“The Fed declares “victory” over the “improving” economy, says no more QE is needed after #2, and then as soon as the economy and the markets take another downturn from no longer being pumped up, the Fed will call it something else, but it will in fact be more QE whether it’s QE2.1 or QE3.0.”
Exactly.
I very much doubt the Fed could stop monetizing the debt without bringing the government to a crashing halt. Are there enough investors to buy all the debt we need to issue if the Fed gets out of the market? When QE2 ends the Fed will have to replace it with some other mechanism for accomplishing the same end. If it doesn’t we won’t be able to beg, borrow, steal or print enough money to keep the federal government functioning. Nobody in the governing class wants to see the federal government bouncing checks; the Fed will keep the monetary shell game going long after our currency is destroyed.
“I very much doubt the Fed could stop monetizing the debt without bringing the government to a crashing halt. Are there enough investors to buy all the debt we need to issue if the Fed gets out of the market?”
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How about if they change the laws regarding 401-(k)’s and force us to buy Treasuries with our retirement contributions? The American people get to finance the debt. It will be presented to them as their “patriotic duty”. They receive a ‘guaranteed” 3% and never lose a penny!
Congress could pass a law, president signs it, and it’s done!