I’ve been pounding the table for months saying that QE 3 wasn’t coming. The reason was simple: the Fed is now politically toxic and cannot engage in aggressive monetary policy without experiencing severe political backlash (this is an election year).
Well, here’s today’s FOMC proving me right… again. Indeed, the Fed has disappointed the “QE is coming” crowd since July 2011. We’ve had Operation Twist 2 which is just the Fed re-arranging its Treasury portfolio, we’ve had promises of extended ZIRP, and we’ve had a multitude of verbal interventions from Fed stooges like Charles Evans…
BUT. NO. QE3.
This makes 8 Fed FOMC announcements/ releases and no QE 3.
Folks, QE 3 is not coming. Not without a Crisis first. End of story. The last time the Fed hit “print” with QE 2 put food prices at all time records and kicked off revolutions and riots around the globe.
Today, gas is already at $4, food prices aren’t too far off their highs… do you REALLY think the Fed will kick off more QE in this environment… during an election year? At a time when the Fed is becoming a hot topic in the election?
If the Fed did this, Bernanke et al might as well brush up their resumes because the Fed would be dismantled. The political environment in the US absolutely will not tolerate more QE unless we get a Crisis first.
Case in point look at the IMF which is essentially a US-backed bailout fund: how many times has Europe looked to the IMF for more money? How many times has the IMF said “No”? A dozen perhaps?
On top of this, politicians and Wall Street are already looking for a scapegoat to pin the 2008 Crisis and ensuing fall-out on. The fall-out from the bailouts/ corruption/ behind the scenes deals is far from over. Many folks got a “get out of jail free” card for four years… that doesn’t mean those cards don’t have expiration dates.
The markets and economy have been maintained by a very tenuous balance of policy and talk between the Fed, Wall Street, and Politicians. But as push comes to shove, and REAL litigation starts, these relationships will crumble and sacrifices will be made. The Fed knows this as do all of the connected power elite. Why do you think Goldman’s CEO hired a high profile defense attorney, Tim Geithner is being subpoenaed, and Bernanke is running such a massive “the Fed is great” PR campaign?
Simple answer: litigation is coming in the future and everyone is playing damage control.
With that in mind, the Fed’s hands are tied until a Crisis hits. Judging by the look of things, it’s going to be coming from Europe’s banking system: a $46 trillion sewer of toxic PIIGS debt that is leveraged at more than 26 to 1 (Lehman was leveraged at 30 to 1 when it went under).
So if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investments (both direct and backdoor) you can make to profit from it.
This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com [7]
Good Investing!
Graham Summers
PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com [7]