The Fed’s Drugs Won’t Work Anymore

QE3. No QE3. The markets have been injected with this hopium for months and have been let down on every occasion except for this last one. The Fed’s issuance of this last round of quantitative easing has rendered future doses of this drug ineffective.

It was explicitly stated that the Fed would issue QE as needed in unlimited amounts until the market is able to create enough jobs to stimulate dramatic growth. This means that there will not likely be any future spikes in the market as a result of another QE announcement…the market no longer questions whether or not more drugs will come, now they expect them.

The Fed had been using “QE hype” to rally the markets. Every time we were on the verge of a collapse another QE announcement would be made bringing us a few feet back from the fiscal cliff. But that tactic wont work anymore…

The Fed’s actions are fiscally irresponsible and the U.S. will quickly suffer the consequences of this poor decision. If the economic change needed to return to growth is structural then a monetary fix, or QE, isn’t the remedy.

The U.S. Dollar is on the decline against other major currencies, and investors are losing confidence in the Fed’s ability to manage the ensuing risk of another recession. Question that remains, what happens when the QE drug gets taken away?

It’s time to hedge; if the value of the U.S. dollar collapses how will you respond? Diversification is key. Learn to manage your risk by looking a head; join the Forward Thinking waiting list now.

Your currency analyst,

Justin Burkhardt

Comments

[Tombstone]

One of the main reasons for QE3 was to support bond dealers in Europe with liquidity.  A good portion of QE3 funny-money will find its way to Europe through the back door.  Benny knows that he cannot let Europe fail and now has gone close to all-out to keep it afloat.  Things over there are much worse than we are led to believe.  Ditto; China and soon America.  And Japan?  The poster-child for basket cases is continuing to sink after 20+ years of Benny-like pumpology.