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.
B). Going to go down as one of the most brilliant financial maneuvers in all of history, IMO.
QE = inflation
QE has become necessary. However you can only kick the can down the road so far before inflation eventually collapses the dollar and its worth zero
Q. What do the majority of Americans think of the Federal Reserve policy of Quantitative Easing?
A. Huh?
I don't know, Banks are getting the money at nearly 0%, yet my credit card rate hasn't changed.
Quantitative Easing is an artful way to say 'The Fed is printing money like nobody's business.'
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.
^^^ Tea Party in the White House. That won't happen.
A The economy is still growing too slowly and unemployment is too high. Inflation is low.
Many good points above....
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.
I read a comment that the silver in a 25¢ silver quarter from when the minimum wage was 25¢ an hour is worth slightly over $23 today. That's just the value of the raw silver, not the value of the coin to a collector. That's how much inflation, aka QE, hurts the average citizen. The biggest theft of real value from American citizens was when one of our Presidents, I think it was Nixon but it might have been Johnson, got rid of the Gold Standard so that a dollar treasury note, what we call a dollar bill, could be exchanged for a set weight in gold.
^^^ It was Nixon. But the gold standard is not the answer to anything.
Get elected and change things.
^^^^Another epic statement
The irony is that, if the Euro-zone hadn't of turned out to be fairly fucked up, QE would have triggered a run on the dollar (to the euro). Very lucky the European let's all welch on each other fuck up coincided with the US don't worry about the NINJA loans fuck up. But really, the Fed had no choice, they had to cover the banks' NINJA loan losses at least in part.
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.
The Gold Standard kept inflation under control, and inflation is the biggest theft of wealth from average people that's ever existed. It prevented the government from printing money without having the gold to back that money up.
QE is and was a short term solution to a long term problem and it just made things worse. The most pathetic part of all of this is the idea that Democrats hel;p the poor and middle class and Republicans help the rich. I see Democrats crowing daily about the great stock market, which is only great because we took the future earnings of the next two generations and used it to prop up this fake market. Obama's Wall Street buddies got rich while unemployment ranged between 7-10% under Obama. The poor got poorer under Obama; he created more debt than every President before him combined; he drove more people out of the workforce than every other President combined, but he made sure that Wall Street and the rich quadrupled their wealth. Bush who gets a bad rap gave us 4% unemployment with a Republican Congress; 6% with a democratic Congress and the highest black home ownership rate in history. I have money so I benefit from the hated Obama, but I do know that the poor who vote for him are the dumbest people on the planet.
B mostly.
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.
Spending twice what your revenue is (and that gap not on track to ever close) isn't sustainable. Both the left and the right are screwing us.
Skibum nailed it
The Fed has been increasingly meddlesome in recent decades. What is different about this round of QE is that it is the first attempt by the Fed to control long-term rather than only short-term rates. I agree that this experiment will not end well.
