Thursday, September 3, 2015

9/3/15 Maybe QE 3 did go into stocks

Again, the Fed buys bonds from banks with newly created money.  The banks replace the bonds thus finding the deficit.  The government spends the money into the economy.  The money ultimately ends up as business profits less any household savings along the way.

Here is business profits percent growth year over year:



QE 3 doesn't look like it helped corporate profits.  If it didn't go into profits it didn't go into the economy and the economy wasn't helped.

If you prefer seeing with adjustments for depreciation & amortization and inventories it doesn't make any difference:



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