QE Forever?

derryb

Will the FED announce another buying spree before year end? While they may call it something else, I believe they will have to add to the kitty.

OperationButter

No brainer imo.

Yes

Julio

Gut says, yes.

mariner67

No.

vpr

No. With bond yields dropping, I'm sure they realize that the law of diminishing returns is working. The problem with adding liquidity is that the money doesn't trickle down to the people who need it. It is spent on expensive houses, coins, stocks etc. The average person on the street is still having a hard time getting credit. Mortgage rates have gone back above 4%. No more easing for now. I'm sure when the economy tanks again, they'll have to print again but I don't see that happenning this year.

streeter

1. The federal govt borrows 40cents of every dollar it spends. If LOLthe FED does not provide
the 40cents, who will? I'm looking around for hands being raised. None. Oh, maybe your
retirement account. LOL
2. Hey, how about them student "non performing" loans? Federal govt guarantee on those puppies.

Just wait til the SHTF on this little charade. 2-5 years. Take cover. Incoming.

streeter

In the back of my brain I keep wondering what "they" have up their sleeve when
the new and improved $100 bill comes out shortly

All "they" would have to do is either completely or gradually demonitize the old benjis.

Can you just imagine the flood of cash reentering the USA? That would be one way to jumpstart Main Street

Good idea to thoroughly rinse the residue off before making a deposit

cohodk

I see no reason for more QE but Bernanke has disappointed me in the past. Still, I'll vote no more QE this year.

OPA

No more QE's. And it appears, that bond prices are beginning to think so also.

VanHalen

I'll believe the $85 billion/month in QE will continue into next year.

Coulport

Same game.
Different name.

tneig

I thought they could do it at will now, ongoing, maybe without the requirement to announce anything?

ksammut

Yes, more QE. Our debt and deficit are not going away. We need a lot more than a wishing and a hoping to stop QE.

jmski52

I feel pretty safe in saying "yes - there will be more QE".

Spooly

Tapering... the FED needs to wind down its spending.

COALPORTER

<< <i>I'll believe the $85 billion/month in QE will continue into next year. >>



Me too, but I doubt they will increase it or come out with another plan to run
along side this one.

ricko

Yes.... they will continue... it props up the banks. Cheers, RickO

Baley

Yes, it channels money to the banksters and makes us debt slaves

renman95

To infinity...and beyond.

jdimmick

they will start to real it back in, although slower at first.

PerryHall

Of course they will. There's an election next year and the Dems need all the help they can get.

TwoSides2aCoin

No. Tapering is the desired course from what Im gathering. We don't need blunt force trauma to add to the hyper inflation coming down the chute for all of our fiscal irresponsibility.

GrumpyEd

I doubt they'll start a new program.
When they reduce to 85B per month the markets will react and they'll keep some level going for longer, it won't be a cold turkey ending.
They'll cut it some to make the point that they created improvements but they'll keep the bulk of it going so things stay stimulated.

johnny9434

<< <i>No brainer imo.

Yes >>

derryb

"If the Fed reduces its purchases of Treasuries and mortgages, interest rates will no doubt start rising from their artificially low levels." - Richard Ebeling, senior fellow at the American Institute for Economic Research in Great Barrington, MA and professor of economics at Northwood University in Midland, MI.

cohodk

<< <i>"If the Fed reduces its purchases of Treasuries and mortgages, interest rates will no doubt start rising from their artificially low levels." - Richard Ebeling, senior fellow at the American Institute for Economic Research in Great Barrington, MA and professor of economics at Northwood University in Midland, MI. >>



And that would be a bad thing?

derryb

<< <i>

<< <i>"If the Fed reduces its purchases of Treasuries and mortgages, interest rates will no doubt start rising from their artificially low levels." - Richard Ebeling, senior fellow at the American Institute for Economic Research in Great Barrington, MA and professor of economics at Northwood University in Midland, MI. >>



And that would be a bad thing? >>


Bad thing for anyone (such as Washington) who is very dependent on borrowing money. A rise in interest rates will create a rise in spending for DC (higher taxes to fund more interest on the debt) and will also create inflationary pressures. The last thing the taxpayer needs is higher prices and higher taxes. This is why many believe the FED is indefinitely committed to QE.

Keep in mind that when taxes alone can't satisfy the politicians' thirst for spending, the economic environment becomes fertile for Cyprus-like wealth confiscation on top of the current Washington-like dollar destruction.

However, a good thing, though painful, as far as resolving runaway spending (debt) by those who can't print their way out. Our last worthwhile economic leader (Volker) proved that. I'm all for higher rates (determined by the market and not the bankers) as long as it reigns in federal spending and borrowing. Unfortunately it won't as long as Washington has paper and ink.

VanHalen

<< <i>

<< <i>"If the Fed reduces its purchases of Treasuries and mortgages, interest rates will no doubt start rising from their artificially low levels." - Richard Ebeling, senior fellow at the American Institute for Economic Research in Great Barrington, MA and professor of economics at Northwood University in Midland, MI. >>



And that would be a bad thing? >>



It needs to happen. Slow (very slow) increases will be the first step in letting us know where we really are. It has to happen sometime.....

jmski52

We've already seen what happens when the perpetual increases in spending are ever-so-slightly decreased. Mind you, federal spending is still increasing quite rapidly but the hue and cry coming from all corners of the federal bureaucracy because of a slight decrease in the rate of increase was enough to become notoriously known as "sequestration" (as if anything was somehow being held back).

Taper is a joke.

cohodk

<< <i>We've already seen what happens when the perpetual increases in spending are ever-so-slightly decreased. Mind you, federal spending is still increasing quite rapidly but the hue and cry coming from all corners of the federal bureaucracy because of a slight decrease in the rate of increase was enough to become notoriously known as "sequestration" (as if anything was somehow being held back).

Taper is a joke. >>



Personally, I havent seen any impact of this sequester thing.

And, the 10yr IS going to 4%, and the US economy will BOOM. Not Ka-boom, but expand, and do so quite nicely.

Can someone please provide the math behind what a rise in the 10yr to 4%, from the current 2.20%, actually means in the total number of dollars needed to fund the debt? Would it cost an addition trillion, 2 trillion, 5 trillion?

While your at it, please compute the additional dollars that would flow into savings accounts as a result of savers being able to get higher yields.

How much of this additional income would flow into the economy, thus providing jobs, higher taxes revenues, ect?

jmski52

Can someone please provide the math behind what a rise in the 10yr to 4%, from the current 2.20%, actually means in the total number of dollars needed to fund the debt? Would it cost an addition trillion, 2 trillion, 5 trillion?

1.8% x $16,500,000,000,000 = $297,000,000,000 annually, or $24,750,000,000 monthly. You're right, it's peanuts. Assuming that 10yr is the average debt maturity.

While your at it, please compute the additional dollars that would flow into savings accounts as a result of savers being able to get higher yields.

Good question. I'd say not many. It depends on what the real interest rate is. (10yr rate minus rate of inflation).

How much of this additional income would flow into the economy, thus providing jobs, higher taxes revenues, ect?

Higher interest rates will always compete with every company's IRR and plans for expansion or capital reinvestment. Rising rates always put a lid on company growth. It's not like the government, where you can just order up a souffle' of new dollars by the hundreds of billions.

Your questions indicate that you think there is no impact from massive government debt. However, there is an impact. We are feeling the effects now, and we will continue to feel the effects for a long time in this country. The quality of jobs is declining and so is the middle class. You want fries with that?

derryb

There is a very big difference on the affect to the economy by dollars created through printing vs. dollars created through production.

derryb

The Dreaded 'Tapering'

derryb

Well, years later it appears QE is forever and we now know why.

OPA

What has that got to do with QE? I believe if you go back to the beginning of time, (for homo sapiens ) that has always been the case, except maybe under Stalin in the Soviet Union. It takes money to make money & the top 5 - 10% most certainly have it, while us bottom dwellers only have a limited amount.

blitzdude

I just bought more bitcoins. Who cares about QE'z?

I don't know about evolution but from most of what I've witnessed we better start going backwards.,,,,,because we jacked this place all up. So sad profit is what trumps life. RGDS!

jmski52

What’s QE got to do with inequality? I don’t think it has anything to do with “it takes money to make money”.

I think it has more to do with “keep changing the rules and keep skimming off the top” while keeping the herd calm with reassuring and soothing official reports and massaged data.

Gee, I hope that doesn’t sound too negative.

derryb

@OPA said:
What has that got to do with QE? I believe if you go back to the beginning of time, (for homo sapiens ) that has always been the case, except maybe under Stalin in the Soviet Union. It takes money to make money & the top 5 - 10% most certainly have it, while us bottom dwellers only have a limited amount.

Duh, have you even considered the possibility that the exploding wealth gap is a result of monetary stimulus? Do you really believe stimulus floated all boats. Wanna buy some swampland?

chesterb

I don’t even know what QE is!

VanHalen

QE now, QE forever!

meluaufeet

2022 about a year from now YES.

cohodk

@meluaufeet said:
2022 about a year from now YES.

Why do you feel there will need to be more QE next year?

meluaufeet

YoY comps

PerryHall

@cohodk said:

@meluaufeet said:
2022 about a year from now YES.

Why do you feel there will need to be more QE next year?

@cohodk said:

@meluaufeet said:
2022 about a year from now YES.

Why do you feel there will need to be more QE next year?

It's an election year and the House and Senate are up for grabs. Stimulating the economy will help the party in power. Both political will do this.

carew4me

Depends on Joe BuyThems approval rating. If it dips below %50 then more bread will be thrown to the crowd.

cohodk

@PerryHall said:

@cohodk said:

@meluaufeet said:
2022 about a year from now YES.

Why do you feel there will need to be more QE next year?

@cohodk said:

@meluaufeet said:
2022 about a year from now YES.

Why do you feel there will need to be more QE next year?

It's an election year and the House and Senate are up for grabs. Stimulating the economy will help the party in power. Both political will do this.

So the stimulus of the last year, which has overwhelmed the supply chain due to excessive demand, will need to be expanded to further the disruption of the supply/demand equation?

DrBuster

I'd wager shutdowns disrupted the supply chain, not stimulus. I know that's what affected ours and my construction buddys say the same. Stimulus is just coincidental timing, not a reason.

derryb

@DrBuster said:
I'd wager shutdowns disrupted the supply chain, not stimulus. I know that's what affected ours and my construction buddys say the same. Stimulus is just coincidental timing, not a reason.

Stimmy has been keeping supply system drones on the couch. Supply issues are not limited to material. They include people who produce and move material. Without working people there is no chain. Less working people equals weaker supply chain.

RobM

@derryb,
Yep. Last week my local grocery had not a single banana. There is no increase in demand for bananas. The banana truck never came because some Chiquita was on the Dole. Truck drivers, in particular, are in deficit. Older drivers retire and younger would-be drivers are discouraged by forecasts of obsoletion of human operated trucks.

Baley

Was there a mad rush and bidding war in everyone's desperation to hoard and store stacks of bananas? That was probably the last truck of bananas🍌 ever!

dorkbar

My buddy drives back and forth from Madison to Minneapolis every day and makes $75K a year. Home nights. Says he never engages his brain, and all he does is hook up and unhook trailers. Yet nobody can muster the resolve to get a job. SMH.