How The Fed's Current Quantitative Easing Measures Exacerbate Wage Stagnation, Poverty, and Every Increasing Socioeconomic Disparity

The United States' solution to essentially every recession within the past few decades was and is presently to create new currency and requisition debt to increase liquidity in financial markets by injecting the money directly into repos, corporate bonds, and now company shares. The United States Federal Reserve is printing $150 million every day as the president recently signed an unlimited bond purchasing agreement with the Federal Reserve.

Consequently, the U.S. stock market will persist to appreciate to ever greater valuations.

Examine how it almost doubled their balance sheet in 2020 alone…

Or, let’s zoom out, from 2002 to 2020…

Now examine the average hourly earnings of all employees…

The Fed septupled its balance sheet from 2006 to 2020, and average hourly earnings of all employees only increased 33% during this period.

Wages remain stagnant while as a result of excessive inflation or currency creation, the cost of goods continually increases.

An interesting fact from US Department of Agriculture’s website:

“The food-at-home (grocery store or supermarket food items) CPI decreased 1.0 percent from June to July 2020 and was 4.6 percent higher than last July.”

Thus, if the Fed refuses to institute quantitative tightening measures, then riots and protests may ensue if wages do not increase.

Concurrently, the U.S. Stock market will appreciate continually ever more as the value of each dollar persists to decline.

This is eerily reminiscent of Venezuela whose economy is suffering a catastrophic recession; however, due to the increase in liquidity, or new currency being injected into their stock market, it continues to appreciate.

Venezuela’s Bursatil stock index, indexed to 0 as at Sept 2018 to present…

Ostensibly, it appears as though their stock market is in a bull market.

However, when you examine the the index in terms of USD value

It seems like the implementation of poor monetary policies is causing dilution of currency value.

So, even if equity markets are doing really well it doesn’t actually mean that you are actually holding your head above water in “real” terms. Thus, despite the purported performance of equity markets, if we examine them in terms of their currency value, a recession is obviously latent within the nation's economy, but obfuscated by the fed's quantitative easing measures.

A hyper-inflationary environment seems imminent as the globe, not exclusively the U.S. pursue erroneous quantitative easing measures to conceal the true states of their economies and alleviate the fears of investors and their corporate constituency. If you're invested largely in tech stocks, or popular indices like NASDAQ or S&P 500 which are primarily composed of technologies companies, then I recommend liquidating and investing your money in a all weather-proof portfolio or alternative investment strategy that prevails in any market environment. If seeking ideas, please read past and future blog posts in addition to this sites reference materials pages to further educate yourself.