Quantitative Easing Has Cost Americans Over $1 Million Per Job Created
Speculation is rampant over whether or not the Federal Reserve will try to give President Obama a boost in his re-election chances by pumping some short-term stimulus into the economy with QE3.
But Jeff Macke points out that, using the numbers from the Fed itself about the cost of QE1 and QE2 and the jobs supposedly created (probably not realistic), the stimulus impact of quantitative easing isn’t worth the cost.
In his Jackson Hole comments last week Bernanke said the first two rounds of quantitative easing had led to the creation of roughly two million jobs. That’s almost certainly a stretch, but let’s run with it.
QE1 cost $1.7 trillion. QE2 cost $600 billion. Using Bernanke’s math, it cost the Fed $2.3 trillion to create two million jobs. According to SSA.gov the average annual salary in the U.S. for 2010 was $41,674.
By the math given to us by Bernanke himself, each job created by QE has cost the Fed $1,150,000. In equity terms, jobs are trading at 27.5x top line salary (revenue). That’s lunacy — even by government standards.
A million dollar per job supposedly created. That’s about as good a track record as President Obama’s “stimulus” spending spree.
But the goal here isn’t so much the long-term health of the economy but short-term economic activity that could serve the President well in his re-election bid. QE3 would likely cause a rally in the stock market that would last at least a couple of months, or just long enough for Obama to win himself a second term.
Tags: ben bernanke, quantitative easing
