Quantitative Easing (QE) put the world into unchartered territory.  It is like being in the open seas alone to learn that your boat has sprung a leak and all you have is your finger to plug the hole leaving your boat to float freely - you just don’t know how it will end. 

The easy part of QE was forcing money into the system by printing money out of thin air to purchase bonds from the banks.  This was supposed to be a temporary measure used to free up cash to lend by pushing down interest rates, boosting the economy in the process. We admit that it worked, but only for a short period by pushing interest rates to historical lows.  This allowed people to rush out to buy stuff they didn’t need like larger homes, Alberta sized trucks, first class trips and other stuff they cannot afford under normal monetary conditions.  The end result has been debt at historical highs.  

Monetary theorists believed QE would make all corporations rush out to borrow and invest in new assets. Unfortunately, this plan has backfired because management understands their targeted customers have little money left over after they pay their monthly bills.  Instead, corporations are taking advantage of today's  interest rates by parking the borrowed funds in the bank for future needs.  In most cases, the end result has been an improved corporate balance sheet. The Central Banks are against this because they want all that borrowed money spent.

Governments, on the other hand, have been listening to these so called experts and are rushing to max their line of credits.  In Canada, our debt by decades end will soar by over $150b, which Ottawa will end up wasting most of.  Sadly, this nonsense is going on around the world.  Only one country is cutting spending, paying down debt, and building up a huge currency and precious metals reserves;  this is Russia.

Zero interest rates are destroying savings for the Boomers, which represent 30% of our population and claim nearly 85% of the wealth.  Today, a savings of $100,000 results in an after-tax income of around $500, or enough to feed a family for 1.5 months if their diet consists of cat food.  As a result of this failed policy, the saver is being forced into spending the capital or cut back on ones spending, both of which shrink the economy.  Spending by those who have savings will not increase until rates return to 4% or higher. 

After 6 years, Quantitative Easing has been a complete failure, something the central bankers, economists and politicians will never admit to.  The end result has been interest rates are slowing the world economy.  The longer we are stuck with zero interest rates the weaker the world economy will become.

Pumping money into the economy was easy. The painful part is going to be pulling that money out of the system, because the Central Bank must sell these bonds back into the market which will push down the value and increase interest rates in the process. Whenever the Central Bankers and economists suggest new economic policies, grab hold of your wallet because it is going to cost you huge.  Stock markets will not return to bullish mode until corporations start investing their war chest of cash.  This will not occur until the consumer has the disposable income to buy their products.

Ben Bernanke joked that "the problem with QE is it works in practice but it doesn't work in theory."  Once we try to unwind QE Central Banks will learn that it worked in theory but not in practice.