Can someone, anyone, tell me what's going on with QEII? Is it stopping? Is it continuing? Is it morphing into QEIII?
I think it's morphing - Bernanke has stated that the Fed may continue to reinvest maturing debt to avoid a cold turkey end to quantitative easing - so what I consider "mini-QE3" past what was supposed to be the end of QE2.
Yea Gold is right on, we might see a similar occurance though as what happened at the end of QE1 when everybody shorted everything and markets tanked then QE2 was forced in.
http://www.reuters.com/article/2011/05/12/us-usa-budget-debt-turmoil-idUSTRE74B6CW20110512 Will there be QE3? :]
I see 30 year US bonds all but tanked a few days ago, seems no one wants - returns on there money, QE666 coming up.
I really don't think the USA has any choice. The US Treasury Bonds MUST be sold to someone, and the overseas buyers have gone home. That leaves Ben Bernanke and his printing press for the duration of the need to sell, which could go on for years! He may well play with words on the name of it but it is the same as before, printing money and adding to teh money supply and guaranteeing BAD inflation. Which is just what the USA wants! It NEEDS a US dollar worth only 1cent to get the debt monkey off its back. The tricky bit will be stopping the hyperinflation once the debt is paid off, and they want to 'fix' the economy. OC
Well it could be said that the reason the overseas buyers have gone home is because of Bernanke buying up everything on the cheap. When you have the fed willing to buy bonds with almost zero interest on them then no one is willing to buy US debt when inflation means that your getting effectively a negative return. ' The thing that concerns me though. As far as I am aware the debt ceiling has not been raised still. The Government has hit the limit and are raiding pension funds to operate (is this not now a debt also?). So if the congress is refusing to raise the debt ceiling, how can Bernanke buy more us debt? How is he going to keep real interest rates in negative territory if he can't manipulate the bond market anymore? Can anyone explain this one to me?
Lovey80, "As far as I am aware the debt ceiling has not been raised still. The Government has hit the limit and are raiding pension funds to operate (is this not now a debt also?). So if the congress is refusing to raise the debt ceiling, how can Bernanke buy more us debt?" The Chinese know damned well that they are holding a trillion dollars of worthless paper, that will be paid back with worthless USDs. They have NO intention of buying any more! Only a fool would! The pollies want to make political capital out of the Debt Ceiling debate, but at the last moment, as in all other times, they WILL raise it. They have NO choice. The printing press will re-start with QE3, and go on as long as it takes to hit the fan. THEN they will buy extra presses to print more USDs. They have NO choice. BERLIN, 1923!!!!!! OC
Lovey80, As an aside, since about 1983, the US Government have mandated the US Social Security Department to channel ALL of their contributions and reserves into US Treasury Bonds. ALL of those reserves have now been borrowed AND SPENT by the USG. OC
Ok so the republicans are using the debt ceiling to mess with Obama, everyone gets it. But "the last moment" has been and gone hasn't it? They have hit the ceiling and have no way of funding legitimately the 150 +/-Billion deficit they need every month. It also begs the question though that the pension raiding is actually a debt right? So how are they legally doing it if the debt ceiling hasn't been raised? I am hoping that the congress holds off on the raise of the debt ceiling long enough for a large correction in the commodity markets.... A sell off will see a short sharp drop in most commodities including Gold and Silver. That should give all of us stackers long enough to buy up large on the big dip knowing that once the ceiling is raised that Bernanke will flood the market with useless paper to re float it. If this happens QE3 could be potentially massive, and possibly be the catalyst for the start of the parabolic move in PM's that we all know is coming sooner or later. It would be handy to have a loose 100k sitting around if silver hits back into the mid teens and this plays out like I wrote above....Anyone got a crystal ball they can loan me?
Lovey80, AFAIK the "last moment" is not until they get to the stage where they can no longer play ducks and drakes with the spare money available, about August I think. I would not be game to wait and hope for $15 silver any time soon. maybe yes, but I would rather have the stuff in my hand, no matter what the cost. We will look back at $40 silver and laugh! If this gets as bad as I think it will, Gold first followed by Silver, will go through the roof, and then go through the roof a second time when they finally go back to the Gold Standard. (and the crystal ball is sitting on your shoulders) OC
The Taylor Rule: According to this rule the US is getting close to no longer needing to pay money to keep the economy in the wanted range of a balance between employment and inflation. Demonstation of the Taylor Rule predicting interest rates: http://globalmacrotrading.wordpress.com/2011/02/11/g3-recap-2-11-11/ According to my maths using this formula interest rates should be -1.49% now, up from a low of -9.33% Sept 2009 (This maths differs from the chart above, I have not worked out why). At some point this number will no longer be negative and I assume this means QE is no longer needed. Given the velocity of the reduction in negative interest rates needed I predict QE will not be needed at some point in the next year. More: http://www.stanford.edu/~johntayl/Amaze.pdf
I get what you are saying and I agree that $40 Silver will look like chicken feed one day. But if you are looking to get as much weight on board as possible in one big hit (say as the first purchase from a new SMSF) then it would be handy if you could predict a swift dip. So that your initial purchase of 20-30-40-50k got you more ounces for your useless paper.
