Bernanke's claims unfounded.

• Author: Nakamae, Tadashi
• Position: OFF THE NEWS

The result of quantitative easing on individual countries economic growth and inflation is dreadful. In the four years between the second quarter of 2008 (just before the Lehman event) and the second quarter of 2012, the Federal Reserve expanded its balance sheet by 34 percent per year. Yet the United States' nominal GDP and GDP deflator rose by 2 percent and 1.5 percent respectively in the same period. Thus. real GDP grew by only 0.5 percent.

In the same period, central banks in Great Britain, Europe, and Japan were also printing money as fast as they could. The Bank of England inflated its balance sheet by 40 percent, the European Central Bank by 20 percent, and the Bank of Japan by 9 percent. Meanwhile, Britain's nominal GDP rose 1.5 percent. Europe's by 0.6 percent, while Japan's fell 1.5 percent. Britain's GDP deflator increased by 2.4 percent. Europe's by 1.1 percent, and Japan's deceased by 1.4 percent. This led Britain's real GDP to fall by 0.9 percent, Europe's by 0.5 percent, and Japan's by 0.1 percent.

By comparison, Japan's results, while bad, are not dire. This contradicts claims made by Ben Bernanke, chairman of the Federal Reserve, who said his "aggressive" approach to quantitative easing would be far more effective in the short- to mid-term than the Bank of Japan's "timid" approach. However, as the above numbers show, this is not the case. Rather, the opposite is true.

During the above period, the Japanese yen appreciated against the U.S...