Americans can scant believe that Prosperity is beginning in their midst very soon, especially as the much loved Quantitative Easing comes to an end this month, with the final $15 Billion instalment of the Assetbacked Securities purchase by the government authorities.
Since August 3rd, 2011 when the Debt Ceiling was raised and approximately $2.15 Trillion of cash flow pumped into the U.S. economy, another $385 Billion has gone in since beginning of this year when Dr Janet Yellen took command as the Federal Reserve Chairwoman. Men are men and women are women, so in a pluralistic egalitarian democracy, Chairwoman is the correct and respected title, I would suggest.
These are figures that will be in the expanded Balance Sheet of the United States, to be reconciled as the economic momentum develops and revenues to the IRS increase. Certainly, since the October 2008 crash when the financial system had almost become a vacuum, the introduction of the bailout of major corporations like General Motors, American Insurance Group and others by the U.S. government served the best purpose, to bring stability to the economic system and restore confidence and growth. That act of faith has paid rich dividends, saving so many millions of jobs. It became the measure that turned a sliding economy into the thin V support, from whence Recovery built up. President Bush and President Obama are to be congratulated for taking those wise steps that have now flowered into a blossoming fully fledged Recovery in the U.S., and which provided the hope and stability that has created the worldwide economic Recovery, no less.
A lot of that cash flow of several trillion dollars has gone into purchase of bonds in corporations, helping to turn their 'toxic assets' into valuable assets and correcting their balance sheets, as well as providing much needed housing for people and premises for businesses. The cash flow loaned to banks has mostly been recouped, but enabled the banks loan on to businesses and entrepreneurs to create the Recovery.
It has been a win/win situation for all.
Now that the Stimulus measure comes to an end, I would suggest enough fat has been created in the system to enable the creation of a healthy number of jobs each month, I guestimate for the next 20 months or so. I can imagine anything between 200,000 to 250,000 jobs being created in the U.S. each month for the foreseeable future, taking people off welfare, enabling them to create their little part of the American dream, having the satisfaction to work with their bones and talents, earning their way in the world. Just the economic momentum built up with the extraordinary measures should ensure that, I would suggest. And a happy happy picture it is, heatmaps of happiness in all the States.
With the Oil price now tending below $85 a barrel - and the market dynamics suggest it may stay there for a few months at least - people will be having more of their hard earned cash to spend on other items than fuel, thereby creating demand and growth in all other sectors, which will register in a stockmarket that will tend upwards to 18,000 over the next 18 months or so. In the meantime, the markets may be range-bound until there is more and more confidence that indeed things are rosy, and Prosperity has arrived in our midst.
Durudarshan H. Dadlani