You buy $100 of stocks expecting $5.70 of growth and income/year, writes GMO's Ben Inker (go to pg. 18), taking aim at the wealth effect. QE comes along and the stocks are now worth $116, but still with an expected annual return of $5.70. What Fed wealth effect models don't seem to get is the overwhelming majority of equities are held with these sorts of assumptions. Can a day-trader buy a big screen TV? Yes, but endowments can't raise spending, a saver cannot buy a larger annuity.