Investors Warned: Step Away From the Kool-Aid - Business News - CNBC European Central Bank (ECB) President Mario Draghi has said he will do “whatever it takes” to defend the euro and Ben Bernanke’s Federal Reserve has gone to infinity and beyond in an attempt to revive the U.S. economy, but a growing number of market watchers are beginning to doubt unconventional monetary policy will actually work. “Investors don’t seem to have quite grasped the impotence of monetary policy in a world of supply-side problems. From labor market weakness to fiscal nightmares, our growing economic difficulties cannot be easily resolved simply by a wave of the monetary magic wand,” said Stephen King, chief economist at HSBC in a research note on Thursday. King believes the U.S. economy is now locked in a low growth environment that cannot be dismissed as cyclical and is accompanied by surprisingly "sticky inflation" driven by high commodity prices, themselves a result of the Fed’s quantitative easing program. “A massive increase in long-term unemployment has been accompanied by a persistent decline in the participation rate, suggesting that some workers have simply given up looking for employment. This seemingly structural deterioration has left employment depressed, activity weak and the economy seemingly unable to respond to the Fed’s financial temptations,” said King. He noted that the so-called fiscal cliff, or the confluence of tax hikes and spending cuts coming at the beginning of 2013, still hangs over the world’s biggest economy. ******************* All we need to is re-elect Obama and the investing world will turn on us. There won't be an ACA because there will be nothing to pay for it with. It's to bad the left just can't see the forest for the entitlements.