QE is simply a form of zombie capitalism.

The dead areas of the global economy – businesses which are to all intents and purposes already bust – are dragged from their deathbeds and their depleted value – their ‘lifeblood’ if you will which has bled away through loses – is being replaced with QE zombie blood.
The replacing of ‘real blood’ by QE ‘zombie blood’ matters because it amounts to the socialisation of loses by inventing new money, but the whole basis if capitalism is that money has value because there is only so much of it and that the world economy trusts currencies to be managed according to a fixed set of rules – QE pretends to be within the rules because theoretically it can be reversed.
The argument is that all those assets purchased using QE money could be resold back into the free market and the QE money returned to central banks, then it would be destroyed, so unravelling the QE process back to the previous state of the currency in terms of the amount of money in the system, so restoring the amount of currency in the system to what it was before QE happened.
There are several fundamental problems with this.
Firstly, much QE liquidity has been soaked up in buying government debt, debt which looks increasingly unlikely to ever be paid off, whilst through the slight of hand of recovering the interest paid by treasuries to central banks, so in effect borrowing for nothing, it is becoming increasingly plain that in the UK for example, without this ‘free transfusion’, the ‘government zombie’ would starve.

This post was published at Investment WatchBlog on November 8th, 2014.