The Quantitative Easing 2 by Federal Government

The Quantitative Easing 2 (QE2) by the Federal Government

The Federal Government is going for QE2 in November 2010. During QE1 in 2008, it has printed US $ 1.2 Trillion and shoot up its monetary base from US $ 800 billion to US $ 2 Trillion.

But the fed is still unhappy with the unemployment rate and the inflation rates in the economy and that’s why to boost the economy and reduce the unemployment rate in the economy, it is going to print more billions of dollars out of thin air.

Unfortunately such kind of Quantitative easings will affect the people living paycheck to paycheck. This is because their salaries won’t increase in comparison to the rate of inflation and the rate at which the new money is being printed in the economy.

But well, the business owners and investors will be in more favourable position in such kind of situations. Because they can save more in taxes by using the power of the corporate structure.

Because of QE2, the price of stocks, gold, commodities and all the other assets all around the world will shoot up and it will be next ti impossible for the average people to invest in these assets.

And yes, the people living on the pension plans and fixed income instruments (Bank Fixed Deposits..etc..) will be suffered the most. Because the inflation will shoot up after QE2 and the fixed income of the people living on their pension plans and retirement funds won’t increase that much.