The proclamation came down from on high this afternoon. We have QE 3.0, and it's a Boy!! Cigars for everyone.
This time they did a twist. No, nothing like their operation twist, which was QE light. This time, it's open ended. They intend to suppress rates through 2015. Coupled with QE 3.0, operation Twist which is simply maturity extensions will continue through year end. What does that mean? They're throwing the kitchen sink, filled with bathwater, and a baby at the problem. All bets are off, and war has been declared on the problem that is our economy.
They left the door open to changing the composition and the size of the program as time passes and the situation changes. The statement clearly states more will be done if the economy doesn't improve.
Don't misunderstand me. They HAVE to do something. This is all they can do. Remember, the Fed can only insert money and take money out of the economy. The Fed can only control inflation. If we're not inflating, we're deflating. The Fed NEEDS inflation, and will do anything to get it.
Some links for you below.
Fed Pledges Action Until Economy Shows Gains
Bernanke: Fed OKd new stimulus because unemployment is 'grave concern'
Quantitative easing
From Wikipedia, the free encyclopedia
Quantitative easing (QE) is an unconventional[1][2] monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions with newly created money, in order to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified
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