When Ben Bernanke introduced the latest batch of quantitative easing (QE2), he made it pretty clear that the plan with this round, just as with the first round, was that the flood of new money should push up asset prices and kick start the US economy via a consequent rise in confidence, and, hopefully, house prices.
The first bit seems a given. QE1 led to a huge boom in financial assets, and QE2 is heading the same way. But the second is not. QE1 clearly did nothing for house prices. And for most ordinary Americans it is the negative wealth effect of being in negative equity or if not that, having lost 40% of their paper property wealth that is stopping them shopping.
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