Intro (5 pts) (about 1 page)
What is Q.E. & why is it used by central banks? (15 pts) (between 3-4 pages)
History of Q.E. and previous specific uses throughout history? (10 pts) (between 3-4 pages)(What other countries have used examples of QE in history)
Use of Q.E. in the U.S. Discuss the reasons for the Fed’s decision to implement QE I and II. Was this a good decision or bad? What has been the impact on the U.S. economy since the first and second versions of QE were implemented? (15 pts)
(between 3-4 pages and your research should provide the next steps and reasons the Fed should take your prescribed direction)
QE III’s impact on the U.S. economy. Specifically, as the “brain trust” of Obama, Yellen and Lew continued implementation of QEIII could this process drive the U.S. dollar out of the world’s reserve currency status? How did other major Central Banks responded to the U.S. action of QE implementation. What happens to U.S. enterprise’s borrowing competitiveness and the riskiness of their cash flows if the U.S. dollar is no longer the world’s reserve currency? Will the current discussion of lifting off historical interest rate lows slow or prevent the process of the U.S. dollar falling out of the reserve status? (20)
Important to understand what a Reserve Currency is and how the U.S. dollar obtained this status.
What commodities point to the U.S. dollar as the Reserve Currency?
What happens to the value of the dollar if the Reserve status is lost and how does this change the cost structure for U.S. businesses?
Impacts of higher costs on the $19T debt as lifting off of historical lows begins and the cost of the deficit climbs in the form of higher interest costs to the U.S. tax-paying base.
Tax increases on the 52% of the taxpayers who actually pay taxes in the U.S. will drive behaviors that politicians don’t consider – U.S. dollars held to outside the U.S. to mitigate the U.S. 35% corporate tax rate – How would a rational U.S. corporate tax policy allow these funds to repatriate and boost investment in the U.S.?
How did the Obama “brain trust” engineer the first down grade of the U.S. credit rating (the first time in U.S. history) Why did Obama allow this to happen? Is a weakened U.S. currency and economy better for U.S. citizens or an intentional policy before he leaves office?
The Fed Banking system is operating with reserves that are at historical highs. Why haven’t the reserve levels had a positive impact on lending in the U.S. economy?
Summary: Based on your research what do you predict will happen to the U.S. and global economies now that Obama, Yellen and Lew have engineered this financial strategy? What is the impact on the U.S. Federal Budget relative to the cost of the Federal debt after normalized interest rates begin? (10 pts)
(between 2-3 pages and based on your research what is the mostly likely outcome or probability of outcomes for the U.S. economy)
Research, Sources, References and CITATIONS (15 pts)
– Minimum of 15 academic sources
Formatting, Organization and Presentation (10 pts)
– 12 pt. font, Arial, 1-inch margins on every side. Footnotes or Endnotes are acceptable – your decision.
– This paper will take time to locate reliable sources and help you develop your understanding of QE and it’s application. If you need to talk call my cell or I can meet you on a Saturday at Starbucks on West End near PF Chang/Fleming’s
– Most people will do fine writing the paper and lose pts on the last two objectives. Please be aware, presentation and references are critical. (I want to see the research)
– It would be hard to write an “A” paper in less than 12 pages. While the range is (12-20) being on the shorter side without proper research and support for your arguments could negatively impact your final grade.
– Make sure your research is academic and use it throughout the paper!!! (Wall Street Journal = good source; Wikipedia = D or F)