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To: SampleMan
don’t think QE is bolstering the market, can we then agree that it should be terminated

Terminating QE can mean more than one thing.

There've been at least three different 'QE's not counting the 'twists'.  One part of the first one had the Fed buying a bunch of private bonds and then later selling them.   You can't mean we should say, 'un-sell' the bonds (buy them) and then proceed to 'un-buy' them (sell them).  Same with the other parts of the other QE's.  If what you mean is we should stop doing and more QE's right now then well, we're not doing and of them right now.

If what you're really saying we should abolish the entire federal reserve then please really say so in plain English.

130 posted on 05/08/2013 2:53:36 PM PDT by expat_panama
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To: expat_panama

$85 billion a month is being created by the Fed. The pure intent is to reduce the banks debts by dilluting the dollars value (ditto for the Treasury), provide the Federal government below market rates, and fluff up stocks. If that isn’t the intent/effect of the current influx, then what is?

Money supply is supposed to reflect wealth creation in order to support liquidity and prevent deflation. When money supply exceeds wealth creation, it is destructive to the value of the dollar.

Right now, money supply creation is vastly exceeding wealth creation.

Decreasing the value of the dollar can be expected to increase the price of stocks first (forecasting) and goods later. You and others appear to accept only half of that equation.

So what do you think would happen to the market tomorrow if the Fed stated “No more QE, starting today”? Would the market continue to rise? If its not based on QE, why not?

There are no free lunches and excessive money supply has an ugly price.


131 posted on 05/09/2013 5:07:06 AM PDT by SampleMan (Feral Humans are the refuse of socialism.)
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