QE3 looming

pmbug

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Emphasis and markup are my own:
The Federal Reserve will roll out a third round of quantitative easing — asset purchases from banks — and steer the economy away from a fresh recession, says Goldman Sachs Chief Economist Jan Hatzius.
...
Get ready for QE3, Hatzius tells Forbes.

"We expect QE3 in six to nine months, probably in a seamless transition from Operation Twist," he says, referring to Operation Twist, another Federal Reserve policy under which the Central Bank shuffles its Treasury holdings around to keep long-term interest rates low.

With QE3 and other loose monetary policies, the U.S. economy should grow 0.5 percent in the first quarter of 2012, narrowly avoiding a recession, Hatzius says.

"It won't be largely effective, but it helps at the margin," Hatzius says, adding that "the idea of monetary easing in response to a weak economy has been the right strategy, and it has been useful."
...

http://www.moneynews.com/Headline/Hatzius-Fed-recession-QE3/2011/10/17/id/414679

Sure it has Mr. Goldman Sachs. The question is... for whom?
 

pmbug

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When we first reported on Bill Gross' massive surge in duration and accelerated purchase of Mortgage Backed Securities a week ago, we said, "That's either what is called betting one's farm on Operation Twist, or, betting one's farm that the next thing to be purchased by the Fed in QE3 or QE4 depending on how one keeps count, will be Mortgage Backed Securities." It was the letter. Confirmation that Bill once again frontran the Fed comes courtesy of Daniel Tarullo who in a speech at Columbia University, talking about the labor market of all things, just said the following: "I believe we should move back up toward the top of the list of options the large-scale purchase of additional mortgage-backed securities (MBS), something the FOMC first did in November 2008 and then in greater amounts beginning in March 2009 in order to provide more support to mortgage lending and housing markets." ...

More: http://www.zerohedge.com/news/bill-...member-tarullo-calls-restart-mbs-monetization

Daniel Tarullo is a Fed board member.

:popcorn:
 

DSAbug

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I read that article yesterday evening. Making a move like this would be incredibly aggressive.

I also think something like this could pass through relatively easily politically. The public is clueless about the MBS market and really wouldn't complain about having lower mortgage rates.
 

pmbug

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Federal Reserve Vice Chairman Janet Yellen said a third round of large-scale securities purchases might become warranted if necessary to boost a U.S. economy challenged by unemployment and financial turmoil.

The central bank should also give “careful consideration” to Chicago Fed President Charles Evans’s proposal to tie the near-zero interest-rate pledge to specific levels of unemployment and inflation, Yellen said today in a speech in Denver.

The remarks signal Fed officials may be prepared to delve further into unprecedented monetary territory and take criticism inside and outside the central bank for expanding the balance sheet. ...

More: http://www.bloomberg.com/news/2011-...anted-if-more-easing-needed-for-stimulus.html

:popcorn:
 

pmbug

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...
Actions by the U.S. Federal Reserve appear to be helping fuel a shift among central banks toward a more benign stance, according to Hastings.

Such a path implies policies of lower interest rates, which favor economic growth, as opposed to a hawkish stance, which implies higher interest rates to fight inflation.

The Fed is considering a range of tools to boost growth, William Dudley, the president of the New York Fed Bank, said in a speech Monday, hinting at the option of a third round of quantitative easing.

“The Fed seems to be pushing the global agenda towards continued dovishness and accommodation and easing,” Hastings said. The Fed also is “pressuring the global yield curve lower in order to force easing around the world, which would of course prevent the U.S. dollar from declining too much against other currencies.”

The need to push the yield curve lower, he added, is “logical” since, regardless of how Europe and Italy play out this week, “there is a need for global central bank collaboration on more stimulus and more long-term funding of various initiatives.”
...

http://www.marketwatch.com/story/central-banks-new-thinking-could-boost-markets-2011-10-25
 

DoChenRollingBearing

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A timely thread!

My guess is that QE3 is inevitable. Hyperinflation seems to be the most likely dénouement we face, but hey, my ability to predict the future is PROVEN to be terrible (short-tern anyway, 0 / 6 in making money in options, so I don't do that anymore).
 

pmbug

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I believe it's coming even if they don't announce it at today's FOMC.
 

pmbug

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Federal Reserve Bank of Minneapolis President Narayana Kocherlakota:
--Kocherlakota: Fed should provide clarity about policy under different scenarios

--Says Fed still has easing tools at its disposal

--Adds Fed could respond with accommodative policies if financial panic develops in Europe

--Kocherlakota one of more outspoken internal critics of Fed policy
...

More: http://www.gfmag.com/latestnews/latest-news-old.html?newsid=1.1877703E7
 

white&yellow999

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QE3.... QE4.... QE5.... QE6.... QE7.... QE until the dollar collapses, not that I want that but it is certainly foreseeable.
 

pmbug

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The "lackluster" recovery of the U.S. economy, dragged down by a weak housing market and high unemployment, may require additional monetary policy accommodation by the Federal Reserve if it continues, a central bank official said Tuesday.

Though the U.S. recovery is on slightly firmer ground, as seen in recent economic data, its "story is one of slow recovery from an especially severe financial crisis and recession, painfully gradual progress on unemployment, and receding inflation," said Federal Reserve Bank of San Francisco President John Williams in prepared remarks. He expects moderate growth, high unemployment and low inflation to most likely continue, rather than a rapid improvement in economic condition. He expects U.S. real gross domestic product to grow at about a 2.25% pace in 2012 and pick up to around 3% in 2013, though he said the unemployment rate will only drop to around 8.75% by year-end 2012 from the current 9%.

This scenario calls for "continued action" by the Fed to support a "fragile economy," he said.
...

More: http://online.wsj.com/article/BT-CO-20111115-710281.html

Rates could be held lower past the Federal Reserve's current guidance of mid-2013, said Charles Evans, president of the Federal Reserve Bank of Chicago.

Evans was speaking Tuesday with reporters after a speech at the Council of Foreign Relations in New York.

Evans said he is comfortable with having an accomodative policy until inflation reaches 3% and unemployment is at 7%.
...

More: http://online.wsj.com/article/BT-CO-20111115-710193.html
 

DCFusor

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I've just about got headline fatigue on this one. A lot of people are calling for this, but I think with politics as they are, the ongoing easing won't be as explicit and public as QE2 was. From what I can tell, various stealth easing has been going on the entire time anyway, with a lot of it going to Europe already.

I'm going to say something possibly heretical here, based on some data I got from hiring a forensic accountant for much of '09 to "follow the money". It's not cast in stone, but it has affected my outlook a good deal.

The measures of money supply are cooked/broken to a level not seen in mere CPI numbers. They are so wrong it's ridiculous, in fact, because due to various failures in law and regulation, the result of the credit boom was effectively allowing institutions to print money completely outside the government/fed system. I can fill in details as needed and give some examples (but that would make this a too-long post). Consider - where does the money for "leverage" come from in party to party transactions and you'll be at the start of the journey.

Thus, the boom actually created huge increases in the money supply. And I mean huge. But all this "fake" money went poof in the crash, almost instantly. We all feared hyperinflation from the Bernanke's printing - but it didn't happen, though there is some inflation (particularly in the things we need vs the ones we merely want). The reason is - get this -- all that printing has yet to make up for the loss of the fake, imaginary money created by various institutions during the boom!

Now, to admit that would be to admit just how much a failure, and how crooked our government has been. You don't often see that sort of mea culpa in politics, to say the least. Thus printing is unpopular politically too, because they cannot admit the reason for the need.

What a tangled web we weave! So further stimulus, unless we all beg for it (not just traders and pundits on ZH) - is going to be more in a stealth mode, plunge protection, little funny deals on swaps between central banks and sovereigns, stuff like that, rather than an outright flooding of the markets with cash - "these things must be done delicately" as the wicked witch said. This avoids revealing where the bodies are buried, and in many cases might actually do a better job per buck - but it lacks oversight so it's only a possibility it works better.

At this point we can't know what's on say, the PPT's balance sheet. While I am all for total openness in most cases, it could also be it's better we don't know (though I'd love to go along for the ride these manipulations create). A big question is whether there is cronyism, that benefits some TBTF institutions, and I'd vote yes, certainly, bet on it. Is this bad? I can't make a call. Personally, I'd just as soon see a few of them fail, but I'm not qualified to predict the ripple effects of that and how bad they'd be for the man in the street. There's no question it would hurt the "1%" bad.

If you just analyze the stuff we know about for sure - the stuff they admit to, you've got to figure that being able to borrow at the fed window at .25% and then buy our limp bonds at a couple percent amounts to bailing out everyone who can do that - ongoing, it's not a secret. Evidently, this hasn't been enough yet.

My big point though, is that since so much money went "poof" in the crash, money that was never on the gov't official reporting books, we actually do have some leeway to print without creating huge inflation.
The outright easing did - in commodities, and was thought of as "bad" in many quarters (including mine). So it seems they are adapting and trying other ways, maybe not such a big splash in the news as before, but still going on.

Here's ZH's Qe3 article of the day. And I really mean that - hardly a day goes by without one saying its imminent. But that's symptomatic of a stopped clock, you gotta take them withe a grain of salt pretty often. You can be right about where it probably will end without being right, or on time (all that matters to a trader) about when, and the path there from here.
http://www.zerohedge.com/news/supposed-deflation-october-blows-door-qe3-wide-open
 
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pmbug

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Some Federal Reserve policy makers said the central bank should consider easing policy further, according to minutes of their Nov. 1-2 meeting.

“A few members indicated that they believed the economic outlook might warrant additional policy accommodation,” the Fed said in minutes released today in Washington. “However, it was noted that any such accommodation would likely be more effective if it were provided in the context of a future communications initiative, and most of these members agreed that they could support retention of the current policy stance at this meeting.”

http://www.bloomberg.com/news/2011-11-22/fomc-minutes-reveal-a-few-members-want-easing.html

Why did the Fed release this today?
 

DosZap

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Bug,
Maybe in response to the EU crisis.Shot across the Bow,so to speak.
Another QE in surprise mode, would not sit well with the American people. IMHO
Giving themselves some operating leeway.
 

Steven Douglas

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Thus, the boom actually created huge increases in the money supply. And I mean huge. But all this "fake" money went poof in the crash, almost instantly.

There is definitely something to that, but look at it in light of the so-called Keynesian "liquidity trap" when we look at the mechanics.

Lots of money is "created" but then destroyed. But that was all on the basis of debt-money created prior in the fractional reserve multiplier model. That model cannot survive, and must collapse, without continued expansion. That's the nature of the Ponzi beast. So when all that "money" goes "poof" (in the case of actual defaults), as it did, so did the artificial reserves used to create the money in the first place.

Banks are left with titles to overpriced "assets" of zero or questionable value, but they still have the problem of a reserve pool to contend with - the very basis of even the illusion of its solvency. Whatever can be liquidated can be used to refill the reserve pool, but that is usually at a loss, and most of it cannot. So even though the Fed can print more money (never "free", always as debt, the principle of which must be returned, regardless of interest), the banks cannot lend most of it out because their reserves have been so eroded that they have to absorb most of the new money just to cover their own insolvency and keep from going under.

So a massive influx of money into "the economy" (snicker - whose economy?) doesn't show up as inflation yet, because all it's really doing is filling the reserve vacuum created by all the money that went 'poof'. This only buys the banks time - the time it would never extend to those it wants/needs to foreclose on in a grab for liquidity.

IF enough time goes by, and with enough economic activity that there is a net accumulation of capital to reseed the banks, on top of the newly created debt-money received, the banks will eventually resume the creation of newly inflated dollars - and that's when the real effects of inflation - that massive refilling of all their reserves, kicks into high gear. In the long run, all the money that disappeared did was create a vacuum that already needed to be seeded by multiples of more inflationary debt before the Ponzi scheme could resume "normal" expansion. That resumed expansion is the long delayed response that suddenly floods the economy with everything that is being seeded by the Fed now, and that is when we feel the effects through rising prices everywhere, as the bill finally comes due, and everyone suffers the real loss of all the money that went poof as the value of the dollar is cut by an enormous fraction in a short period of time.
 

DCFusor

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One wonders if the "reserves" are even a positive number at this point. FASB 137,157 etc - mark to fantasy is still in effect. Thus I crack up when people say buy banks, they're trading below book value.

Last I heard, the banks were leveraged even more now than before the crisis. And what of all those CDS's that may or may not pay off - either by fiat pronouncement, as with Greece, or by counterparty risk, eg, when they declare they're hedged, are they, really? Gross exposure is the new net...

And that is why the Bernanke might just bail Europe - it bails his banker buddies, too.

Holding onto my shorts for now, but the weekend could be scary.
 

DSAbug

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6 days down on the market.. if you are going to be short, i'd be using an ETF like HDGE. That way you wont have the potential for having to sell your long positions if you are wrong on your shorts. Only having 1 trading day in the next 4 leaves me with a lot of angst on the short side so i'd rather have my short position be actively managed.
 

DCFusor

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I'll check it out, thanks for the tip. My "shorts" are just longs in spxu, euo, smn and the like - I'm a cash guy (and most of that in an IRA that can't directly short or play options). They're up quite a lot since opening the trades so it's a hmmmmm kind of decision. I notice on comparison that HDGE doesn't drop as much as say SPXU when markets go up, but isn't traded much either. I'll keep an eye on that one for future use.

And you're right - 6 days in a row usually gets a bounce. To my eye, however, this is more like the tankage in August, rather than the usual bounce around whatever trading range (which is usually more like 3-4 days, and exiting my shorts back then really opportunity-cost me), and to me it looks like there are a few percent to go there. That German Bund thing - hard to see what rabbit the pols are going to pull out of the hat that will make things bounce much (or for long).

Maybe I'll just trim them down. They've been making more than my longs have been losing, and my main intent was to hedge that; the longs pay huge divvies, so I'm trying to hold them till ex div date, about 2-3 more weeks. With Vix like it is, buying puts on those is kinda expensive just now...(which I can do, but in the "wrong" account).
 

pmbug

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QE3 eurostyle?
...
I have not made up my mind about the wisdom of a Fed rescue. It is fraught with dangers, and one might argue that resources are better deployed breaking EMU into workable halves with minimal possible damage.

However, debate is already joined -- and wheels are turning in Washington policy basements -- so let me throw this out for readers to chew over.

Nobel economist Myron Scholes first floated the idea over lunch at a Riksbank forum in August. "I wonder whether Bernanke might not say that 'we believe in a harmonized world, that the Europeans are our friends, and we know that the ECB can't print money to buy bonds because the Germans won't let them. And since the ECB will soon run out of money, we will step in and start buying European government bonds for them.' It is something to think about," he said.

This is not as eccentric as it sounds. The Fed's Ben Bernanke touched on the theme in a speech in November 2002 -- "Deflation: making sure it doesn't happen here" -- now viewed as his policy "road map" in extremis.

"The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt. Potentially, this class of assets offers huge scope for Fed operations," he said.

Berkeley's Brad DeLong said it is time for Bernanke to act on this as the world lurches straight into 1931 and a Great Depression II. "The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash," he said.

The Fed could buy E2 trillion of EMU debt or more, intervening with crushing power. The credible threat of such action by the world's paramount monetary force might alone bring Italian and Spanish yields back down below 5 percent before one bent nickel is even spent.
...

http://www.telegraph.co.uk/finance/...Should-the-Fed-save-Europe-from-disaster.html

:paperbag:
 

pmbug

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Perhaps not:
...
Though any Fed intervention in Europe would guarantee a nice stock market rally into the New Year, it’s unlikely to occur. The Fed has already been stung by conservative criticism of its domestic quantitative easing policies, and with Republican primaries looming ahead of the presidential election in November 2012, moves by the Fed to support the European bond market by further debasing the dollar would be hugely controversial. Though the Fed propped up foreign financial institutions during the depths of the crisis in 2008, the lengths it went to to conceal this from the public shows that Bernanke and Co are well aware of the serious political risks that come – not surprisingly – from bailing out foreigners.

There are, moreover, issues with the Fed’s balance sheet. As Tangent Capital’s James Rickards points out in both his new book Currency Wars and in a piece for the King World News Blog, the Fed is leveraged by around 50 to 1. A mere 2% decline in the value of the Fed’s assets would be enough to wipe out its capital. Piling more leverage on to its books by printing money to buy European bonds would risk the remaining confidence financial markets have in the Federal Reserve System – and by extension, the US dollar itself.

Thus, it seems implausible to expect the Fed to act as a “white knight”, riding to the eurozone’s rescue. As Rickards has discussed on numerous occasions, and mentioned on this website previously, the IMF remains the eurozone’s best hope as far as any rescue deal is concerned. ...

http://www.goldmoney.com/gold-research/newsdesk/fed-to-intervene-in-europe.html
 

pmbug

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The biggest bond dealers in the U.S. say the Federal Reserve is poised to start a new round of stimulus, injecting more money into the economy by purchasing mortgage securities instead of Treasuries.

Fed Chairman Ben S. Bernanke and his fellow policy makers, who bought $2.3 trillion of Treasury and mortgage-related bonds between 2008 and June, will start another program next quarter, 16 of the 21 primary dealers of U.S. government securities that trade with the central bank said in a Bloomberg News survey last week. The Fed may buy about $545 billion in home-loan debt, based on the median of the firms that provided estimates.
...

http://www.bloomberg.com/news/2011-...illion-of-home-loan-debt-in-third-easing.html
 

DSAbug

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@Swiss..

All indications point to further Central Bank cooperation.
 

dontdeBasemebro

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This is probably a noob question, but could someone explain how the swap rate works? Is this merely a change in exchange rates between fiat currencies or is it something else?

Hey, look what we have here-->:silver:
 

pmbug

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...
Here's a primer to what the swaps are and why the step was so important:
...
Q. What did the central banks actually do?

A. They made it easier and less costly for banks to get U.S. dollars. The central banks already had in place agreements -- going back to December 2007 and emergency actions they took in the early days of the global financial crisis -- to swap local currencies with the Federal Reserve for dollars for, typically, up to three months. On Wednesday, they reduced the charge for doing that and extended the size and timing of the swap lines.

The lower price should encourage European commercial banks to go to the European Central Bank to borrow, through repurchase trades, the dollars that came from the swaps. The ECB also announced that it was reducing the amount of margin the banks have to post on those deals.

The steps are "designed to both remove the stigma and costs associated with the use of cross border swap lines," according to a report from bank analysts at Keefe, Bruyette & Woods.
...

http://www.reuters.com/article/2011/11/30/us-centralbanks-primer-idUSTRE7AT2XT20111130

Essentially, the Fed is going to give money to foreign banks. Technically, they are loans that need to be paid back, but wink, wink, nudge, nudge...
 

pmbug

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Jim still warning people:
We already have QE 3. Get out the Federal Reserve‘s balance sheet. You’ll see that they’ve been pumping up – you can see unadjusted M2 is going through the roof. Look at their balance sheet.

All sorts of assets are suddenly appearing on their balance sheet. Where did they come from? They didn’t come from the Tooth Fairy; they came because they’re in there buying in the market as fast as they can. There Is QE 3 already. They don’t call it that but it’s there.

http://jimrogers-investments.blogspot.com/2012/02/qe-3-is-already-taking-place-look-at.html
 

white&yellow999

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Found this article relavent to this discussion.

http://www.thestreet.com/story/11441982/1/bernanke-bludgeons-bullion-opinion.html

NEW YORK (Bullion Bulls Canada) -- Gold and silver prices plummet because the U.S. economy is so healthy that the Federal Reserve won't have to print any more money, and so there won't be any more inflation. Laughter, please.
The U.S. economy is healthy? As I have pointed out on previous occasions, 0% interest rates are nothing less than an economic defibrillator -- a temporary desperation measure to attempt to breathe life into a dying economy. Permanent 0% interest rates simply mean that economy is already dead, as we have seen with Japan. All that remains to be done is to put these zombie economies out of their misery, through debt default followed by massive restructuring.
As I have stressed in my recent commentaries, it is also beyond absurd for Bernanke to pretend that the Federal Reserve has ceased its money-printing. The gravity-defying U.S. Treasuries market provides conclusive, mathematical proof that such a claim is false.
Maximum bond prices at a time of maximum supply defy every economic principle in the books. Maximum bond prices at a time of maximum supply, when the largest buyer (China) has been selling Treasuries for more than a year, when the "economic surpluses" which financed Treasuries-buying have nearly vanished, when Treasuries auctions have been rigged so that no one knows who the buyers are, and at a time when the U.S. economy is obviously and hopelessly insolvent defies legality.
Someone, somehow is financing the totally opaque purchases of $trillions in U.S. Treasuries, and the list of suspects is rather short: the Federal Reserve. If the Fed is not financing those purchases with its officially/legitimately created funny money, then in must be doing so in some less than legitimate manner.
The only other mathematically possible scenario is debt default: bonds immediately going to zero (or close to it). Otherwise, exponential money-printing takes the underlying currencies to zero, also making the bonds worthless. Either way, we are 100% certain to get to the same result. Paying maximum prices for any of these paper time-bombs goes well past idiocy and all the way to deliberate economic suicide.
As I have explained on a number of previous occasions, in either a debt default or hyperinflation scenario, gold and silver prices will explode in an equally exponential manner -- again as a function of basic arithmetic (along with supply and demand). Thus the long-term upward revaluation of precious metals is as certain as sunrise following sunset.
 

ancona

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I believe we are going to see an epic disconnect between paper and physical, unlike the last few months, which have seen massive dislocations of capital due to market rigging and paper stuffing to control the obvious upward trajectory of our favorite white metals. My LCS tells me he can't meet demand, and is rationing silver to meet his customers needs........or at least, helping them each to get an allocation of metals.

The weird part is this; Most of his customers are retirees and near-retirees, who are getting fucked in the money markets and in the stock market funds, and they just want a FAIR RETURN ON THEIR SAVINGS, NOT THE ANEMIC .122% OFFERED TO TIE THEIR CASH UP FOR A YEAR.
 

bushi

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Thus, the boom actually created huge increases in the money supply. And I mean huge. But all this "fake" money went poof in the crash, almost instantly. We all feared hyperinflation from the Bernanke's printing - but it didn't happen, though there is some inflation (particularly in the things we need vs the ones we merely want). The reason is - get this -- all that printing has yet to make up for the loss of the fake, imaginary money created by various institutions during the boom!

Steven Douglas said:
So a massive influx of money into "the economy" (snicker - whose economy?) doesn't show up as inflation yet, because all it's really doing is filling the reserve vacuum created by all the money that went 'poof'. This only buys the banks time - the time it would never extend to those it wants/needs to foreclose on in a grab for liquidity.

This. I was about to write something along these lines in response, but you guys just expressed my exact thoughts. I would only add to these a fact, that since the banks are not lending to the general public at the moment, than all this shitload of freshly printed cash cannot be spend on consumption & increase inflation significantly YET, until they START lending it again. Just you wait...

Just assume.. no, take it as a lemma - they will do every foul thing to preserve the status quo, right up until we crash into the wall at full throttle, or the power is taken from them by the mass-protests, and new political leaders (today - in little significance) take the steering wheel. So, just take it for granted, and free your mind to some more productive things, than speculate "if" next QE is or is not in the cards. QE ad infinitum will be the order of the day if it gives even the slightest hope of normalizing the situation, even temporarily, the very same minute it is needed, and the public will know zip about it, officially. Additionally, things like wellbeing of the sheeple is not important, preventing the "system" from collapse is all that matters. Preserving people's buying power is completely unimportant, preserving people's living standards (well obviously, average incomes always lag behind the real inflation, and in fact, NEVER accomodate fully for it) is just something that will be laughed at, because it is not on their goals list/statuatory goals list, etc. Fairness of the system and measures taken to stabilize it... bwahaha... well, shall we just skip that part, and reinforce the initial message: they will do EVERYTHING, foul or not, to protect "the system". Rest is just noise, in their view. People losing jobs, houses, life they had planned ahead of them. Just noise and some unconvenient statistics. Luckily, statistics can be tuned up a little this way or that, to make us all feel happier.

Why banks do not care about customers anymore (savers - getting the cold shoulder, with all the new fees for everything, and earnig nothing on their money in the bank, borrowers - I mean the real meat ones, not some huge gamblers - they do not get approval for their loans applications). Because they are not important at the moment. Banks are getting all the money they need to stay solvant (just) freshly from the press, they make their safe (but cut-throat small) living from bonds, and deposits back at their respective central banks (yep, that is very funny, but true - they are getting their QE money, that they beg for, on near-zero rates, and they deposit it right back in the CBs, where this money has just came from, on some slightly higher interest, than their original ZIRPs). Anyone else still sees a need for a customers in this picture? I don't. The system is broken, and they are printing at speeds to reinflate it/keep it afloat, but the point is, IT IS NOT WORKING at the moment. Problem is, when we say "they print" - it actually means that someone is borrowing all that shit into existence. Total indebtness of the whole shit hole monkey circus is getting even deeper.

You cannot drink yourself sober, you cannot fill the hole with earth dug out from the same hole.

Thus the crash WILL come, probably in this current depression that we are in, because it is global, there is no knight on a white horse to come for the rescue, and once the shit starts spread further (as it slowly does) and poping up in "too big to bail" economies, the game of fiat money and QEs of all sorts will be up. Amen.

We'll have to "pull an Iceland" at some stage, all, that is inevitable, if we are ever to return to growth - banks bondholders would need to put some KY on their anuses, bend over, and just get through this. But they are squirming and trying everything else (do not blame them, I wouldn't like the abovementioned alternative either :)), for as long as they can get away with it. IT means, in practice - for as long, as the conditions start to be unbearable for societies, and people start seriously FIGHTING them back. Iceland wasn't full of oh-so-foresighting politicians, men of principle - oh no, they were trying to spoon fed their society with the same medicine, as everywhere else. But it was icelandic people, who literally assaulted their parliament, and FORCED their hand to say "f you, mr.s bank bondholders, we are not paying the debts of the banks, that are not owned by us the people, and just happens to be operating here".

It really is the nature of the beast - these cancers on the society, (politicians), they try to get away with path of the least resistance, and God forbid of sacrificing anyone else of power, if they can get away with some lies, trickery and misery for the general public. Who cares, as long as THEIR arses are covered?
 
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DoChenRollingBearing

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:agree:

Too bad it's all true...

That was an excellent, excellent rant bushi!


They DON'T have our best interests at heart, they're all liars, thieves and psychopaths.
 

pmbug

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With Bernanke's recent speech, the pundits in the blogosphere and the media are all speculating on possible QE3 coming. I decided to look up the Fed's M2 stats per Jim Rogers' advice from February:

http://www.federalreserve.gov/releases/h6/current/

M2NS_Max_630_378.png


http://research.stlouisfed.org/fred2/series/M2NS

Possible QE3?

:noevil:
 

escobar

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I agree. I think its all noise. The money supply will continue to go up whether anything is announced. They will only officially announce it if they need it for effect like a falling stock mkt.
 
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