Free Republic

Bernanke’s Quantitative Easing: Wrong Medicine for an Ailing Economy Friday, 14 September 2012 08:40 J.D. Foster The Federal Reserve’s Open Market Committee announced today that it would pursue $40 billion in additional monthly stimulus in the form of quantitative easing. Meanwhile, it will maintain its previous program of exchanging about $45 billion monthly in short-for-long-term securities. Quantitative easing, or QE, is purchasing long-dated government bonds and similar debt instruments. » If you like this article, please donate to Right Side News Daily The policy is certainly well motivated: The U.S. economy is barely growing, as the latest jobs report underscored,...

Here Comes $10,000 Gold... Sam RoSep. 16, 2012, 5:56 PM"It has never been easy to have a rational conversation about the value of gold," wrote Ken Rogoff in a 2010 piece titled $10,000 Gold?. But with the national debt passing $16 trillion and the Federal Reserve launching a unlimited quantitative easing, the gold bulls will increasingly tell you that the sum of their fears are coming true. In this week's issue of Barron's, Jim McTague spoke to Guggenheim Partners Scott Minerd: Hedging against the most pessimistic case without crippling the upside potential of a better or even miraculous case appears...

  Free Republic moderators---  please do not excerpt.--Zero hedge does not mind        "Everything will collapse" is the consequence Gloom, Boom, & Doom's Marc Faber sees from the Fed's latest 'stimulus' (and the fallacy and misconception of how money-printing can help employment). In a wondrously clarifying interview on Bloomberg TV this morning, Faber explained why he was 'happy', since "the asset values of his holdings will go up" but as a responsible citizen he is worried because "the monetary policies of the US will destroy the world." It truly is class warfare under a veil of 'its good for you' as...

Basically the Fed has gone too far done the money printing mode to stop now. They believe what their policies will stimulate employment but all operations in this regard have failed. The Bernank will spin this as an apolitical move coming two months before an election that could cost him his job…just sayin'. This policy is intended to boost asset prices and prevent a Japanese style deflationary cycle. No matter what they say, TPTB will always choose inflation vs deflation every time. Thus far they've succeeded in supporting their primary clients, the mega-banks. The bottom line for us is we're...

If You Can Eat It, Buy It Now Because It'll Be More Expensive In A Month Bruce Krasting, My Take On Financial EventsSep. 14, 2012, 8:10 PMThe most significant market adjustment since Bernanke used the “Unlimited” word is not in stocks, bonds or PMs. It’s in inflation expectations. Have a look at this chart. Focus on the incredible spike in the past 24-hours. The 10-Year Breakeven SpreadThe sick part of this is that if Bernanke saw this graph, he would cry with tears of happiness. This is exactly what he was praying for. Ben thinks that inflation is a good...

By Mr. Curmudgeon:While Islamic militants riot outside U.S. embassies overseas, and kill American counselor officials and their support personnel, another terrorist act just as deadly took place on American soil. Federal Reserve Chairman Ben Bernanke announced his independent, in your face, answer-to-no-one agency will flood the U.S. economy with $40-billion-a-month in counterfeit greenbacks to buy worthless mortgage-backed securities. He said the Fed would continue the policy "until such improvement is achieved in a context of price stability." That's Fed speak for "Forever."Commodity prices, like oil for instance, soared after Benny boy's announcement. So much for "price stability."As if to prove...

$480 BILLION ANNUAL DIRECT TAX ON SAVINGS Federal Reserve Goes All In for its Owners By Wayne Jett © September 14, 2012 The Federal Reserve announces its intent to create $40 billion monthly at the expense of existing savings and pay it to the big banks for mortgage-backed securities. This outrageous looting evokes what response? Applause, of course, and a little intellectual hand-wringing gives just the right tint of fair debate. Who continues to assign any credibility to the Federal Reserve’s announced policies, objectives and motives? No informed person, except those beholden to big banks (the Fed’s controlling shareholders), including...

Ratings firm Egan-Jones cut its credit rating on the U.S. government to "AA-" from "AA," citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality. The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.'s real gross domestic product, but reduces the value of the dollar. In turn, this...

You can't accuse Federal Reserve Chairman Ben Bernanke of not living up to his nickname. Back in 2002, Bernanke delivered a speech entitled "Deflation: Making Sure 'It' Doesn’t Happen Here" in which he referenced a statement by economist Milton Friedman about fighting deflation by dropping money from a helicopter. Well, it might be time for a new nickname for Bernanke because what he did today was a lot more than drop money from a helicopter. Today the Federal Reserve announced that QE3 will begin on Friday, but it is going to be much different from QE1 and QE2. Both...

In one more example of why we are going to need more-er and open-ended-er QE from the Fed, today's dismal data rolls on. Industrial Production dropped 1.2% MoM - its largest drop since March 2009 - and missed expectations by the most since December 2008. The market (expectedly) is unimpressed and stable - fully aware that the Fed's new infinite QE will simply be expanded to an infinte-er QE should things go from worse to worse-er. To add more salt to the wound, Capacity Utilization dropped to its lowest of the year and missed expectations by its most in 16...

This is not what people mean when they talk about “wealth creation.” In fact, it’s very nearly the opposite of that: The inevitable devaluing of the dollar — the prices of gold, silver and several other commodities spiked in the minutes following the Fed’s 12:30 announcement — means our savings will lose value. This is the destruction of future wealth in the hopes of creating some current economic growth. In that respect, it is no different from increasing the budget deficit even further to fund even more Keynesian spending. The Federal Reserve’s Open Market Committee today said it will keep...

The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates. The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve. There's strong hints that they'll do Treasurys next," Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London."They're pulling out all the stops to try to get this...

The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment. “We’re looking for ongoing, sustained improvement in the labor market,” Chairman Ben S. Bernanke said in his press conference today in Washington following the conclusion of a two-day meeting of the Federal Open Market Committee. “There’s not a specific number we have in mind. What we’ve seen in the last six months isn’t it.” Stocks jumped, sending benchmark indexes to the...

NEW YORK (CNNMoney) -- The Federal Reserve announced plans to unleash more stimulus Thursday, in its third attempt at a controversial program to rev up the U.S. economy. The policy, known as quantitative easing and often abbreviated as QE3, entails buying $40 billion in mortgage-backed securities each month. The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months. The Fed is wasting no time. The purchases begin Friday and are expected to total about $23 billion over the remainder of September.

The bank says it will work to stimulate the economy until it sees improvements in the labor market. The Federal Reserve announced an open-ended bond buying program Thursday it said would continue until the labor market improves "substantially." The announcement marks a significant new step in the Fed's effort to boost the economy, and also signals the central bank's concern about the weak recovery from the recession. The political ramifications of the move could also be huge. The decision comes less than two months before a presidential election expected to turn on voter perceptions of the economy. Stocks spiked on...

The following is the text of a statement Tuesday by rating agency Moody’s: Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government’s Aaa rating and negative outlook, says Moody’s Investors Service in the report “Update of the Outlook for the US Government Debt Rating.” If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable, says Moody’s. If those negotiations fail to produce such...

Why The Fed Will Not Launch QE3 Interest-Rates / Quantitative EasingSep 09, 2012 - 10:46 AM By: Tony Pallotta Whether the Fed decides to launch QE3 this week is far more a complex decision than they lead us to believe. It is not as simple as monitoring economic data and deciding whether to expand the balance sheet or not. Yet the Fed rarely discusses what that other criteria is in making such an important decision. The recent Jackson Hole speech by Chairman Bernanke did offer some insight to the other factors, as well as his recent Congressional testimony. And there...

A wide range of economists expect the Federal Reserve to restart balance-sheet-expanding bond buying in a bid to spark better growth rates, amid other, lesser stimulus options. For most forecasters, the release Friday morning of tepid-at-best August hiring data essentially seals the deal that when the central bank ends its two-day monetary-policy meeting next Thursday, it will in some fashion offer fresh stimulus to the economy. The way economists see it, comments by core central bank officials, most notably Chairman Ben Bernanke‘s speech a week ago, make some form of action very likely....

Why QE3 Is Coming Next Week Calculated RiskSep. 8, 2012, 10:29 PMSince the Jackson Hole Symposium, I've been thinking it is very likely that so-called "QE3" would be announced at the next FOMC meeting (Sept 12th and 13th). And after thinking about Columbia University professor Michael Woodford's paper presented at Jackson Hole, I think this round of asset purchases might be more effective than most people expect. Notes: QE3 is shorthand for another Large Scale Asset Purchases (LSAP) program. "QE" is monetary policy, not fiscal policy (not spending). Yesterday, Goldman Sach economist Sven Jari Stehn beat me to the punch....

Goldman Presents: The Case For A Fed 'Double Punch' Joe WeisenthalSep. 8, 2012, 4:52 AMThe Fed is set to meet next week, and thanks to Friday's disappointing jobs report, economists have raised their odds of seeing QEIII adopted. That would mean that in an effort to boost the economy, the Fed would buy more purchases... perhaps Mortgage Backed Securities with the purpose of bringing down interest rates for homebuyers. In a note put out last night, Goldman's Sven Jari Stehn presents: The Case for a Double Punch in September. Stehn's paper actually keys off of the Michael Woodford Jackson Hole...