tagged w/ Quantitative Easing
-
Jeff Harding from Market Watch talking about Frank Shostak’s piece from the Ludwig von Mises Institute where he argues that the Federal Reserve should freeze its balance sheet:
"The vast amount of liquidity the Fed pumped into its primary dealers have fueled the stock markets and the current M&A splurge. It has also provided liquidity to the corporate markets which makes borrowing cheap . That is why you see companies like cash rich Google GOOG +0.06% ($35 billion in the till) borrow $3 billion on the bond market at an average of 2.33%.
It makes sense that when the growth momentum of quantitative easing stops, that this will eventually affect the markets, usually six to nine months later.
Shostak sees that this will put downward pressure on credit expansion by banks and thus the money supply will shrink. I think that is correct as well. We have seen some growth in lending activity recently and, as I have written lately on this, it is likely that this will stagnate."
Jeff Harding then makes prediction:
"I believe the Fed and the Administration will be willing to tolerate a higher level of price inflation and for a much longer period of time, despite the inflation hawks’ warnings. I think this new money stimulus will occur no later than during the start of the presidential election period (January, 2012), and will continue until the winner is sworn in. I think Dr. Bernanke will be fired thereafter."
Jeff Harding doesn’t believe that “the Fed will play ‘chicken’ during an election year, and when things turn ugly they will announce QE3 and that will kick the can down the inflationary road. QE3 may be the last installment of this monetary madness.”Jeff Harding from Market Watch talking about Frank Shostak’s piece from the... more
-
-
There was a time when everyone thought CDOs are perfectly safe. That ended up being a tad incorrect. It resulted in AIG blowing up, recording hundreds of billions in losses and almost taking the rest of the financial world with it, leading ultimately to the first iteration of quantitative easing.
A few years thereafter, several blogs and fringe elements suggested that munis are the next major cataclysm and will likely require Fed bail outs (some time before Meredith Whitney came on the public scene with her apocalyptic call). It would be only fitting that the same AIG that blew up the world the first time around, end up being the same company that does so in 2011, and with an instrument that just like back then only an occasional voice warned is a weapon of mass destruction: municipal bonds.
AIG dropped over 6% today following some very unpleasasnt disclosures about its muni outlook, and corporate liquidity implications arising therefrom:
"American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity."
So how long before we discover that Goldman has been lifting every AIG CDS for the past quarter? And how much longer after that until someone leaks a document that the company's muni strategy was orchestrated by one Joe Cassano?
Continue on at:
http://www.zerohedge.com/article/will-aig-implosion-20-lead-qe-30-0There was a time when everyone thought CDOs are perfectly safe. That ended up being a... more
-
-
Bernanke’s endless talk of more dollar printing sets precious metals soaring
Gold prices rose close to all time highs on Monday following Ben Bernanke’s comments on CBS’s “60 Minutes” Sunday, as the Fed chairman indicated that even more quantitative easing is being considered.
Bernanke appeared less than convincing as he told viewers that the economic recovery may not be self-sustaining, and that the Fed may purchase even more Treasury bonds.
The comments, coupled with the fact that unemployment in the US is now officially at its worst levels since World War Two, a fact that has been long known but never admitted, were driving factors in sending gold and silver soaring once more.
Investors are still seeking a safe haven in the precious metals, driving gold futures for February delivery up $10.50, or 0.8 percent, to $1,416.70 at 10:22 a.m. on the Comex in New York.
Earlier in the day the price climbed as high as $1,420.
Gold has now risen in value approximately 29 percent this year and will make a tenth consecutive annual gain.
“Further currency debasement is the new norm,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago told Bloomberg News.
“As long as that stands, investors are going to buy metals as a hedge against paper money. Gold has very clear sailing to go much further from here.”
Zeman also pointed out that gold would now be even higher if investors were not also buying dollars as a safer bet against the Euro.
“Without the eurozone troubles in the background, we’d see the dollar much weaker and gold much higher,” Zeman said. “These debt issues continue to pop up, and printing more money is essentially a huge positive for gold.”
“Gold is supported either way — risk sentiment turning sour, or (by) further weakness in the greenback,” added VTB Capital analyst Andrey Kryuchenkov. “Clearly investment demand is still there.”
Fears over the spread of the European debt crisis were also heightened today with news that Moody’s downgraded Hungary’s debt to the lowest investment grade.
Zeman predicts that gold will hit $1500 before the end of the month.
Meanwhile, spot silver traded at a 30 year high, gaining almost 2 per cent to $29.90 a troy ounce, the highest price since 1980.
The precious metal has gained 10 per cent in the past week, and 66 per cent since August.
It’s time to protect your wealth with precious metals. Gold and silver have staged one of the best ten year runs in history and captured the attention of millions of investors worldwide.
The last decade may soon be written in history as what jump started the revolution in personal finance; utilizing metals as an important hedge against economic fallout. The ability of precious metals to protect against inflation, as well as deflation, and everything in between truly shows how versatile and rewarding gold and silver are as investments.
http://www.prisonplanet.com/gold-trades-close-to-all-time-record-silver-hits-30-year-high.htmlBernanke’s endless talk of more dollar printing sets precious metals soaring... more
-
-
Related Articles:
Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again
How In The World Did We Get To The Point Where The Federal Reserve Is Printing Money Out Of Thin Air Whenever It Wants?
Secret Walmart Survey Shows Inflation Already Here
QE2: It's the Federal Debt, Stupid!
The Death Of The Dollar? 11 Signs That We Could Be On The Verge Of A Global Currency Crisis
Related Video:
Banks to Cash-In Again on New Fed Plan (VIDEO)
http://globalpoliticalawakening.blogspot.com/2010/11/preparing-for-revolution-progressive.htmlRelated Articles:
Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again... more
-
-
Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.
by Lindsay Beyerstein, Media Consortium blogger
According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.
Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:
The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come. But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.
But wait! There’s more:
* The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
* Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
* Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we... more
-
-
What the Federal Reserve is up to, and how we got here.
-
-
The grand symphony of currency manipulation seems more finely orchestrated than ever before. However, it's not necessarily the fundamentals that are moving currencies so much as global perception. In the battle between the Fed's quantitative weakening of the dollar versus the eurozone debt crisis, the dollar is winning this round of who sucks less.
On October 1st, I posed the question, will the dollar rebound before being dissolved into a global currency? At that time, no one was predicting the dollar to gain strength with the Federal Reserve planning more quantitative easing. The windbag media promoted QE2 as a stock market stabilizer and a boost to U.S. exports, yet most experts openly called it a backdoor bailout, or monetizing debt, or plain old money printing. Nearly everyone agreed it would ultimately erode the value of the dollar even further and cause measurable inflation.
Indeed, it was a well-justified gloom-and-doom 6 months for the dollar by Fed critics. After all the media build-up, the Fed's announcement of the $600B easing plancame strategically on the day after mid-term elections, when most of the media was focused on feeding the false left-right frenzy by digesting the election results. In other words, QE2 got some mention, but the timing was clearly a tactic to keep a lid on the talking-head backlash. Then, Obama rushed out of the country for the G20 economic summit taking the remaining media distraction with him. Between stories of Michelle's shopping trips, it was revealed that China and other foreign economic players were not very happy about the Fed's move. Yet, the dollar started to rally.
Recent commentary by Chuck Butler in the Daily Reckoning questions the commodity sell-off and dollar rally:
But does it all make sense, given what I mentioned above that the FOMC is looking for inflation to inject into our economy? No… But since when, going back to the financial meltdown, does anything the markets do make sense?
Nothing makes sense if we still believe fundamentals actually matter. Sure the dollar is nearly dead, fundamentally, but it seems that perception now trumps concrete analysis. As I reported in October:
The fundamentals suggest that it (the dollar) should be finished, but just as the world is about to declare it dead, miraculously a global storyline seems to emerge just when needed and foreign investors rush back in for "safety." A clear example was the steady drumbeat of a sovereign-foreign-debt war that resulted in reports of whether the Euro would even survive, while the dollar enjoyed a triumphant ride up victory mountain.
Now, here we go again. As soon as the Fed announcement was made, the media shifted its focus once again to the eurozone debt "crisis." Story after story, day after day, about the developing crisis in Ireland -- and now Portugal. News agencies often salivate to repost these headlines, because crisis sells. And it sells because doom and gloomers, otherwise known as fundamental analysts, are waiting for reality to catch up to the numbers -- not just in the eurozone, but globally. The debt-infected PIIGS is a legitimate story, but it is clearly being heavily pushed to make the dollar look less pitiful.
READ MORE: http://globalpoliticalawakening.blogspot.com/2010/11/eurozone-debt-crisis-20-dollar-sucks.htmlThe grand symphony of currency manipulation seems more finely orchestrated than ever... more
-
-
The Federal Reserve is Laundering Money (VIDEO)
-
-
Ben Bernanke and the rest of the folks over at the Federal Reserve did not just wake up one day and decide that they wanted to start printing hundreds of billions of dollars out of thin air. The truth is that the economic forces that have brought us to this point have taken decades to develop. In the post-World War 2 era, when the U.S. economy has fallen into a recession, either the Federal Reserve would lower interest rates or the U.S. government would indulge in even more deficit spending to stimulate the economy. But now, as you will see below, both of those alternatives have been exhausted. In addition, we are now rapidly reaching the point where there are simply not enough lenders out there to feed the U.S. government's voracious appetite for debt. So now the Federal Reserve is openly printing hundreds of billions of dollars that will enable them to finance U.S. government borrowing, and (they hope) stimulate the U.S. economy at the same time. Unfortunately, the rest of the world is not amused. Nations such as China, Japan and many of the oil-exporting nations of the Middle East have accumulated a lot of U.S. dollars and a lot of U.S. Treasuries and they are not pleased that those investments are now being significantly devalued.
So how did we get to this point? Why is the Federal Reserve printing money out of thin air in a desperate attempt to stimulate the economy?
Well, the Federal Reserve has more or less exhausted all of the other tools that it has traditionally used to help the economy during an economic downturn. As you can see from the chart below, the Federal Reserve has lowered interest rates during past recessions. The goal of lowering interest rates is to make it less expensive to borrow money and thus spark more economic activity. Well, as you can see, the Federal Reserve has no place else to go with interest rates. Over the past 30 years, rates have consistently been pushed down, down, down and now they are kissing the floor....
Another way that the U.S. economy has been "stimulated" over the past 30 years is through increased government spending. The theory is that if the government spends more money, that will get more cash into the hands of the people and spark more economic activity. That was the whole idea behind the "economic stimulus packages" that were pushed through Congress. However, increased government spending always comes at a very high cost under our current system. Government debt is now totally out of control. As you can see below, the U.S. national debt has exploded from about one trillion dollars in 1980 to over 13 trillion dollars today. Currently, there is very little appetite in Congress for more government spending to stimulate the economy, especially after the results of the November election.
Most Americans don't realize it, but much of our incredible "prosperity" over the last 30 years has been fueled by the mountains of debt that we have accumulated. Now U.S. government debt is exploding at an exponential rate....
Sadly, the U.S. government has absolutely no self-control when it comes to spending money. Our politicians are absolutely addicted to debt.
The truth is that the U.S. government just can't seem to stop wasting money. One of the most comical news stories of the past few days involved the Recovery Independent Advisory Panel, which is a sub-committee of the larger Recovery Accountability and Transparency board. This panel will be holding a meeting on November 22nd to discuss how to prevent "fraud, waste, and abuse" of economic stimulus funds.
So where will this meeting be held?
It is going to be held at the ultra-luxurious Ritz Carlton Hotel in Phoenix, Arizona.
Yes, seriously.
You just can't make this stuff up.
So if the Federal Reserve cannot stimulate the economy through lower interest rates and the U.S. government cannot stimulate the economy by spending even more money, what does that leave us with?
Unfortunately, that leaves us with either doing nothing or with having the Federal Reserve print money out of thin air and shovel it into the economy.
Sadly, even after months of news headlines about quantitative easing, most Americans still do not understand what it is. The following is a short video that is very humorous but that also does a good job of simply explaining what quantitative easing is and why it is bad for the U.S. economy....
READ MORE: http://globalpoliticalawakening.blogspot.com/2010/11/how-in-world-did-we-get-to-point-where.htmlBen Bernanke and the rest of the folks over at the Federal Reserve did not just wake... more
-
-
Unlike QE1, QE2 is not about saving the banks. It's about saving the country from Greek-like austerity measures necessitated by a burgeoning federal debt. The debt is never paid, but is just rolled over from year to year; but the interest is paid, and it is here that QE2 relieves the pressure, since the Fed rebates its interest to the Treasury.
The inflation hawks are circling, warning of the dire consequences of the Fed's new QE2 scheme. "Quantitative easing" (QE) is Fedspeak for creating money out of nothing with a computer keystroke. The hawks say QE is massively inflationary; that it is responsible for soaring commodity prices here and abroad; that QE2 won't work any better than an earlier scheme called QE1, which was less about stimulating the economy than about saving the banks; and that QE has caused the devaluation of the dollar, which is hurting foreign currencies and driving up prices abroad.
READ MORE: http://globalpoliticalawakening.blogspot.com/2010/11/qe2-its-federal-debt-stupid.htmlUnlike QE1, QE2 is not about saving the banks. It's about saving the country from... more
-
-
I've been writing report after report detailing our economic and political crisis. After writing two books and getting over five million page views on my online reports, I am inspired by the response and support they have been getting from people across the political spectrum. However, I am forced to confront the fact that we are still failing to reach the people that we most urgently need to reach, the average American citizen, the people who are busy working every day trying to make ends meet and don't have the time to read through long reports.
We've begun work on a documentary, but it will take at least eight months to get it out and, given the urgency of our situation, we realize that we don't have time to spare. So we are going to start making short videos to break issues down in an easily understood manner. The goal is to have a video that family and friends can watch which explains our crisis and hopefully inspires passive people into action.
In this first video, I explain the Federal Reserve's latest Quantitative Easing scheme.I've been writing report after report detailing our economic and political... more
-
-
China’s Dagong Global Credit Rating Co. reduced its credit rating for the U.S. to A+ from AA, citing a deteriorating intent and ability to repay debt obligations after the Federal Reserve announced more monetary easing.
The credit outlook for the U.S. is “negative,” as the Fed’s plan to buy government debt will erode the value of the dollar and “entirely encroaches” on the interests of creditors, analysts at Dagong, one of China’s three largest ratings companies, said in a statement. The U.S. is rated Aaa and AAA by Moody’s Investors Service and Standard Poor’s Corp., the highest credit ratings of the New York-based companies.
READ MORE: http://globalpoliticalawakening.blogspot.com/2010/11/chinas-lead-credit-rating-agency.htmlChina’s Dagong Global Credit Rating Co. reduced its credit rating for the U.S.... more
-
-
President Barack Obama defended the Federal Reserve's policy of printing dollars on Monday after China and Russia stepped up criticism ahead of this week's Group of 20 meeting.
The G20 summit has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent a currency row escalating into a rush to protectionism that could imperil the global recovery.
But there is little sign of consensus.
READ MORE: http://globalpoliticalawakening.blogspot.com/2010/11/obama-returns-fire-after-china-slams.htmlPresident Barack Obama defended the Federal Reserve's policy of printing dollars... more
-
-
AFP reports President Obama "defended Monday the Federal Reserve after foreign condemnation of its 'quantitative easing' policy of printing billions of new dollars to shore up the fragile US economy." In India, Obama said "that the Fed had an independent role in regulating the US economy and he could not order it to act, nor comment on its decisions," but he "broadly defended the central bank's motivations."
http://www.politico.com/news/stories/1110/44861.htmlAFP reports President Obama "defended Monday the Federal Reserve after foreign... more
-
-
Even as Barack Obama and Ben Bernanke publicly defend the Federal Reserve's new $600 billion quantitative easing program, top finance officials around the globe are expressing alarm and outrage. But what did Obama and Bernanke expect? "Quantitative easing" is little more than legalized cheating. For a moment, imagine that the global economy is a giant game of Monopoly. Essentially what Bernanke has done is that he has just reached under the table and has slipped another $600 billion on to his pile of money, hoping that the rest of the players will not call him out on it. The rest of the world has heavily invested in the U.S. dollar and in U.S. Treasuries, and this new quantitative easing program is going to devalue all of those holdings. If the Federal Reserve continues to go down the road of monetizing U.S. government debt, other nations are rapidly going to get spooked and will soon refuse to invest in U.S. dollars and U.S. Treasuries. When that day arrives, it is going to cause mass panic in the world financial system.Even as Barack Obama and Ben Bernanke publicly defend the Federal Reserve's new... more
-
-
Within a decade, a loaf of wheat bread may cost $23 in a grocery store in the United States, and a 32-oz package of sugar might run $62. A 64-oz container of Minute Maid Orange Juice, meanwhile, could set you back $45.71. This is all according to a new report released Friday by the National Inflation Association which warns consumers about the coming wave of food price inflation that's about to strike the western world.
Authored by Gerard Adams (no relation to myself, Mike Adams), this report makes the connection between the Fed's runaway moneycreation policy ("quantitative easing") and food price inflation. (http://inflation.us/foodpriceprojec...)
"For every economic problem the U.S. government tries to solve, it always creates two or three much larger catastrophes in the process," said Adams. "Just like we predicted this past December, the U.S. dollar index bounced in early 2010 and has been in free-fall ever since. Bernanke's QE2 will likely accelerate this free-fall into a complete U.S. dollar rout."
Read More: http://globalpoliticalawakening.blogspot.com/2010/11/loaf-of-wheat-bread-may-soon-cost-23.htmlWithin a decade, a loaf of wheat bread may cost $23 in a grocery store in the United... more
-
-
St. Louis, Missouri – Friday is finally here… The end of what has been an exhausting week here on the trade desk. The dollar continued to get beat down through most of the trading day but started to rally back a bit in the afternoon. Overnight the dollar actually gained with the highflying Nordic currencies falling almost 1% versus the greenback. The euro (EUR) and commodity-based currencies also sold off a bit, and the sharp rally in both gold and silver stalled. A break in all of the price action was to be expected, but it may not last long as we will get the October US jobs report later this morning.
Read More: http://globalpoliticalawakening.blogspot.com/2010/11/piigs-return-to-slaughter.htmlSt. Louis, Missouri – Friday is finally here… The end of what has been an... more
-
-
-
SEOUL, South Korea — Former Federal Reserve Chairman Paul Volcker says the U.S. central bank's plan to buy hundreds of billions of dollars in government bonds probably won't do much to boost the economic recovery.
The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds.
Volcker told a business audience in Seoul that the Fed's bond plan is obviously an attempt to spur the U.S. economy but "is not the kind of action that's likely to change the general picture that I've described as slow and labored recovery over a period of time."
Read More: http://globalpoliticalawakening.blogspot.com/2010/11/volcker-calls-fed-plan-illusion-wont.htmlSEOUL, South Korea — Former Federal Reserve Chairman Paul Volcker says the U.S.... more
-
-
The Federal Reserve today announced that they will be implementing $600 billion in additional quantitative easing by the end of June 2011. The Federal Reserve will maintain its current policy of reinvesting principal payments from its security holdings and will expand its balance sheet by an additional $75 billion per month. The total announced balance sheet expansion was $100 billion higher than the public consensus of $500 billion. The Federal Reserve will continue to hold interest rates at record low levels of 0% to 0.25%, where they have been for nearly two years.
Read More: http://globalpoliticalawakening.blogspot.com/2010/11/feds-quantitative-easing-to-starve.htmlThe Federal Reserve today announced that they will be implementing $600 billion in... more
-
