Investment Office Logo

...on Quantitative Diseasing in America.

Ken Fisher
Fisher Investment, Capital Markets Update: Summer 2017

"What we said for years, going back to the beginning of so called Quantitative Easing in America was that it was not Quantitative Easing, it was Quantitative Diseasing. And that the Quantitative Diseasing was actually bad, and so many people thought (because I don’t think they understood how monetary policy really works) that we had an expansion in a bull market because of Quantitative Easing, which was in fact a flattening of the yield curve at the time, such that they believed that this was stimulative, and what we said from the beginning was no, it is not stimulative, it is never stimulative, it is not inflationary, they thought they were printing money, we said  no, the quantity of money is not actually increasing, go and measure, it is increasing at the slower rate of any economic expansion in modern history, on an inflation-adjusted basis, any way your measure it; and that Quantitative Easing as it is called is always contractionary and deflationary, and that we’re having a bull market and economic expansion DESPITE it, not BECAUSE of it.

Once you grasp that notion, the notion of the ending of it was bullish, and the notion of the unwinding of it should be bullish."