As QE2 Fades, Debate Swirls Around QE3

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LOS ANGELES-As GlobeSt.com blogger Dr. Sam Chandan recently pointed out, concerns about the lackluster pace of the domestic recovery and spillovers from disruptions to growth in Japan, the Euro Zone, and the Middle East, coincide with the planned conclusion of the Federal Reserve’s second quantitative easing (QE2) program. Chandan, who is president and chief economist of the newly formed Chandan Economics, points out that, as a result of this upcoming end to QE2, questions about the usefulness of policy intervention are receiving new attention. Should we extend the Fed’s purchases of Treasury securities? And if so, what are the attendant risks of growing the central bank’s balance sheet even further? Would QE3 be a waste of money?

The question is material for the commercial real estate markets. Guy Johnson, president of locally based Johnson Capital, tells GlobeSt.com’s Natalie Dolce, “No one will really know how much of a waste the $600-billion QE2 was, because maybe we avoided a complete disaster.” Despite whatever QE2 did or didn’t accomplish, unemployment remains a persistent problem, along with lack growth in both wages and consumer confidence.