QE2

[BrntOrngStmpeDe]

From what I'm reading is seems as though we are damned if we do and damned if we don't. Is there a way out of the mess?

"The dialing back of the Fed’s monetary machinations increases the possibility that interest rates will need to rise in order to attract buyers in sufficient quantities to fill the gap. And if there’s one thing we know, it is that rising interest rates would be devastating to an empire of debt such as the United States circa here and now."

"This steep downward slope of the dollar’s trend line over the last year begs for the Fed to attempt something to slow the dollar’s descent. Were they to signal a continuation of the same level of monetization now underway, past June, can anyone doubt that the dollar’s steep fall would only worsen, risking even collapse?"

To my reading this seems to say that if we continue monetization we are hosed with a potential dollar collapse but we are also hosed if we don't monetize because that leads to higher interest rates.

 

[YoLaDu]

i have nothing to add, obviously, but everytime i see QE2, this pops in my head.

 

[Gone To Texas]

I see three options.

1. Keep monetizing the debt in order to enable government spending and pay off government debt at a low rate, the dollar collapses, our savings are destroyed and *everyone* become poor.

2. Stop monetizing debt, interest rates rise, interest payments on our government debt skyrocket, dollar strengthens, our savings are safe, but the fragile economy crashes due to the higher cost of borrowing and we all lose our jobs.

3. Drastically cut government spending which eliminates the need to monetize debt. The dollar avoids collapse and the economy suffers a deep but short recession as people currently dependent on government contract and handouts figure out how to contribute to the productive side of the economy,

My vote is for #3.

 

[Ag with kids]

QE/QE2 was Milton Friedman's idea, FWIW...

 

[Oilfield]

Gone to Texas, #3 for the win. Time to go to work.

 

[upset_horn]

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[Gone To Texas]

So upsethorn casts a vote for option 1 or 2.

 

[johnny chimpo]

Boys, it's gonna be QE to infinity or collapse, whichever comes first. Only thing to do to protect your rapidly devaluing dollar denominated assets is to convert that toilet paper into precious metals or other commodities. Inflation is here to stay. It ain't rocket science, and has served me very well the last 3 years.

 

[Musburger]

Thoughts from my blog.

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[TexasGolf]

get ready for QE3. The fed does not see the inflation.

 

[Leftwith]

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[A. BETTIK]

So essentially the centralized government has raised a tax on poor people. Nobody votes for this crap.

My hope is to live old enough to see my kids and grandkids identify, catch, convict and imprison all centralized government socialists doing this to us now and the past thirty years.

 

[Gone To Texas]

It's June. QE2 is supposed to end this month. Its stated objectives were to stimulate economic growth and reduce unemployment. Did it work? And what is next?

Here are some results since December 1, 2010:

Official Unemployment: Down from 9.4% to 9.1%
S&P 500: Up 8.1%
Dollar Index: Down 9.9%
Price of Oil: Up 12%
National Debt: Up 3.7% ($510 billion)

Any predictions what will happen to: employment, equities, bonds, and the dollar after Bernanke closes the spigot?

IMO, based on the above, QE2 did not achieve its goals. Therefore, logically, I expect the announcement soon of QE3.

 

[TexasGolf]

whats the effect been on:

housing? foreclosures etc?
commodities/inflation? cost of living/food etc?

 

[Texas007]

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