Over the last year, the Fed has begun resorting to verbal rather than direct monetary intervention. And it is Chicago Fed President Charles “QE” Evans who clamors most for more easing.
Is QE3 Right Around The Corner?
(August 30 2011)
So much for no QE3, at least if Charles Evans gets his way.
Chicago Federal Reserve President Charles Evans was on CNBC just a few minutes ago, and comments from Evans made it sure seem like an additional round of quantitative easing is on its way.
http://www.benzinga.com/media/cnbc/11/08/1890663/is-qe3-right-around-the-corner#ixzz1oHCdaaE2 [7]
Bernanke Managed Expectations Like A Champ: QE3 Is Around The Corner
(November 2 2011)
Dissent, though, jumped from hawks to doves as Chicago Fed President Charles Evans wanted more accommodation; along with a reference to lower inflation, these two suggest Bernanke has managed to save his last bullet, and will probably bring out the quantitative easing in coming months.
Federal Reserve Could be Laying the Groundwork for QE3
(December 6 2011)
Chicago Fed President Charles Evans gave a speech at Ball State on December 5, and within it he detailed some of the actions that the Fed could take to support its dual mandate of promoting maximum employment and fostering price stability. Although Evans did not specifically mention asset purchases, he said that without action the Fed could fail both parts of its dual mandate.
Evans is the President for the Chicago Fed. Chicago is the second largest financial center in the US (after NY). So this guy is simply pushing for his “constituents” in calling for more monetary accommodations from the Fed. In fact, Evans’ verbal interventions alone have produced even more market gains than QE 2 did.
Here’s the effect of QE 2 ($600 billion) from start to finish.
And here’s the impact of Evans’ pro-QE 3 comments starting with his August 30 2011 CNBC interview until today.
There you have it folks. The Fed can get more market gains from Charles Evans than $600 billion in QE. Hey Bernanke, here’s an idea: just stop bothering with monetary policy at all give Charles Evans his own TV show. Heck, we'd get the same effect with less Dollar devaluation.
However, the facts remain that the Fed cannot engage in more QE while in today’s political climate Which means… the Fed will disappoint, and we will get a market correction. This Hilsenrath story from earlier this week is just an attempt to prop things up verbally without the Fed openly contradicting Bernanke’s testimony last week. All the macro and technical signs point towards something bad coming this way. The red flags are literally everywhere. And judging by the significance of them, we could very well be heading into a full-scale Crisis.
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