Hi, I've been investigating and I'm curious about your opinions... What will happen economically and how will it affect the markets? QE3 might get trimmed and if it happens, then we will enter a new phase. More opportunties, more dangers. How/when/what will happen in your opinion? I pretty much have my own ideas, but I want to know what you think. We pretty much believe PMs will become cheaper, but I'm thinking about economies, the vast markets... what influence can slower, smaller, less QE bring? I want to grab the opportunities and I want to avoid the risks and dangers.
The FED has no choice, they MUST print to get the money to buy the US Bonds, that MUST be sold to finance the deficit. The foreign holders have shut up shop and will not cough up the trillion a year involved. They may well talk of it, but they will NOT do it! In fact my bet is that they will vastly increase Bond buying.
Am with the old man there! If they stop printing, bye bye to the US $, is a long road they can keep kicking the can down.
True... I also think "they must print", but... perhaps they're implementing a smarter strategy right now that might work for a while. If the euro, JPY get destroyed before the dollar, then that will help the US. And right now the US is the only of the three to even think about stopping the easing... Cheapening gold and weakening yen, euro will help the US. Well, even thought the economy is not doing better, the currency will gain from this. But: I've read some articles, speculations about how "bad it will be" if the US stops the easing... some are afraid of new bubbles that could pop. I wonder how stopping the easing can do bad... Prolly some credits will go nuts... expenses will skyrocket (no money to pay for them). Not sure...
I think you are seeing it now - the prime fear of the market is that QE will stop - and its correcting
if the money printing stops interest rates will rise. can't see that being allowed to happen for a long while yet. talk of an end is just that -- talk.
+10000000000000 The real question is "What Will Happen to the US economy if QE Stops/Shrinks?", answer is SHTF
Everytime there's talk about QE, the markets go crazy. Feels as if the markets are hooked on some kinda drugs and are afraid of going cold turkey. Doubt bernanke has the balls to pull the plug on QE during his term. Just kick the can down the road...
QE = Financial Crack Cocaine And now the market is addicted - we will not have a normal market again (if ever) unless we go through a serious de-tox.
In addition, the US budget deficit is here to stay, in fact almost certain to rise dramatically. NO pollie has the guts to tell the voters that their pension is going to be cut by 20%, that taxes are going up by 15% and a visit to the hospital Emergency Ward is going to cost them $100 as they walk in the door. No pollie will close an army base in their electorate. Food stamps down by 20% and so on. That Trillion a year is certain to double in the years ahead, even without SHTF. JMO OC
We are getting in there, private hospitals ask for a fee as soon you get in there: $280.00 your private insurance is a different matter. Public hospitals who knows, at the moment, we will see... it won't be long to start asking for $$$, but we are giving medicare anyway, so letss wait and see.
There's no way at this point that economies such the US or Japan could cope with the tapering of QE. Even if the US wants to taper, the yields on bonds not just in the US, but also Japan would widen (which we've been seeing over the last few weeks based only on talking of tapering QE e.g the Nikkei and JGB market going full retard) forcing governments to pay more to service their debt which they simply can not afford to do. It would at the very least quickly reverse any recovery if you can call it that until they realise that QE is necessary. In doing so markets would just as quickly realise that there really isn't any kind of real economic recovery and the whole thing was based on a monetary house of cards. I would expect PMs will be very choppy leaning more to falling prices whenever there's talk of tapering but to rise just as quickly with the continuing volitility in the Nikkei and various bond markets as yields widen. For those interested, I use this link at forexpros to keep a close eye on real time government 10 year bond yields which is the benchmark indicator for government bonds. http://www.investing.com/rates-bonds/government-bond-spreads
FWIW, my not so long range prediction is that the top 5 central banks (or more) are going to enter a co-ordinated plan to print the currencies needed to buy ALL the Bonds, - Sovereign, State, City, and Corporate, that are issued around the world. In other words, by the 10s, and 100s, and maybe even 1000s of TRILLIONS. That will 'solve' the problem for a month or six, but in in due course MUST generate hyperinflation. You cannot hide such sums in 'the system' forever, they MUST eventually find their way into the population. JMO OC
QE didn't make much difference to general price trends, and if it 'stops' then it won't make much difference to general price trends too, I'd say. Only some markets where the price increased due to expectations of the latter, saw higher prices, some of them having already been corrected in quite some degree. If you look at the net monetary bases of both dollar and euro, well, the trend plots today sit on the same increasing angle that the trends have been over the last decade. The central banks created money, but most of it didn't add to the amount circulating. Without new money being spent on top of existing money, the net total amount doesn't increase. In the decade ahead of 2007, people spent too much. Since then they spend less. A sustained lower spending is possible, it just means less buying of things that weren't really needed. Of course, governments and the parasiting gangs behind them, their spending should drop too. Alike in Greece, where yesterday the state tv channel stopped broadcasting. That's 2500 less (if they cease to receive any government wage/benefit). Hyperinflation requires careless further money creation AND spending of that money by govt, in such a degree that the producing part of the population can't sustain the theft anymore and cease to produce as to avoid having to pay instead of earn on the end of the day. That isn't the general case as of now, so hurrying to buy things at prices that already were driven up by frontrunners, isn't needed. The monetary precious metal prices trends serve as good examples, all those that bought during the last 3 years and didnt sell it again for those nonhyperinflated dollars/euro's, see now lower prices for them. Because the general production costs didn't increase, and its thus profit in terms of purchasing power. All it needs is enough people willing to buy those monsterboxes at the higher prices temporary caused by futures market positions that very rarely end up in requests for delivery; simply because it never was the intended.
