Tags: Cantor Fitzgerald | Tax Relief | QE2 | Boost | Economy

Cantor Fitzgerald CEO: Tax Relief, Not QE2, Will Boost Economy

Thursday, 30 Jun 2011 01:00 PM

The Federal Reserve's loose monetary policies have been great for big corporations' balance sheets, but the individual consumer is still suffering and would benefit more from tax relief, says Shawn Matthews, CEO of bond-trading firm Cantor Fitzgerald.

"Tax relief for individuals would do immense greatness for the economy at this point," Matthews tells CNBC.

The Federal Reserve is wrapping up a $600 billion bond buyback program, known as quantitative easing, which was designed to fuel economic growth in part by boosting the stock market.

The program, known as QE2, has been great for big companies, who are flush with cash, but that money hasn't reached consumers and small businesses, which are still finding it tough to find credit.

"QE2 was essentially a program designed to create a lower risk-free rate, which actually helped corporate balance sheets. That was great at a time when our corporations needed help," Matthews says.

"The problem is we haven't gotten to the consumer, to the individual balance sheet, and if you look at credit that the individual can get, it's still incredibly expensive and very hard to come by."

The U.S. real estate market, meanwhile, continues to serve as a weather vane for household balance sheets.

"If you look at the real estate market, it still hasn't bottomed, and we're probably a year away from that happening. The biggest asset on an individual's balance sheet is probably their home."

Many economists believe quantitative easing has done more harm than good.

Of 49 economists surveyed recently by The Wall Street Journal, 20 of them, or nearly 41 percent, considered QE2 "unsuccessful," meaning they thought the costs exceeded the benefits, the newspaper reports.

When asked questions about the specific effects of QE2, 25 percent of economists say it created "unhelpful inflation worries," while another 19 percent said it "didn't have much impact on anything."

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The Federal Reserve's loose monetary policies have been great for big corporations' balance sheets, but the individual consumer is still suffering and would benefit more from tax relief, says Shawn Matthews, CEO of bond-trading firm Cantor Fitzgerald. Tax relief for...
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