The share market is ignoring it, but the American economy is not performing as expected. And in Europe, France has suddenly emerged as a danger.
If both these trends continue then 2014 will be bumpier than markets expect.
The main objective of quantitative easing was to stimulate the US housing market, which in turn would drive the wider American economy.
Yet in October contracts to buy existing American homes fell for the fifth straight month and are down 1.6 per cent on October 2012.
The simple truth is that American banks are using the liquidity created by quantitative easing to fund hedge funds and other speculative pursuits. They are refusing to make it easier for Americans to buy houses by requiring large deposits.
With so much of the quantitative easing money going into speculation this is driving the US stock market but not the real economy. Indeed as I explained last week (A world-class flaw in the Fed's jobs plot, November 21).
Many American businesses are holding back hiring people and investing because they are frightened of the effects tapering quantitative easing will have on the US economy. No one really knows the risks the hedge funds have taken.
US companies are lifting their profits by reducing their costs and improving productivity rather than investing and hiring to expand.
What we do know is that a lot of the US quantitative easing money has been transferred to Europe to help fund European banks. In turn those banks have bought Spanish, Italian and other high-risk bonds.
And QE money has also been pumped into the European share market. But just as in the US, the QE money is not getting into the real European economy. The figures coming out of France – Europe’s second largest economy – show that whereas there are small rates of improvement in most parts of Europe, led by Germany, France is slipping back. The French have done little to improve their situation and it is showing.
But thanks to US quantitative easing money the French stock market has been rising.
Despite all this I remain a long term American optimist. Next year, probably towards the end of the year, the US will start winding back quantitative easing. The compulsory spending cuts will have brought the US budget deficit down to low levels and Americans will suddenly find they have an economy that is highly productive and is driven by cheap energy, low cost labour and technology.
That’s when the real US recovery starts but getting there will be bumpy.