I think it is amazing how so few commentators have linked QE to the unrest in the Middle East. Most of these countries are food importers and high oil prices don’t do much for countries other than Saudi Arabia who can shower cash on their unemployed young men to quell discontent.
The substantial increases in imported food in North Africa and the Middle East are far more important than some nonsense about democracy. If you’ve read the Pew Reports on what Egyptians, Libyans and Syrians actually want from a government you’ll find it’s not democracy.
With the Federal Reserve announcing QE^infinity recently, and aiming for nebulous targets like a 6.5% unemployment rate as reason to change policy directions, what will the unintended consequences of quantitative easing be this time?
We have no idea. And that’s the problem with globalisation. We have no idea how the world being so connected will play out over the coming decades.
Putting all of the benefits of globalisation aside, the world has become so inter-linked that we have no idea what event in what country could trigger other bad events in other countries.
To paraphrase Donald Rumsfeld, the “unknown unknown’s” are really scary. Just think about what quantitative easing has done so far – reinforce wealth inequality and those who hold financial assets.
What would happen to New Zealand if the proceeds of quantitative easing wash up on our shores in the form of bankrolling another housing bubble? Oh wait.