The U.S. Is Printing Money Up To its Neck Without Seeing Any Rise in Exports

From the outset of the economic crisis, Obama’s advisors as well as the Fed have been trying to jump-start the economy by injecting more money into the market. They did this with two expectations:

-The money would be given by the banks to consumers, producers and investors. This would increase demand, which would increase production to meet the demand. This would mean new jobs and overall economic growth.

-With so many dollars printed, the value of the dollar would decrease. This would help bolster America’s exporting capabilities, reducing imports and increasing exports. This speeds up production and growth.

Between 2008 and 2010, the Fed added one trillion, 750 billion dollars to the market through its purchase of securities. However, here we are at the end of 2010: Have these one trillion, 750 billion dollars done any good?

Has the American consumer, producer, or investor started to consume more, produce more or invest more? Have imports slowed down and exports picked up, reducing the trade deficit? Essentially, has growth begun in the U.S. economy?

Up in Smoke?

According to indicators published by the federal government, the money injected into the economy so far has not accomplished its aim. National income data shows that growth is small and slow, to the point of being imperceptible. Private consumption just doesn’t seem to be increasing. Investment is still below 2008 levels. Despite the fall of the dollar, exports are not increasing. There is only a slight decrease in imports. The trade deficit is not decreasing. Finally, unemployment cannot seem to be pushed lower than 10 percent.

Despite all this, the Fed plans to pump 600 billion more dollars into the economy by June of 2011 in order to support growth. Taking into account the slow rate of recovery, it was announced that to open the lines of credit and prop up an economy struggling with unemployment, the Fed will have to pump 75 billion dollars per month into the economy through purchases of treasury bonds and bills.

The one trillion, 750 billion dollars that have been pumped into the market so far have gone up in smoke. Let’s see what good the next 600 billion dollars does.