US monetary policy has lost its power

Comments on Robyn Harding "Bernanke is running out of magic bullets" 30/07/2012 http://www.businessspectator.com.au/bs.nsf/Article/US-Fed-Reserve-Bernanke-stimulus-eurozone-pd20120730-WNSLX?OpenDocument&src=sph&src=rot


Conventional monetary policies have done its appropriate jobs in managing the US economy and it is highly unlikely for it to be capable of doing more as long as the US economy is concerned.

Any further QE or lower the 0.75% rate will not produce any measurable effects on the economy, apart from benefits the banks and those financial institutions to make money by pushing the stock market higher.

It is now for fiscal policy to take its responsibility to put the US economy in a long term path to health.

Besides, the US and EU all have to adjust to the challenges out of the rise of large emerging economies and that means their relative living standard will not be as higher than the emerging economies as in the past.

That also means the real wage in those countries have to fall further to be internationally more competitive vs the emerging economies.