Thursday, October 28, 2010


Definition from wickie:

"The term quantitative easing (QE) describes a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero."

Risks from wickie:

"Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio"

Market Oracle:

"Deep pockets can only delay the inevitable. They cannot stop it. Quantitative Easing talk is raising expectations for liquidity infusions that people think will seep into stock markets. Hedge funds are buying stocks ahead of the actual Quantitative Easing from the Fed. QE2 is simply a fancy name for the Federal Reserve printing U.S. Dollars and buying fixed income securities from large Wall Street firms, buying junk bonds, corporate bonds, mortgage backed securities or Treasuries. It is essentially a fraud on U.S. Dollar holders, is a fraud on the taxpaying U.S. Consumer and Small Business, a fraud on the working person who has to get his money through hard labor."

In general I believe QE2 is already IN the market

"Everyone's Already Counting On Quantitative Easing 2, Says Analyst"

QE will fail miserably "the economy is desensitized to liquidity and cheap credit"
from above must read link (business insider)
" But as many commentators have been pointing out for over a year, the "problem" in the U.S. economy is not a lack of credit or high costs of credit: the problem is too much debt and the fact that there is no market demand which requires expanding business.

So the Fed is pouring "easy money" into an economy which has no need or desire for it, except to gamble with in the equity, bond and commodities markets.

Bernanke's QE and ZIRP (zero-interest rate policy) has effectively destroyed the incomes once generated by savings and low-risk fixed investments, and as a result the flood of "hot money" has gushed into stocks, bonds and commodities, all of which are in bubble territory as a direct result of QE and ZIRP.

If you can't make money with cash in savings, then the incentives are weighted in favor of taking on risk: seeking a return in stocks, commodities or other gambles."

So the unintended consequences include higher prices for food and energy among others, and I ALWAYS felt the State and local governments are so STARVED for revenue they will go after it from "those left standing" nOT expect property taxes to follow values downward.

I have shown you how housing has barely reacted to the $trillions thrown at it including LOWEST HOME MORTGAGE RATES IN HISTORY and GOV incentives....low interest rates is killing our older population and I pointed out, its screw the savers policy from the FED is trying to FORCE majority INTO RISKY investments....isn';t that great? savers DO spend interest income....guess they forgot about that?

IF NOT already FED is losing credability,continuing with failed policies....making them larger and more if QE 1 didn't work let's make QE 2 shock and awe and certainly that WILL work?

WHY wasn't money put DIRECTLY into the hands of working men and woman and small businesses? instead of big banks who just "SAT ON IT?"

QE1 and FED POMO operations have done NOTHING to increase the DEMAND for LOANS...contracting credit and loans does NOT lead to expanding economy...almost 100% of increase in corporate profits is result of FED and GOV stimulus.....can't stand on own 2 feet.

"Corporations sitting on HORDE OF CASH" what good will trying to keep FORCING rates LOWER DO?

So Hedge Funds, Money MGR's are FRONT RUNNING upcoming FED action....2 times early since March of 2009 it has worked to raise markets orig QE and then late AUG POMO..let off gas even a little and down she goes....this is the ultimate game of MUSICAL CHAIRS and the penultimate PONZI SCHEME.....early in you make moolah.....but you don';t want to caught late to the speculative TROUGH!!! when the music stops.

Jobs scarce....housing DOA, loan demand continues to contract....people are come the political speaches telling how much progress we have made.


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