QE3?

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Iron
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http://www.telegraph.co.uk/finance/econ ... tance.html

QE2 has still some way to run (the bond purchases are to be phased over several months!), so I think it's premature to even think about QE3!

Does Bernanke think 'As long as I keep printing money, something's gotta give'?!?

Is he basing US monetary policy on Zimbabwe and the Weimar Republic?

Jeff
aligammack
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Quantitative Easing Explained - Funny

http://www.youtube.com/watch?v=PTUY16Ck ... re=related
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CaerMyrddin
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Is it me, or economy is really hard to read these days?
Iron
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Brilliant! :)

Over the last year, there have been some quite startling rises in commodity prices: http://markets.ft.com/markets/commodities.asp

And in the UK, petrol is close to a record high: http://www.bbc.co.uk/news/business-11968437

So all in all, I think using QE to fight deflation is a tad premature...

Jeff
aligammack wrote:Quantitative Easing Explained - Funny

http://www.youtube.com/watch?v=PTUY16Ck ... re=related
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CaerMyrddin
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Althougt I don't agree with the 'printing money at ease', prices are rising at a world basis, which doesn't mean the US won't face deflaction.

Anyway, the problem is the americen economy can become anemic, even in a scenario of world inflaction?
kuber1
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Oil up. Gold down then up. Silver up. Dollar down, Pound Sterling ..oh dear oh dear oh dear. :roll: ... Euro wishing it wasn't. Food up. Real Inflation above interest rates. QE3 what to do? Trade that you know will be used.
Iron
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I hope people don't suddenly start shorting gold, as I've read that the quantity of gold that's been sold exceeds the amount of the stuff in existence!

Jeff
kuber1 wrote:Oil up. Gold down then up. Silver up. Dollar down, Pound Sterling ..oh dear oh dear oh dear. :roll: ... Euro wishing it wasn't. Food up. Real Inflation above interest rates. QE3 what to do? Trade that you know will be used.
Iron
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IMHO, QE is a bit like a surgeon performing open heart surgery blindfolded.

He might save the patient, but he's more likely to kill him! :)

Jeff
CaerMyrddin wrote:Althougt I don't agree with the 'printing money at ease', prices are rising at a world basis, which doesn't mean the US won't face deflaction.

Anyway, the problem is the americen economy can become anemic, even in a scenario of world inflaction?
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Euler
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superfrank
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Take a look at this graph showing the correlation between commodity prices and QE (FED purchases)...
http://www.ritholtz.com/blog/wp-content ... chases.jpg
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superfrank
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Is seems from this WSJ article that QE3 is not the certainty many think it is (including me!).

http://online.wsj.com/article/SB1000142 ... 45430.html

I wonder if privately the FED have realised that QE has failed - yeah it boosted asset prices (but this is harmful, not helpful, to long term growth). The money mainly ended up in commodities causing global inflation problems.

So what happens if the central banks stop meddling and let the market adjust naturally? My view is that commodities would come under pressure (especially oil) and there there would be a big correction in equity prices (FTSE below 4000).

This is how I reckon it will play out...
- more weak economic data as QE2 wears off through the summer.
- oil and equities under pressure and some sharp falls similar to what happened in 2008.
- political pressure mounts as people demand that "something must be done" (crybaby capitalists as Gerald Celente calls them).
- the govt. and FED cave in and QE3 begins (maybe not called QE this time, for political reasons, but essentially the same thing - cheap/free money).

You can come back and mock me when nothing like this happens!
rubysglory
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You probably on the right track superfrank. Rising commodity prices as the world struggles to satisfy China's hunger, higher food prices, consumer spending all but non-existent and the inflation genie raising its ugly head. With US interest rates already at zero, and with no QE3 monopoly money on the table, this might well be the medium term future of world financials.

rg
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superfrank
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PIMCO'S Gross says Fed to unveil QE3 at Jackson Hole
http://www.reuters.com/article/2011/06/ ... L820110622
Bill Gross on Wednesday said the Federal Reserve will likely hint at a third round of bond purchases, better known as "quantitative easing," at its next Jackson Hole meeting in August.

Jackson Hole is an annual global central banking conference, led by the Fed, which takes place at Jackson Hole, Wyoming. It was at this event last year that Fed chairman Ben Bernanke said the U.S. policymakers were prepared to make a major new investment in government debt or mortgage securities if the economy worsened significantly or if the Fed detected deflation -- a prolonged drop in prices of wages, goods and assets like homes and stocks.

Gross, the co-chief investment officer of PIMCO, the world's top bond manager, on Wednesday said on Twitter: "Next Jackson Hole in August will likely hint at QE3 / interest rate caps."
If stocks/commodities weaken through the summer, then buying before Helicopter Ben opens his trap could prove a good bet...

Image

The problem for the Fed is that, in trying to prop up the stock and housing markets, they also end up boosting commodity prices which in turn causes problems of higher fuel, food and input costs which suppresses consumer demand because people have less money to spend after paying for necessities. The law of unintended consequences.
Iron
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superfrank wrote:PIMCO'S Gross says Fed to unveil QE3 at Jackson Hole
That might explain why the FTSE is tumbling today...

When will the fools realise that you can't solve your problems by printing money?!?

Jeff
Iron
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Economic trouble puzzles Fed chief, too - http://apnews.myway.com/article/20110622/D9O16AK02.html

I suppose at least no-one can accuse Mr Bernanke of being too proud to admit his lack of insight...

Jeff
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