Quantitative Easing - impact on Singapore

Someone asked for my views about the impact of quantitative easing on the Singapore economy. I must confess that I am not an economic expert but I believe that most economists are also unsure about the likely impact of these measures.

My own views are pessimistic, as expressed in this article about the Global Economic Turmoil. The low interest rate, stimulus package and quantitative easing adopted in America is causing asset bubbles around the world. In the short term, stock markets and property prices have shot up, but these are likely to cause a lot of problems in the months ahead.

America hopes to create more jobs with these measures. They expect the jobs to be created with the recovery of economic growth. I expect that these measures will fail to create the jobs, due to globalization, wide disparity of income, uncertainty of the future and other factors. If America goes into a double dip recession, it will reduce demand for the rest of the world and cause problems in the emerging countries that depend on consumer demand in America. It does not make sense to ask give money to a debtor to spend.

The long term solution is an economic system that can provide jobs for everyone who is willing to work. This will not come with the current economic structure, which is based on competition. It requires a new approach to distributing the work opportunities in a fair and regulated market, which will continue to be a free market in giving choice to workers and employers. My ideas are contained in this article on Creating Employment.

In the short term, the asset markets are booming, due to cheap money. You can join the party for the fun. But, like all bubbles, the pain has to come afterwards.

Tan Kin Lian