We have yet to pay a painful price for QE

The ZeroHedge reports, Chief Economist Richard Koo of Nomura in a recently released report titled "The Calm before The Storm," said in a research report, QE policy not only failed to clear a path and direction, and we have yet to pay a price for an unprecedented QE policy.

Mr Koo in October 2013, the United States Federal Reserve (Fed) warned that Mr Koo believes that United States economy Fed QE policy prevails under the stimulus, probably already in the so-called QE Trap.

From the figure, you can see, after the bursting of the asset bubble, implementing national compared with States that do not implement QE QE, QE country long-term interest rates in the early fall when greatly, this will make the QE will be able to receive earlier economic recovery of the country.

QE:

Under the stimulus of QE, QE country over time, economic recovery and expectations of future inflation to start rising, long-term interest rates will start to rise.

And in the process of rising long-term interest rates, the market and the housing market is very sensitive to interest rates, such as industry, demand will begin to slow down, resulting in economic growth began to slow.

After after a rise in long-term interest rates, the market for future economic strength and concerns over inflation growth recovery, as well as the Central Bank gradually tighten monetary policy to tighten QE easing previously released on others money, long-term interest rates would come as QE country in volatile, QE country's economy will fall into a "QE trap".

Non-QE countries:

In contrast, States that do not implement QE trend of long-term interest rates is more smooth, but will be slower than QE economic recovery.

But these countries do not have to worry about Central Bank must tighten up money from the market, so when the economy begins to recover, after long-term interest rates began to level off, the market nervousness will dissipate, investor confidence will begin to increase.

From Richard Koo QE trap theory can also be clearly seen in the picture, when when the economy begins to improve, than QE not QE's long-term interest rates long-term interest rates still lower, also on behalf of the non-QE countries economy recovery will be able to come from behind.

Richard Koo:Fed and market pull.

Chief Economist Richard Koo of the Nomura warned again on the 1st on the market.

Mr Koo noted that from the Fed into raising interest rates after cycle start tightening monetary policy, the market then tumbled, and Fed can delay raising interest rates to stabilize the market, but the Fed also worry about their actions behind the inflation growth, pulled dilemma for Fed and the market situation, and the market will continue to fall into severe shock.

Book of Economics has not caught up with changes in the world economy?

Richard Koo also pointed out in the report, Macroeconomics of books I'm afraid has not caught up with the current changes in the world economy.

Because in the 1970 Japan economy catch up with Western countries, global manufacturing will begin to flow into Asia, while at the same time none of these developed countries asset bubbles appears to their situation, which has led to the development of national balance sheet recession in the past.

But economics does not keep pace with these changes, economists still rely on the old economic models and theories, models and theories I am afraid the 1950 and 1960, effective in the past, which is why many economists cannot predict the main causes of the 2008 financial tsunami, as economists did not pay attention to the private sector only in debt reduction, rather than expanding profits.

We have yet to pay a price for QE: The 2008 Nobel economics prize winner Paul Krugman said, the Central Bank's inflation target combined with QE, will be able to significantly reduce real interest rates.

But Krugman has recently acknowledged that this approach to economic recovery, I am afraid only a temporary solution, the root. Concluded in the report by Mr Koo, due to QE there is no direction and a clear way out, the process of normalization of the Fed pushing interest rates that the market does not want Fed to continue raising interest rates, Fed will begin pulling and markets, leading to market volatility, as is currently the case.