QE3 is supposed to work where QEs 1 and 2 did not.  The beneficiaries will be the large companies so I am not surprised to see the stock market surge in the light of further stimulus.  But this will benefit the small privately held firm very little.

The reason is simple and for anyone in the private sector it is obvious. What is restraining small business growth is the expectations of higher taxes on investment, laws and regulations that discourage growth such as Obamacare, the lack of credit, the destruction of the equity values in homes, and tight credit.  None of this will be solved by lower interest rates.

Large publicly held companies who have credit will see a boost in their bottom lines as their borrowing costs are reduced, but the uncertainty will still be a restraint. Dodd Frank makes it harder for banks loan money to small businesses so what good is creating money that banks can’t lend?

The irony is that this administration which has criticized the larger companies in the corporate world is doing its best to help them at the expense of the smaller companies.  Larger companies are also better situated to adjust to the greater complexity of regulation because they have the infrastructure to buy health insurance more cheaply and comply with the stream of regulations that is turning into a gush.

Small business is on strike. Capital is leaving this country for investment overseas. For the first time since WWII there has been a net outflow of capital from our shores.

The Fed can no longer cover for the reckless fiscal policies.  QE3 may give us a sugar buzz like the last ones did but we are reaching the point where we are trying to give a sugar buzz to a diabetic.  It may only make the host sicker.