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QE Infinity Calls Continue: "QE4 Will Be Their Next Move"
To be sure, the idea of “QE infinity” has been around for quite some time.
Once it became clear that the globalization of unconventional monetary policy had, for all intents and purposes, served to elevate central bank stimulus above economic variables and common sense in the eyes of market participants, it began to look as though withdrawing that stimulus might well prove to be impossible without triggering an outright meltdown in capital markets.
Still, the assumption was that eventually, trillions in global QE and seven years of ZIRP would conspire to resuscitate global demand and trade at which point the central banks of the world would ever so gradually begin to roll back stimulus.
Only that’s not what happened.
Instead, global trade has remained in the doldrums and the unprecedented effort to keep capital markets accommodative has actually contributed to a worldwide deflationary supply glut. That, in turn, has hit commodity currencies especially hard, pushing emerging markets to the brink. China’s move to join the global currency wars muddied the waters even further and once the Fed admitted that in the current environment, it’s impossible not to be market dependent, QE4 essentially became inevitable.
In short, if the Fed hikes to telegraph its confidence in the US economy, EM will careen into crisis and that will feed back into advanced economies forcing the FOMC to reverse course. If the Fed remains on hold in an effort to avoid triggering more EM outflows, DM risk will sell off as market participants interpret a dovish FOMC as indicative of a worsening outlook for US economic growth and inflation expectations. And then there is of course the possibility that by keeping the world in suspense, the Fed is contributing to the uncertainty that plagues emerging economies and that keeps investors on edge.
Between this and the fact that global demand and trade appear to be grinding to a halt (just ask the WTO, the OECD, and the ADB who have all voiced their concerns in the past two weeks), the only way out for the Fed appears to be a return to QE which would simultaneously (albeit temporarily) i) realign Fed policy with the ECB and BoJ, ii) provide a bid for domestic risk assets, and iii) send the "right" message to EM regarding the FOMC's concern for keeping the situation from deteriorating further.
Against this backdrop we present the following from FT which is just the latest example of everyone admitting the inevitable:
The Federal Reserve will pursue another round of quantitative easing before it increases interest rates, according to economist Jerome Booth, who said a premature rate raise would trigger a recession in the US.
The former head of research at Ashmore, the emerging market fund house Mr Booth co-founded in 1999, said the Fed was right to keep interest rates unchanged at its last meeting and predicted it would begin a fourth round of bond-buying before rates were increased.
“What we have had is a jobless recovery in the US and so the Fed could not afford to cause another depression by raising interest rates. QE4 will be their next move, which is now much more likely than a rate hike.”
Peter Schiff, an outspoken opponent of the Fed and chief executive of Euro Pacific Capital, a US investment firm, said:
“We are going to see more weakness in the US jobs market and the Fed did not want to add to the disappointment with a rate hike.
“I don’t think they ever intended to raise rates. The whole thing was just a bluff and they will come back with QE4 first. That is going to hurt the real economy just like QE3 did but it will blow some air back in the stock market bubble.”
And the punchline to the whole thing is this: the more unconventional monetary policy you employ, the more exaggerated the financial cycle becomes, which in turn leads to ever larger booms and subesequent busts...
...which then serve as the excuse for more QE...
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With the majority of pundits still believing the Fed narrative of "liftoff soon", it will come as a huge surprise that "nobody saw coming". We could even get a one-two punch of QE and NIRP. Of course, anyone that holds these opnions is labeled a "tin-foil hat wearing fringe lunatic" and, obviously, a "deranged gold-bug that still lives in their mom's basement".
Nope, they are telling you what they are planning on doing for those that are paying attention. The St. Louis Fed said QE was ineffective. Now the heavy weights are pushing to ban cash to facilitate negative rates and even the E dollar.
The St. Louis Fed said QE was ineffective, because it was not enough.
exactly. Its also such a convienent position to take because it cannot be disproven. Didn't work? thats because we didnt ease or print enough. No matter how much is done, when it inevitably fails, that will ALWAYS be the response. Just like the pork-laden stimulus bill. Didnt do jack shit but waste a bunch of money, and you have idiots like krugman claiming that the only reason it didnt work is that it wasn't big enough. Not like we can go back in time and do it again, and they know that, so this is an easy position to take
QE4evah!
At least until it fails.
(somebody had to say it)
The 'position' they will take will be to kneel before the guillotine. Mark my words. All of 'em'
What program has ever "been Enough?"
They must lunch with Krugman on a regular basis.
Carbon Credit Default Swaps?
Label me will ya !?! I resemble that remark!! http://www.mobiusengine.co.uk/wp-content/uploads/2013/06/tin-foil-hat-3.jpg
Mooooom! We're outta popscicles, MOOOOM!!
At this point, QE anything is simply an exercise in "levitation"...keeping the markets up for as long as they can before they let them fall completely. They want to stairstep the market down and all they have to counter financial Armageddon is an old, sickly Khazar grandmother and bluster about QE. Their friends are already massively SHORT.
With public and .gov pensions in peril...
print like there's no tomorrow.
“Regarding the Great Depression, … we did it. We’re very sorry. … We won’t do it again.” -- Ben Bernanke, November 8, 2002.
Of course his official story as part of that speech was that the Fed fucked up by not easing, which most certainly is not what happened. So instead of being an admission, it was more cover. I would say in 80 years or so we'll have another similar pseudo-admission from the Fed chair, but more likely in 80 years we'll either have no Fed, or we'll have a truly Orwellian neo-feudal society where the Fed won't feel it is necessary to make such statements to the serfs.
I don't agree with armstrong on everything, but I do agree with him on the great depression. The fed tried to help europe by allowing the bubble to grow to enormous size because they didn't want to worsen europes problems by raising rates and they ended up making it worse in the end. Same thing you are hearing now about how we can't raise rates because of the damage it will cause in EM countries.
trying to fix something by doing more of what caused the problem in the first place didn't work out very well last time, no reason to suspect it will now.
Armstrong is an odd duck. Throwing everything he says out because of it is probably not a good idea though. He makes more sense than mainstream economists.
Always appreciate your posts LTER.
Infinite plus one. Checkmate, Janet.
They've been monetizing the debt this whole time and it won't stop until the dollar is dead and buried.
Exactly. Although they will announce QE to pump up stocks. It's a pump and confidence game.
QE until the market say enough and crushes the US dollar.
But Marc to Market says the USD is the safe haven and place to be going forward. Check out the top of the page for his bullish "analysis".
He is probably right, at least in the short term. The EU is a clownshow, china's problems are just beginning, and japan is, well, japan. All fiat currencies eventually go to zero, thats true, but it probably isn't going to happen as soon as many on here seem to think. Personally, since even the fed is admitting QE didn't work, i think QE4 or maybe QE5 will be actual "helicopter money", probably several times. They will do it, it will "work", at least in the short term, since all it will do it temporarily juice spending, and people like krugman will keep insisting it needs to be bigger. Eventually, just like conventional QE, it will take ever larger amounts to produce the inflation they claim is missing, so they will keep doing more of it, since they will keep thinking "just a little bit more" is all that is needed to achieve economic "escape velocity". Thats probably what the end game will look like. But I think we will see it elsewhere first. Cleanest dirty shirt and all that
And the punchline to the whole thing is this: the more unconventional monetary policy you employ, the more exaggerated the financial cycle becomes, which in turn leads to ever larger booms and subesequent busts..."
Respectfully,
if there is a QE4, and IF it involves a direct injection of cash to consumers, it would have to be a very substantial amount, something very unprecedented. The moral hazard itself would be epic.
I doubt this is in the offing, precisely because of its limitations and potential to do great harm. It would be a temporary solution to a chronic employment/corrupt corporate environment problem, representing a starter dose of Fed crack on the house...soon leaving the masses shaking for more (claiming it "worked").
It also BETTER NOT be any more stimulus for banks or corporate SOB's either. THAT should bring the house down all by itself, with literally millions of Americans marching all over this country.
No, we are through. We can certainly dig the hole deeper, but, we cannot solve this problem with still more expensive and unearned liquidity.
We face neither a liquidity nor an insufficient credit problem...
...it's a middle class employment problem.
m
I'll bet you dimes to donuts the Helicopter Drop is a huge increase in the earned income tax credit. We're not going NIRP we're going NIT. If you look at relative success of the 2010 tax and home buyer credits there's no reason they won't cycle back to it. 15K rebate in the hands of every tax payer under 50K in earnings. Follow that up with up to a 30K home buyer down payment assistance after Housing Bubble 2.0 pops. The shit show can continue for a while yet...
It pays to be poor.
Yup, it will come in the tax return. Having a mortgage now might be worth $10k in NIT
lol. Here's what's going to happen. After '08 people learned how to hedge.
The issue with hedging is leverage. Let's say you own the underlying security "outright" . You can use one twentieth of your available margin to cover NOT ONLY the underlying security, but also cross hedge the security, via derivatives. (ETF's)
Tyler is an absolute genius, when he discusses/explains flows in the bond markets, and the implications of sudden directional flows.
Zero Hedge has been stunningly accurate with their reporting on how bond traders are securing/procuring lines of credit, in order stem the flow of liquidations.
Personally, I'd rather trade ETF's as opposed to Mutual Funds. There's certain advantages. How mutual funds package their management fees, is laughable.[ Ex; the POP vs NAV pricing, is a joke.]
I love they people who support and defend the COMEX saying the exchange is simply market participants "hedging" their bets. Leverage? What's that have to with anything? LOL....
As always, thx YC.
They CAN"T stop, it's game over once they stop. They have known this since 1913. Every ponzi will be revealed.
and the integral calculus of infinity math is one hell of a lot easier than the differential equations required coming back the other way to get back to where you started.
Yawn... old news.
QE to Infinity has been the plan for decades... merely an extension of the 'Greenspan Put'.
Wake me up when we reach the crash-and-reform phase. I won't be holding my breath.
It's hard to trigger a recession when you're already in one.
economist Jerome Booth, who said a premature rate raise would trigger a recession in the US.
Crazy guy. The recession is already there do we really need people that can only look in the rear mirror?
Only a moron would think that raising interest rates by .25% would cause a deprdession. The Fed had to do a lot more than that to cause the first depression. All their manipulations since have been steering us towards the coming collapse. A miniscule rise in rates would have a corresponding miniscule effect.
There is no economy, there is only QE induced temporary stats as the money flows a second into the deep pockets.
Ding ding ding!
https://app.box.com/s/rvlhbckx959xahjysa30zwyallimx0qb
Another round of QE is a given.
QE=Bankster utopia
I think the wild card is the Bond market. If the next equity selloff is accompanied by a collapse in Bonds too, the Fed will have to make a choice. Protect bonds or the equity market. I predict they will NOT DO QE4
Who the fuck do you think runs this shitshow?
QE4 will be even bigger.Although a little lower than Krugman's dream. Maybe $200 billion/month.
We know Dudley, Evans, Williams and BullTard are salivating of the idea of a massive QE4.
Yellen needs to inject probably $1T into the US economy over the next 12 months just to offset what the Chinese will be doing in the opposite direction over the same time. Plus another $1T to offset the hit the EMs are about to take. And then a final $1T just for the US economy to not spin into depression.
That's $3T net QE. In 12 months. At least.
Your $200B/mo is a really good guess.
We live in a Fiat World, in today's Fiat World, Infinity is the only thing left to keep the wheels greased, as the real wealth producing economy is slowing down and facing numberable challanges to a rebirth of growth. In fact, population growth is the growth mechanism now days, the only growth mechanism. Take away growing populations and there is zero growth. The financiers are wealth stripping everything, and central banks are feeding them infinity QE and feeding governments infinity bond buying.
That stall thing before we run out of shit to rebuild with. These clowns are eating all the seedcorn.
More MOAR!
If the Fed pulls another QE then this entire fiancial house of cards needs to completely collapse.
not before the dow sees 16000
10,000 DOW...then maybe QE4
Good thing there is Enough paper Gold for everyone to protect themselves with...
avoid them pesky physical shortage problems and stay Paper.. only.. that way when you shit yourself, you will have plenty to wipe with...
it was always going to be zirp 4evah + qe infinity
Up my FAFSA.
Consider that the BULL market in equities started when Interest rates were 16% in 1981, the bond market was decimated sitting at 40% discount and nobody believed that the equity rally would last very long. 34 years later we are at the polar opposite i.e. interest rates are at ZERO, bonds are closer to their peaks along with equities. It would be poetic justice to see a bonifide bear market the likes most have never experienced. It will be violent and will undo all the gains that many have taken for granted. It is not going to be an easily tradeable affair. I think this time around BOTH bonds and stocks will get decimated and a real liquidity crunch unfolds and credit is evicerated.
I think the panic that will ensue will be due to the fact that the masses will come to the realization that QE1, 2 &3 did not revive the economy and only widened the wealth gap, therefore QE4 would not work either. Furthermore if this is an unruly liquiditation of equities, Bonds will also take a hit because it will become obvious that creating MORE debt is not the way to solve a debt based problem.
I hope QE4 will become known as the rapid failure in the 4-move Fool's Mate of the EU Queen:
https://en.wikipedia.org/wiki/Fool%27s_mate
Another year of hope and spare change.
Ray Fuk'n Dalio was @ Xi dinner @ the Black House. "They're" goin'a bail his sorry honky risk/parity ass OUT!
Markets do not exist in their own right; they are supposed to represent the value of the underlying companies and the state of the economy.
Companies provide real products and services into that economy.
Companies take raw materials and make them into products.
Cheap oil = collapsing global economy
Low commidity prices = lack of demand for raw materials from which real things are made
QE and low interest rates may have kept markets up, but the real economy is collapsing.
Maintaining the penthouse suite while the foundations are crumbling.
Central Banks policies just aren’t working.
The last thing the FED wants is for the foundations to collpase during QE.
It will leave no doubt as to their impotence.
I doubt if they have a death wish.
"I Got Mine", is all they care about.
Entanglements are for careless fools that deserved to be sacrificed.
its a beautiful day the birds are singing "zirp nirp nirp nirp zirp nirp....
It's a circle jerk shit-show.
Ask these too big to fail, zero cap-ex, free money, algo swaping, buyback, Non- GAAP, assclowns.
They run the Circus> http://www.newyorkfed.org/markets/pridealers_current.html
"free money, algo swaping, buyback"
William Dudley of the NY Fed feels at home helping his buddies at Goldman Sachs.
I'm thinking that at this point the whole house of cards is going to catastrophically collapse - no getting out of it, it is far too late to turn back now.
So the longer they can kick the can down the road the better prepared those of us in the know can get. Maybe even convince a few more others to come aboard and get their shit together while there is still time.
A couple more years of stacking beans, bullets, and band-aids as well as metals and bitcoin, and getting like-minded people to join us could do us good. It takes several years to get a garden going really well, learn useful skills etc.
https://www.youtube.com/watch?v=AFMinapKlTA
They never stopped QE, they just practice large hidden QE they call "no QE", and huge admitted QE.
So their next step is simply to return to huge admitted QE, but QE-infinity started many years ago, and will simply continue until the dollar vanishes. And probably beyond too.
The entire system operates on QE from its inception sometimes they hit the accelerator, sometimes they step on the breaks.
QE is a car, if the driver is pressing the gas or the breaks the fact still remains you are a passenger.
What you should worry about is the moment the car stops and you are asked to exit the vehicle, because the people driving this thing dont usually have good intentions.... be even more worried if they pull over on a bridge or at the edge of a canyon or near a river.
I believe the Feds have been buying everytime the Dow drops near 16000. They know if 16000 doesnt hold the next drop goes to 15000 and it could snowball a lot faster lower.
QE Infinity is end-game, its the way the elite will solidify their place as rulers of the new Feudal system.
http://i39.tinypic.com/2yzhimp.jpg
At some point the working class will no longer work to sustain themselves but will be put to work by FIAT LAW, wages will become fixed, the new Feudal age will begin its collapse.
When you see farmers , factory workers and such unionized and wages fixed but work hours mandated you know you are in the death spiral.
Feudalism takes a lot of sweat equity to sustain (not the elites sweat o/c, that goes without saying), which is why you will have a break down at some point and government will force labor out of the population to maintain the living standard of the elite, this will be done with a large buildup of military and police powers coupled with a disarming of the population.
At some point the health burden will be very high and health-care will slip (we are already seeing this) as it is very hard to work a population to death and keep them healthy at the same time, that will bring about a series of plagues and other diseases that will ravage the planet (birdflu, Ebola) cases will become more prevalent.
The elite will struggle to kill off the weak, while working the strong to death, we probably have another 20 years where they can keep the lights on in their ivory towers.
At some point what little is left of the population will revolt, civil war and major wars will break out and the Neo-modern-Fuedal system will crash and burn, gold will be re-instated as the currency again, and the cycle repeats.
Catfish bait is getting too pricey.
I think rotten bankster will work just as well.
Sounds about right. The only thing is though that I think we are much further along on the road to the next revoluation than the elite realize.
Interesting thoughts.
But I don't think there will be enough oil.
No once they blow it up it's gone. Nothing will remain, and nothing will return. We will become less that 100M humans on earth and never remember any of it.
Give it 100 years. But the worst of it, over the next 30, starting in 5.
I get the feeling you are one of the Elite. Watch out for people like me who are stronger and more intelligent than you (and All of the Elitists, for that matter). You think people like me will be working for you? Ha! I'll be the one who wakes you up at 3am with a knife to your throat and a fist around your balls. If you're an Elitist or one of their spawns, be afraid; be very afraid...
Here I go again:
This means that the Federal Reserve Board can alter or amend all the Rules of the Fed the way it wants to just by voting to do so.
Therefore, we should consider the fact that QE may exist in two forms. The publically announced kind we've been familiar with after the events in '08 and '09. And a 'sotto voce' QE whose activity is withheld from the general public, but known to the banks and institutions.
But the publicly declared QE, which is what QE4 would be, is the preferred variety as we saw in the workings of QE3.
When QE3 began in the fourth quarter of 2012, the DJIA was about 13,500 and the S&P about 1500. When QE3 ended two years later, in the fourth quarter of 2014, the S&P was up 33% to 2000 and the DJIA was up 4000 points to 17,500.
At that point the Dow plateaued and went into a trading range from 17,000 to 18,400. The QE money was no longer sneaking into the NYSE, but just as important, the Wall Street traders had lost heart without hearing the "Rallying Call, QE3, QE3" on the Seventh Avenue Express on their way to fight the good fight until 4pm.
Got to keep those future public and .gov pensioners on the dole.
@soldier
The definition of INSANITY is doing the same thing over and over again expecting a different result. Once confidence is broken in the market, QE won't matter. Once the market breaks, those that are trapped and sitting on losses will beg for QE in the hopes that they can get out in the percieved rally. That rally will never materialize. Psychology of the marketplace is what counts and God forbid that if Bonds break along with the stock market, there is nothing that the Fed can do. They will be exposed as having no clothes. Interest rates are already at zero, going negative gives the impression of desperation and panic and I do not think they will go there. Interest rates are already negative now if one considers 2% inflation.
ZH, when oh when are you going to featue the only two analysts that matter? (ALL others are flakes, wannabees, has-beens, AP cut-outs, etc.)
https://youtu.be/u7tTdO6oxUA
https://youtu.be/YpZZHeVwFPU
Then go back once again to Sinclair, to make sure you understood Holter ..
Now, when Sinclair says "I've been told."
The word is -- RESET ..
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (start at the 11 minute teaser)
Neither Sinclair or Holter have anywhere near a clearance above top secret. So again, "I've been told." "My source(s) have never been wrong since 1974." (shortly after closing the gold window.) "I do trust my source(s)." Has Sinclair changed his position from a year ago?
We can fund it ...
(we can)
https://www.youtube.com/watch?v=iKS-pcyNERQ
Either the financial cycles graph is about to break, or we're in for on hellva ride.
"The Federal Reserve will pursue another round of quantitative easing before it increases interest rates, according to economist Jerome Booth, who said a premature rate raise would trigger a recession in the US."
The U.S. has been in a recession since 2008. Subtract the debt and there is no true GDP growth, which is why the FED is stuck on ZIRP.
As we have been in an ongoing recession some 7 years, we are also in a depression.
Your man writes "a premature rate raise would trigger a recession in the US". But for crying out loud - there MUST BE recession. That's the point. The Fed just hasn't accepted that yet. They've been trying to fight math.
After a major credit-overexpansion asset-hyperinflating boom, there must at some point be a reset with PAINFUL evaporation of paper wealth. Attempting to avoid recession could only work if borrowing could be expanded exponentially. You can start 'exponential' (we were well into it even before the GFC) but you can't continue it. It becomes progressively more difficult as the slope rises then impossible. It MUST break, and the higher the point it breaks from, the bigger the fall. Every time you kick the can it gets heavier till you can't kick it any more.
Take Home:
(1) The task of the Fed - which it's tried to avoid for numerous reasons, some good - is what it's always been - to see and accept the math, then MANAGE THE NECESSARY RECESSION. More destructive stupidities like QE4, NIRP etc etc etc just take us further up the curve. Better to get off it before we inevitably fall off it.
(2) DON'T ENABLE ASSET HYPERINFLATING CREDIT-OVEREXPANSIONS ... again .... again ..... again .... again ....
.