Have a fixed exchange rate plus QE and you are guaranteed inflation…

  • ajsmith124

    Nominal GDP is derived from a simple equation…

    Federal spending / avg federal tax rate

    For example… $4 trillion / 22% (0.22 of national income) = $18.2T

    Lower interest rates can stimulate borrowing, however, that borrowed money leaves the economy once it is taxed by the feds.

    In order to produce consistent inflation, you need large federal tax cuts and/or spending increases.

  • Larry Choi

    If Quantitative Easing Works, Why Has It Failed to Kick-Start Inflation?

    I know the answer. The Quantitative Easing (QEs) are equivalent to governments over-printing of paper money, which, the classic economic theory would say, it would kick up the inflation because there are more money than goods available for purchasing. It is this theory that guides our central planner in implementing the QEs. That is, if inflation does not kick up, than the QEs. should be continued. However the central planner fail to recognize that QEs are unprecedented actions, the classic theory does not apply.

    Historically, governments printing money to finance the military or civil projects or support the
    extravagant livings of the noble families. The money spent would eventually get into the general public, and eventually causes inflation. QEs however, the money was spent on bailouts. Bailout for those rich financial investors who took on unwarranted risk and failed. Those guys had made a bundle in the good days. QEs not only make them survive but also make them go again. Very little QE money
    goes to the general public. That is why QEs Failed to Kick-Start Inflation.

    It’s time for the central planner to look for another parameter to guide their monetary policy. No one has
    ever seriously look into the cause of of the 2008 financial crises. No one has ever considered using the market forces as a main drive to set interest rate and consider the fair and equitable returns between
    bank depositors and other financial investors.

    Larry Choi

  • Fix

    QE can work but it wasnt done properly. After QE the government should stop issuing bonds and started making loans to banks rather then issuing bond. Then only credit creations can occur. When credit creation increases, the economy increases. What is necessary to improve an economy is by credit creation. The central banks produced only 3% of money, it is the bank who produces money through credit creations. I know credit creation is not a good way to stabilize the economy. I dont like a debt fuel economy myself. But we are already in this debt fuel system that cannot be reversed.

  • TOUBI Joseph



    All citizens of the world know it. When you purchase
    securities (stocks or bonds) you naturally expect to receive an income from
    these securities. The shares pay dividends while bonds bear interests.

    You’re probably wondering what is the use of such
    basic reminders but just be a little patient and soon you will land at the
    right airport and on the right track.

    If you were offered to you in particular to acquire
    shares and bonds while forgoing dividends and interest on those shares and
    bonds, you rightly would fall into a burning anger. It is obvious that only a
    mentally ill would acquire securities while forgetting to collect dividends and
    interest generated by these securities. And you know that in general,
    shareholders are very demanding in terms of dividends and generally require
    double-digit returns on their shares. It is also obvious to you that if you
    purchase securities, you will demand a return over all the period during which
    you have been holding such securities.

    Obviously, all the world’s citizens know that the
    Central Bank belongs to … the State. However, the detailed FED’s shareholding
    for example is still not available on its website (You know, it is because
    there is a lot of democracy, good governance and transparency). So if the
    Central Bank earns income, such income rightfully belongs to the State and if
    it loses, the loss rightfully belongs to the State.

    The basic reminders above being made, let us start to
    look for the runway and be courageous because you expect fierce turbulence on

    Due to a well-organized conspiracy of silence, none of
    our “global economists” has made cases about the iniquity you are
    about to discover now.

    From 2008 to 2014, the US FED massively practiced
    Quantitative Easing (QE) in order to revive the American economic engine as it
    is said. This QE consisted of a massive purchase by the FED of private company
    shares, government bonds and corporate bonds. Cumulative amount of such
    purchases? Hold thy peace; USD 6 700 billion over six years!

    So during six years, the amount of shares, government
    bonds, corporate bonds purchased by the FED was USD 6 700 billion. The FED
    bought these securities from commercial banks, insurance companies and
    investment funds.

    Let us share at this juncture a small technical detail
    and rest assured, it is the only one.

    When the FED buys these securities from commercial
    banks it creates from nothing (ex-nihilo) a special money that Americans will
    never see nor use because it circulates only in the hands of commercial banks.
    This money is the “central money”. So for this type of redemption that did not
    cost the FED anything ( since even a basic employee of the central bank can
    simply click in two minutes on a computer keyboard to create “central money” )
    there was no new injection of money into the American economy.

    When the FED buys these securities from insurance
    companies or investment funds, the FED in this case actually creates new money
    from nothing ( ex-nihilo) and this new money actually enters into the American
    economy. Here again the FED has incurred no cost. FED has created from nothing
    the new money which is reflected in the accounts held by investment funds and
    insurance companies in the books of commercial banks.

    Now let us begin the landing phase and let us
    therefore enter into the strong turbulence area.

    The FED has spent nothing at all as we have seen. Its
    basic employee clicks on the keyboard of a computer to create both the “central
    money” given to banks and the new money given to insurance companies and
    investment funds. In return for this creation from nothing the FED became the
    owner of USD 6 700 billion of stocks and bonds that normally pay dividends and
    interest to the FED!

    You have already started understanding the landing

    Assuming that the FED hit by a strong
    distraction (normally in neoliberal economics, shareholders require
    double-digit returns on their shares) has merely accepted an average annual
    return of just 1% on these USD 6 700 billion securities, it means that
    since 2008 the FED annually garners large and growing revenues which, in full
    capacity, amounted to USD 67 billion per year. And that income is generated by
    securities that have cost nothing to the FED!

    Let us rejoice because the FED is in principle
    an institution belonging to the United States of America (we cannot
    confirm this hypothesis to you because, you know, due to abundant democracy and
    transparency the shareholding of FED is not published even on the FED’s
    website) and therefore, this FED must naturally have deposited these revenues
    from purchased securities into the hands of a chronic debtor living in
    permanent budget deficits and whose name is … United States of America. So
    logically, these revenues from the FED’s QE have probably helped paying a
    portion of the US monstrous public debt.

    Is not this very rejoicing? No there is no
    reason to rejoice and now your anger is allowed to burn freely because no
    single USD from these QE revenues has been handed over by FED to the American
    State. And to make thy anger complete, remember that the US State has a monstrous
    public debt of USD 19 381 billions and meanwhile the country really need
    any single USD available, FED is keeping for itself this annual QE revenue of
    USD 67 billion for which it has done no work. The guys in New-York are very
    patriotic, good in governance and transparency and as you can see, they are not
    trying to implement a new world order of darkness. Very nice having a central
    bank belonging to the State which is dying under a huge bondage of public debt
    while the central bank is thriving and keeping for itself huge revenues from
    securities purchased with money created from nothing! And we are talking here
    about the central bank which is the guarantor of all the overwhelming amount of
    USD circulating in the world economy.

    Just an example to illustrate things. If you
    hand over USD 67 billion to the American State annually and this during two
    years then the US State will have enough money to launch a “Marshall plan” for
    Africa trough the complete financing of the New Partnership for Africa Development
    (NEPAD). The African American devoid of his own genuine spirit has spent eight
    years in the White House without having the least idea of what one may do for
    Africa. And concerning poor Americans, agitation and Hollywood style speeches
    are the best answers the African American dwelling ( for few remaining months)
    in the White House since eight years has found. He has no idea of what FED is
    doing with the revenues from QE.

    The other guys from New-York will here complain that
    they are entitled only to 6% of FED’s dividends as private shareholders. Well,
    why not granting each American citizen this right to 6% of FED’s dividend? And
    moreover, each manager knows that it is the person managing who decides the
    real level of dividend because he can take hundreds spending decisions in his
    own favor or in favor of masonic fraters in order to eat up all the turn over
    before handing over a meaningless 94% of small dividends to the State Treasury.
    So were has gone the huge Revenue from Quantitative Easing? See the private
    guys in New-York. The African American in the White House (for few months
    again) knows nothing about this. He is devoid of spirit and externality is his
    only asset exactly like it is the case of all Black African Heads of State. Just
    watch him walk and talk as an Hollywood star. In few months time you will see
    him holding a lot of joint show tours across Africa with African Head of States
    who like him are devoid of spirit and rely only upon externality. Having an
    authentic vision and understanding of the world for their own peoples is not
    printed in their genes. So do not expect the constitutional law professor from
    Harvard to push hard for a rule allowing a portion of revenues from FED’s
    Quantitative Easing to be allotted to the financing of NEPAD. Harvard University
    gave him no authentic vision and understanding of the world for his own peoples.
    So let him come and tour accross Africa now that he will soon leave the White
    House. May be one of these days a European American in the White House will get
    interested in a Marschall Plan for Africa and NEPAD. Can we study the NEPAD
    Plan ? Yes we can, yes we can and yes we can.

    End of story.

    But the story is a worldwide one, so let us continue.

    The major central banks of the world ( FED ,
    ECB, Bank of Japan, Bank of England mostly) have since 2007 ( the beginning of
    the crisis that is still ongoing ) injected nearly USD 13,000 billion in the
    economies of the concerned countries via Quantitative Easing (QE). If we still
    assume an average overall yield of only 1% per year, it is a substantial and
    growing average annual revenue that these central banks have earned since 2007.
    At the full capacity, this substantial revenue was nearly USD 130 billion per

    Now you citizens of Japan , Great Britain and of
    the countries that are (still) in the Euro zone can check whether the central
    banks just mentioned above, deposited back the QE revenues into the public
    accounts of the concerned countries (Japan , Great Britain and countries that
    are still in the EU) which indeed are heavily indebted. I did not check this
    but is it too much assigning this small weekend exercise unto you? You can even
    pass over this simple exercise to thy beloved MPs and insist that they should
    summon thy prime minister and central bank governor and put the question to

    Shalom to all the nations of the earth.

    Apostle Joseph TOUBI




  • Joseph TOUBI


    Since November 2016 the worldwide economy seems to undergo a shortage of the American Dollar which is the reference “money” used in the overall globalized finance and in the world global economy. This state of artificial scarcity results in the rate increasing of US Dollar against other important currencies. One would have rather expected a drop of the US Dollar rate, taking into consideration the downfall of the price of oil and raw materials as well, which are most of all traded in US Dollar.
    Why is the US Dollar becoming apparently scarce, at a time village dwellers need less of it for the trade of their oil and raw materials, while deflation threatens the leading industrial countries of the world?
    It is at this juncture that your fifteen years old last born daughter, who lives in the Mecklenburg-West Pomerania and who had studied a little bit of economics will bring out again to you her good old Quantity Theory of Money and explain that it is necessary to separately consider the quantity of US Dollar in circulation in the world and it’s velocity in the world; an approach the economists often forget.
    Let’s give an ear to the advice of your fifteen years old last born daughter who lives in the Mecklenburg-West Pomerania and separately examine both parameters mentioned above, starting with the quantity of American Dollar in the world.
    To start, your eighteen year old daughter who lives in the Rhineland-Palatinate and has studied accountancy will tell you that thanks to an unbelievable regression of the thought, no genuine “money” exists in the world, but rather debt which, once produced by commercial banks, allows the debtor (public or private debtor) to disseminate a mean of payment within the national or world economy.
    No debt, no “money”; and the “money” is entailed into the world only by debt. Now in the United States, the Federal Reserve System (FED) has already exhausted its watering of Quantitative Easing (Q.E) and cannot go further, because the massive Quantitative Easing of the FED resembles more and more to counterfeit “money” and in addition to this it has achieved no economic recovery.
    So, after having organized the artificial breathing of systemic banks, systemic investment funds and systemic insurance companies, all of which are in a state of advanced clinical death, the FED does no more have the means for launching new Quantitative Easing in favor for example of foreign central banks so as to provide them the US Dollar needed by the worldwide economy.
    The total debt of the United States, including public debt and private debt is absolutely unfathomable and even the FED does not know its precise figure. It is said to be above 63 000 billions USD, more than the total M3 aggregate of USD, meaning clearly that such a debt will never be repaid! Moreover, do not rely on that African American, a real Hollywood star deprived of spirit, who still haunts for a few weeks again the White House (we are in December 2016), to give you the precise figure of the American total debt. Café’s slogans such as “Yes we can”, stand to him as a sufficient vision of the world, just like the folk dances are referred at as “culture” by the African Africans.
    To draw the conclusion on the Quantity of USD in the world, United States do no more have the means to create mountains of additional debts which will bring forth additional means of payment the worldwide economy highly needs. To copy a little bit the neoliberals, let’s say that it is a truly scientific conclusion. The time therefore has come for the United States to slow down the speed in their role of means of payment providers to the worldwide economy, because in case this country fails to do so, it will assuredly collapse under an already unfathomable debt burden.
    A minimum of isolationism and introspection is now a scientific need for this country and one remains voiceless in front of the regression of the thought that leads billions of citizens (including economists!) to think that it is Donald TRUMP, who might have invented the need for a return of the United States to an unavoidable deglobalization and to a questioning of this planetary liberalism based on the US Dollar.
    When the United States, already crushed by a huge debt, are continuously and unceasingly requested by the feudal neoliberal worldwide system to grant additional means of payment to the world economy; that is additional debt, all what they can do now is to choose one or another of the following two logic options:
    1- Option No 1: Multiplying wars all over the world, so as to freely plunder for decades, oil, mines, gas and various minerals from other countries, in order to compensate the amazing debt mountain by assets acquired free of charge. Accountants easily understand this equation called in accountancy “balance of the double-entry book keeping”. The only way to survival for this heavily indebted country is to permanently hit many other countries around the world and steal their wealth otherwise it will collapse because there won’t be enough assets acquired free of charge to balance the unfathomable debt. Suppose that you have a debt of 25 000 USD and no asset at all. Obviously you are bankrupt. But if now thy old aunt Rose gives thee for free her jewels worth 40 000 USD you are no more bankrupt. Is not it? You can just sell old aunt Rose’s jewels, reimburse thy debt and still have 15 000 USD left in thy pocket. The issue is that the United States have no old aunt Rose and are therefore compelled to permanently acquire assets free of charge all around the world through war. This is the root of the need to secretly build a global empire though GOD The LORD JESUS CHRIST has forbidden such foolishness in the Book of Daniel.

    2- Option No 2: Going back to isolationism and dismantling all the global neoliberal economic system which is compelling the country to unceasingly provide additional mountains of US Dollar to the neoliberal globalized economy; which additional mountains of USD comes from additional mountains of debts. This second option is a peaceful one and it leads to the dismantling of the current international monetary system which is based on a permanent injection of new US Dollar coming from new debt.
    In front of these two options, history teaches that United States are a nation originally built upon the pre-emption of millions of people stolen from Africa. This debt of blood has never been paid by the United States meanwhile the Bible teaches that blood illegally shed (as a matter of fact, illegally in GOD’s mind and not according to human fashioned laws) loudly cries for avenge all through millenaries. Led by his instinct, Donald TRUMP has foreseen that the world is undergoing a real mutation and therefore has chosen to place his country on the track of peaceful option number 2, so as to stop the continuous production of additional blood debt. And by an incredible regression of the thought, huge crowds of people, including economists and fake week-end pastors, stood up to condemn TRUMP. The blunt language and nonsense speeches of TRUMP will not nullify the fact that this man seems to have instinctively understood that the world is changing and by so doing, deserves a complete dismantling of the today’s international monetary and financial order based on the US Dollar.
    Throughout the planet, there is already too much US Dollar, that is too much debt created by the United States. I can henceforth notice your amazement, because you think, if the rate of the US Dollar rises, it means the Dollar is lacking. At this juncture, you may be tempted to just give up and conclude that one should let the US Dollar rate increase. Hence will you discover that magic does not function in the field of economics. An increase of the rate of US Dollar will sharpen commercial conflicts between United States and China, push upwards customs duties in the United States, slow down the Chinese economy and that of countries exporting to the United States and completely kill the countries living on oil and raw materials exportation. What to do then, since the solution is not to be found on the side of the quantity of US Dollar in the world?
    Your last born daughter hereby reminds you that it is time to examine the velocity of the US Dollar in the world.
    If you pour down a billion US Dollar in a village and a single inhabitant keeps it all for him alone, you’ll understand that the trade of the entire village will crumble and the villagers will become poor (except the sick kleptomaniac who seized for him alone, the entire means of payment). By an incredible regression of the thought, the economists had never put themselves this mere simple question: who actually makes “money” to circulate, thus actually creating the money’s velocity? The answer to this mere simple question is obvious. Only the labor factor can actually cause the “money” to efficiently circulate.
    The capital factor doesn’t know how to do this. And this, for two main reasons well studied in economics: the absorptive capacity and the Dutch disease. The kleptomaniac financial capital which requires two digits return on capital, while the world’s GDP hardly grows at 3% per year has since more than fifty years, confiscated the “money” at a global scale and has concentrated “money” into the hands of a world elite of darkness which, constrained by its limited absorptive and digestion capacity, had deployed multiple tax havens in order to avoid any fair wealth sharing. But because tax havens do not have tanks to store these mountains of “money” gathered by Babylon the great, our elites of darkness are therefore compelled to pour their excess “money” into bubbles that burst out one after another. Babylon the great is currently 0.01% (and not 1%) of the world population, holding more wealth than the remaining 99.99% of people of the world.
    Since the human individual is limited, this 0.01% of the world population has neither the intellectual means, nor the physical means to make all the rational investment and management decisions which should enable “money” to quickly and efficiently circulate over the world. A fair allocation of “money” in favor of the labor factor is now a necessary necessity all around the world. Such is the ultimate condition for a quick and well conducted ( yes conducted by the visible hand of intelligent States and governments) birth of a billion new investors around the world.
    Political democracy is nothing without monetary and financial democracy. Rebalancing the share of profits and income between labor factor and capital factor will enable the labour factor to efficiently implement “money” velocity and it is this “money” velocity achieved by the labor factor that will definitely and structurally absorb deflation and revive the global GDP growth. Yes as you see “money” velocity is an unmatchable tool which surpasses by far this stupid interest rates manipulation policy conducted by all central banks around the world. You increase interest rates (as many are urging FED to do) then you block economic growth and invite deflation. But you increase “money” velocity and behold you chase away deflation without increasing interest rates, thus enabling economic transactions to develop, meaning GDP growth. That is what the monetary and financial democracy shall do.
    Pilling up and blocking the whole world capital into the hands of a feudalism of darkness which not knowing what to do with such huge stock of “money” repeatedly initiates and inflates bubbles which explode one after another and permanently suck countries blood via the financing of public debt, inevitably causes deflation and economic crisis (disappearance of economic transactions) as it is usefully shown by the Quantity Theory of Money that all have forgotten to meditate afresh. Yes if “money” is confiscated by a handful of priests of darkness then thy neighbor won’t by a house. Thy aunt won’t buy bread at the bakery. You won’t send thy son to university and the owner of a construction company won’t feel like investing…
    The Quantity Theory of Money states that for a given amount of “money”, if you slow down the velocity of the said “money”, as it is the case when the “money” is concentrated into the hands of few satanic priests of darkness, then, a decrease of the average price level must compensate. If the prices remain high while the priests of darkness confiscate mountains of “money” then a decrease of the volume of transactions on goods and services must compensate and behold a new friend named stagflation comes and dwells in thy house.
    Is not this generalized deflation resulting from the quasi-zero velocity of the “money” confiscated by the tiny feudalism of darkness that has been threatening the industrialized countries for a decade?
    Is this not the reason for the inefficiency of Abenomics in Japan? To function well capitalism needs a billion capitalists generated by monetary and financial democracy otherwise there won’t be any “money” velocity to be expected.
    And if there is no circulation of capital then no riches trickling from the top to the bottom of the social ladder, no promotion possible for the overwhelming majority of individuals who are born at the bottom of the ladder.
    Abenomics as well as Q.E have concentrated huge quantities of capital into the hands of the tiny kleptomaniac elite of darkness whose absorptive capacity is overwhelmingly exceeded and this has resulted into a quasi-zero velocity of “money” which nullifies the huge quantity of “money” injected and causes deflation and economic crisis. The Quantity Theory of Money invites us now to consider the great challenge of all the civilizations: the velocity of “money” which the labor factor alone can achieve.
    One will need a true change of paradigm and initiate a new monetary and financial democracy that directly put into the hands of the labor factor the huge quantities of “money”. The spontaneous trickling of riches from the top to the bottom of the social ladder is the chimera which has until now justified the concentration of “money” into the hands of the capital factor which precisely cannot make the capital to circulate. It is time to throw away this chimera.
    Increasing the velocity of “money” within the worldwide economy implies true political actions aiming at putting huge masses of injected “money” not into the hands of the capital factor but directly into the hands of the labor factor. Behold the monetary and financial democracy stretching its redeeming hand to us before the final collapse comes.
    You may certainly be asking yourself where to start the implementation of the monetary and financial democracy?
    It is here that your thirty years old first born daughter living in the Schleswig-Holstein explains to you that the world elite of darkness which has confiscated the “money” has well noticed that given its limited investment and management capacity, all its bubbles explode one after another and has tried to escape this curse by overwhelmingly investing “money” in the financing of public debt. Yes public debt is the supreme refuge of the tiny feudalism of darkness which is repeatedly drowned under huge amount of fresh “money” generously provided by central bank’s Quantitative Easing (Q.E).
    Eureka, the Countries enjoying sufficient “political democracy” quickly list in their public debts all claims belonging to the 0.01% which is richer than 99.99% and declare these claims null and void. This will immediately restore public finance, enrich the citizens and launch public investments, private investments and economic recovery.
    Such a solution is above all desirable since many States are technically in bankruptcy. Furthermore, the countries enjoying enough “political democracy” set a ceiling to the income of the financial capital. Above this ceiling (Two or three times the growth rate of the GDP for instance), the surplus of big companies’ return on equity is transferred to citizens by the means of tax cuts on labor factor, public investments and additional income granted to those excluded from the Babylonian financial feudalism. In addition to all this, the central banks hereby launch new and revolutionary Q.E: the helicopter of Ben BERNANKE directly dump huge amount of fresh “money” into the hands of the labor factor, that is into the hands of populations and complete this action by requiring simultaneously that financial feudalism pay back at least part of the previous Q.E implemented in their favor without any tangible result concerning GDP’s growth and deflation erasing.
    At this juncture, we can hear the pretended economists and the so called bankers and financial experts shrieking at the top of their voices and claiming that such measures will hinder free enterprise. By an incredible regression of the thought, our neo-liberal economists have forgotten to include the human being in their equations of “economic science”. Among billions of human beings who will receive this additional income under the new paradigm will emerge millions of persons that will save and invest in order to become new capitalist entrepreneurs. Do you need a proof? Quite simple. All trough the earth, surveys carried out by credible institutions will tell you that in any given country SMEs has a number one problem: lack of funding. And the same surveys will tell you that employment is mostly from these SMEs and not from gigantic corporate companies and financial institutions. Get it?
    Is not it good, monetary and financial democracy? Yes the 0.01% is victim of its limited absorptive capacity, suffers from Dutch disease and it must be helped by the monetary and financial democracy.
    How did the human thought regress to the point of admitting that a tiny financial feudalism should increase its wealth by a rate ranging from 25% to 30% per year (Return On Equity of course) while the overwhelming majority of the population would be satisfied with an overall growth of the GDP not exceeding 3% per year?
    The global financial feudalism is trying to invent and impose on us a strange capitalism without capitalists, characterized by a motionless quantity of “money” which paralyzes any hope of progress for mankind.
    This can only lead to the revolt of the scarlet coloured beast against mystery Babylon the mother of harlots and abominations of the earth that is to the return to this old Marxist-Leninist revolution that the global financial feudalism is secretly and strangely longing after. Why is the financial feudalism of darkness so much insisting on awaking in thy spirit the taste of this Marxist-Leninist revolution? The answer is mere simple: mystery Babylon wants to deprive you of any dispensation of freedom. Your final imprisonment in darkness and satanism is its ultimate goal and the confiscation of “money” on a global scale is just the mean used to push you toward this rebellion of the scarlet coloured beast named Marxist-Leninist revolution. You know the famous dialectic of the thesis (the global confiscation of “money” by the global financial feudalism) and the antithesis (your revolt long awaited by the elites of darkness) that combine into a final synthesis (worldwide Marxist-Leninist revolution) which deprives you of all freedom and subjects you to the dictatorship of a world antichrist who, of course, will claim to finally solve the problems of mankind.
    When Apostle Paul, through three missionary journeys, laid the Judeo Christian foundations of the West and the East, he achieved by so doing the death of all the spiritual and natural feudalisms of the world and announced the resurrection of the New Born Individual who is Master over Satan, Master over the kingdom of darkness and Master over all the antichrists. Yes it is time to stop being afraid of getting free from Satan and darkness.
    Shalom to all the people of the earth!

    Rev. Apostle Joseph TOUBI