QE2 BOOM OR BUST?

While so many politicians would have you believe that the increase in the number of jobs in the past year is a direct result of Quantitative Easing (QE2), making it a success, a look at the numbers paints a very different story.

According to an article I read recently, the number of jobs increased by 700,000 during QE2.  Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created.  I figure I could retire quite comfortably on about a third of that amount.  So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs.  Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes.  Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses.  Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs.  Why not apply the same method on a national level if you're going to spend the money anyway?  Something our political leaders may need to look into.

So, QE2 Boom or Bust?  I'd have to say it's a bust.  $850,000 is way too much to pay for creating a single job and if you consider the added burden of inflation, if I had been involved in passing this legislation, I don't think I'd be so quick to pat myself on the back.    (For more on this subject, click the title above for a link to the article on Smart Money.com)