Some economists and traders see other positive economic effects in QE in the United States: The Fed buys Treasurys, which increases their demand and keeps their yields low. Since Treasurys are the source of long-term interest rates, it also supposedly keeps auto, furniture and other consumer debt rates reasonable. This is true for corporate bonds, as well, so businesses can expand with less worry.
Then there are the risks of relying on QE. Some economists believe that QE only benefits wealthy borrowers. By using QE to inundate the economy with more money, governments maintain artificially low interest rates while providing consumers with extra money to spend. This also can lead to inflation. Economists quibble as to whether inflation now exists. But worldwide food prices have been going up, gas prices are again on the rise, and various other goods and services cost more.
QE can also have the reverse effect on economies: Central banks can simply decide to use the extra funds to increase their capital reserves in their loan portfolio, not passing on the reduced rates to consumers. In the United States, the Fed cannot force banks to lend to anyone. QE can, therefore, possibly lead to social unrest if the rich and large corporations can borrow at the lower rates, leaving average citizens in their wake. QE also increases the deficit, which impacts all taxpayers, but has less effect on the wealthy.
In sum, QE has accomplished some of its objectives but dropped the ball on others. Lethal subprime mortgages were removed from banks’ balance sheets, it has helped stabilize the U.S. economy — for the moment, and it has kept interest rates low enough to temporarily revive the housing market. But if, for example, QE has run its course, it leaves behind low interest rates that give central banks little ammo to battle the next economic downturn.
The question remains as to whether QE has gone too far worldwide. Can the United States afford a $30 trillion debt, even with low interest rates? Is the current worldwide social unrest — with food inflation and a wealth gap — an unintended byproduct of QE lending practices? In other words, are the massive corporate stock buybacks by cheap money from QE and low interest rates from the Fed — that have fueled the decade-long stock market rally — a success or a failure?
Time, of course, will tell.
https://www.forbes.com/sites/forbesfinancecouncil/2019/04/12/quantitative-easing-massive-success-or-massive-failure/#68466056133a
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