OT: Quantitative Easing ?
Papi_Chulo
Miami, FL (or the nearest big-booty club)
There seem to be some financially educated folks on this board – do you have an opinion w.r.t. the Fed's QE?
a) still necessary?
b) was necessary but no more?
c) was never necessary or a good thing?
d) any other comments – it's good – it's bad – etc.
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21 comments
2. Convince Fed Chair and Board and other major central banks to "print up" nearly $5 trillion in new money.
3. Profit
A. Huh?
I agree with Dougster that this has been a brilliant financial manoeuvre. BUT, it is only a manoeuvre, the game is not over yet, not by a long stretch. Bernanke was very crafty to come up with this cheeky way to fire up the printing presses when the US banking system was mere nanoseconds from seizing solid. It is the classic Keynesian method to stimulate an economy in the midst of a depression.
However, I fear that Bernanke has handed a chalice to Yellen that is as poisoned as the chalice that Bush2 handed to Obama. That huge inventory of US Gov't T-bills and bonds on the books of the Federal Reserve is a massive neutron bomb waiting to explode in Yellen's lap.
Rising interest rates are inevitable in the improving US economy. The consequences to that huge multi-trillion dollar Fed inventory of US Gov't debt in a rising interest rate scenario are horrific to contemplate. Ms. Yellen will have to demonstrate some very artful footwork.
A sublime piece of poetic justice would see a Tea Party Republican candidate elected to the US presidency in 2016.
I will be stepping up my purchases of physical gold in the next few years.
The economy is still growing too slowly and unemployment is too high. Inflation is low.
QE is bad for main street Americans because it means inflation and punishes savers. QE is also bad because the current bull market in stocks isn't really based on strong economics, it's based on a convoluted state of the gov't propping things by printing money.
IMO, necessity is a difficult question. The banking crisis lead to a lack of liquidity at the height of the crisis. So the Fed was caught between a rock and a hard place at that point. But, the Fed should have cut QE off once it was obvious the free fall was over and that QE wasn't freeing up lending to the public.
Although, someone has to cook the books when you are spending way above revenue with no end in sight.
The gold standard was retarded. No country would ever really let you freely convert the paper notes into gold. It's just as make-believe. It just makes it harder for a country to maintain price stability, since it multiplies general price variations by gold price variations.
QE has dragged out the recovery but we forget that the US economy was on the verge of complete collapse in the last days of W's presidency. Obama continued the Bush policies, and if he had been able to double the spending we'd be much better off economically today.
People lose sight that not all government spending is "bad". The money goes to actual people who then contribute to the economy because we're a nation of spenders.
But the time has come to ease the QE...yes we will have some inflation but that's not a bad thing either. How can a bank make money with a 4% mortgage? They can't, so they buy stocks. If rates were 7-8% housing would boom, and as housing goes so goes the economy.