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We're At the End Game For Fed Intervention
The Fed cannot and will not announce QE 3 barring a market bloodbath or major failing. It certainly won’t announce QE 3 when commodities prices never really cooled down from their QE 2 highs.
Commodities as a whole are only 8% off their QE 2 highs. Some commodities are actually higher than during QE 2. If the Fed were to announce QE 3 in this environment is would KILL the US Dollar and the US consumer. End of story.
So instead, the Fed is engaging in verbal interventions, trotting out guys like Evans who, if he were a Doctor, would be in jail for malpractice. Only in economics can you be completely wrong and promote ideas that make people starve and lose their retirements and not be arrested.
After all, why announce QE 3 when you can get the exact same impact just from speaking in public? It’s a heck of a lot easier. And it doesn’t involve people rioting and the economy imploding (yet).
So if you’re banking on QE 3 coming in September, you’re in for a rude surprise. Unless the S&P 500 craters to below 1,100 in the next three weeks, QE 3 ain’t coming.
The Fed has already gone too far with QE. QE 2 spent $600 billion and didn’t accomplish anything (as I and several commentators have recently noted). The Fed’s balance sheet (roughly $3 trillion) is already larger than the economies of the UK and Brazil. Has anyone bothered to ask how exactly the Fed going to unwind this? Everytime the Fed halts QE the markets implode. Do you really think the Fed could withdraw even $1 trillion in liquidity without forcing systemic collapse?
Folks, we’ve already crossed the Rubicon on Fed intervention. There is no way we can undo what the Fed’s done. All that is left is the inevitable debt restructuring and market collapse. The Fed will be dismantled within five years (if not, it will be significantly reformed). Bernanke is going to be stepping down within 18 months and possibly facing lawsuits.
This is the facts of the matter. The QE 3 debate is pointless. We’ve already begun the End Game for the Fed and its interventions. Sure, we might prop things up here and there temporarily, but the great unwind has begun.
Indeed, I fully believe we are about to enter into the next leg down for this Crisis. The financial system is on DEFCON Red Alert (no matter what stocks are doing). And smart investors are taking steps to prepare themselves and their portfolios NOW while the markets are still holing up.
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Im with PCR, been saying the same all along since QE3 stories started last Feb and every bit of bad news was met with market rises as 'optimism for QE3 increases' its all BS folks, carrot on a stick.
i was under the assumption the fed has all but begun qe3, and that's it's been hinted at, leaked, etc for days now. and now phoenix tells me no way? i'm confused now.
i was under the assumption the fed has all but begun qe3
You're right and phoenix is wrong.
Somebody has to buy approx $150 billion of new Treasury debt issued each month to keep the federal government operatiing.
Nations like China used to buy it, but not anymore. The Fed os the only buyer left. They don't buy all of it, but they buy what other people won't.
QE has been basically 2 things: buying Treasury debt and buying toxic (near-worthless) securities from Wall Street banks. Buying toxic (near-worthless) MBS is in there somewhere, not sure off hand if it was prior to QE or part of QE.
QE in some form must go on to keep the government funded and continue bailing out increasingly insolvent Wall Street banks.
If QE really does stop, the federal government would stop and Wall Street banks would collapse. So yes, QE in some form will continue.
It may not be called QE. It may be called something else. It may be done quietly behind the scenes. It might be funds channeled thru foreign banks or foreign countries so they can buy Treasury debt. It might be funds channeled thru other people so they can buy Treasury debt.
But somebody has to buy it, and they're not going to invest their own money, so the Fed has to put up the money. There's no other way.
It is possible Fed may stop buying toxic securities from Wall Street banks. If it comes down to choosing between saving Wall Street banks and keeping the government going, I suspect the government will win out.
That's because he forgot to say you will LOSE EVERYTHING
Well the FED has certainly not stopped manipulating markets with ZIRP. But is that 'QE3'? Would Bubbles at Jackson Hole stating 'OK QE3 is here, we'll hand hold bonds and keep rates at 0%, theres your QE3' have passed? No, they would have said 'thats not QE3 at all, we want $2.5 trillion free crack for equities minimum'.
The only thing the Fed stopped was overt interventions. The behind the scenes currency swaps and reinvestment is still ongoing.
The lies have become truth, and the truth will be branded a lie, and anyone speaking it will be called a terrorist traitor.
Move along now comrade, the bread line is to the right, and tickets for the circus can be had at the window on the left. Now shut up and get back in line.
Picked a hell of a day to quit snorting gold dust...
drink some collodial silver, it will help with the cold sweats.
Graham Summers, are you EFFING NUTS? How do they not QE when gov is spending $1.6 trillion more than revenues and every bank is insolvent.
The fed's balance sheet makes no difference and they never need to unwind it. NEVER. They print the stuff, remember? They don't need to make a profit.
The game is to slowly devalue the dollar until the banks are solvent again. Only time will tell what the collateral damage will be -- a tug of war between inflation and recession. Not fun for the rest of us.