Da da daaaaa - Welcome to the brave (old) world of QE3 to infinity!

[Earthjade]

The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate," the Federal Open Market Committee said today in a statement at the end of a two-day meeting in Washington.

The FOMC said it would probably hold the federal funds rate near zero "at least through mid-2015." Since January, the Fed had said the rate was likely to stay low at least through late 2014. The Fed said "a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens."

Chairman Ben S. Bernanke is enlarging his supply of unconventional tools to attack unemployment stuck above 8 percent since February 2009, a situation he has called a "grave concern." The decision provoked a renewed backlash from Republicans, including Senator Bob Corker of Tennessee, who said Bernanke's policies damage the Fed's credibility while doing little to spur the economy.

Stocks soared after the Fed's statement. The Standard & Poor's 500 Index jumped 1.6 percent to 1,459.92 at 2:24 p.m. in New York. The yield on the 10-year Treasury note rose to 1.78 percent from as low as 1.71 percent.

http://www.bloomberg.com/news/2012-...illion-in-mortgage-securities-each-month.html

Frankly though, I'm surprised today's surge in gold and silver wasn't higher on the news.
I'm also surprised with the Fed announcing what is essentially indefinite QE.
I thought they loved giving the market occasional doses of hopium and you can't do that if it's permanently priced into the market.

 

[thatguy]

BTFD!! This years QE3 is sponsored by toy story and here is a word from the official mascot Buzz Lightyear "To infinity and beyond!"

 

[theiain1]

[youtube]http://www.youtube.com/watch?v=j2AvU2cfXRk[/youtube]

 

[DanDee]

[youtube]http://www.youtube.com/watch?v=j2AvU2cfXRk[/youtube]

Thanks for that, I watched it, then watched a few more of their clips, had a bit of a laugh and then thought "Why the hell am I laughing?"

 

[SilverSanchez]

QE has been priced in (IMO), its no surprise therefore much of the initial gains have already been made.

Buy the romor sell thefact - well the rumor has been around for a year at least. I was always considering this qe3 will be an anti-climax for many who think the markets rise and fall on news - it doesnt it rises and falls on expectation of news.

When the market is surprised - thats when you see the big moves up or down.

Having said that - obviously the only way is up
[youtube]http://www.youtube.com/watch?v=QjO0rQMbEo0[/youtube]

 

[aleks]

Buts its not technically QE as we know it.... they aren't giving money to the gambling institutions

 

[radiobirdman]

To the moon I tell ya





















Inflation that is

 

[Silber]

Remember the move that Silver did yesterday due to the ESM/Bailout Funds being ratified? On the kitco chart, this now looks like a pimple

It's a pity, though, that all this came just at the time of the new Perth Mint releases - I would have loved to buy the new coins a few weeks ago at 23

 

[Guest]

Did they honestly have any other choice?

You cannot fix the fundamentals here. World wide policy now for a decade has only been about kicking the can down the road for as long as they can and has nothing to do with fixing what they know cannot be fixed.

This policy is more about looking for a controlled demolition and staving off global panic for as long as possible, buying time for the elite to ensure they have their escape plans sorted before it can no longer be hidden.

 

[hyperinflation]

after each of the last 2 rounds of QE, silver rallied ~50%.. a bit to go yet

 

[Ilikemetals]

And it begins...

 

[CriticalSilver]

The Bernanke Blows Hard ... bubbles that is. This from a reuters journalist via Zerohedge...

QUESTION: My question is -- I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn't see how that had helped the economy.


So I think there's a fear that over time this has been a policy that's helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different -- differ from trickle-down economics, where you just pump money into the banks and hope that they lend?


BERNANKE: Well, we are -- this is a Main Street policy, because what we're about here is trying to get jobs going. We're trying to create more employment. We're trying to meet our maximum employment mandate, so that's the objective. Our tools involve -- I mean, the tools we have involve affecting financial asset prices, and that's -- those are the tools of monetary policy.


There are a number of different channels -- mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more -- more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.


Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.


One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason -- their house is worth more -- they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest.

http://www.zerohedge.com/news/punch...tes-blowing-asset-bubbles-antidote-depression

Can you believe the hubris of this guy? He is saying he is taking on the responsibility for forcing people to spend more money so there are more corporate profits, that he hopes will translate into more hiring. But what insane business managers would hire people on the back of a transitory surge in demand manufactured by a central planner and that has no basis in a sound or fundamentally healthy economy? Wouldn't you just stack the profits while there were profits to stack and maximise the productivity of the existing workforce?

Of course, that is where the Infinity part comes in. They have to convince the businesses that this central planning manipulation of consumer spending is permanent and they can make future plans on the basis of the FED herding the public into spending more money that they don't have.
Now, I think we can all say with some certainty that QE to Infinity was predicted by Jim Sinclair a few years ago when the first QE was planned. In fact, he coined the term. So he identified immediately what the outcome would be and has consistently identified that Gold would trade above US$1650.

Now he is convinced it will be above $3,500.
http://www.jsmineset.com/2012/09/02/coordinated-central-bank-actions-for-one-more-kick-of-the-can/

I guess the question is who do you trust more, Bernanke or Jim Sinclair?

But there is only one way that the FED can manufacture consumer spending and that is to devalue the money they have in savings and the money they are earning so they (we) have to "use it or lose it" AND cut off any refuge to savings outside the financial system they control, otherwise people will just park themselves on the sidelines while this blow-hard blows over. That means total financial control of spending by the Feds and no escape for the masses.

Gold may definitely be going above $3,500, but this is definitely not good.

 

[TheEnd]

Wonder when we'll start seeing the inflation kicking in...... At least it's before the elections.... This year and the next few are going to be craaaaazy!!!!!!!!

 

[Rinchin]

If they are printing more funny money to buy mortgage backed securities does this mean when the various degrees of sub prime burrowers start defaulting that the fed will end up owning these houses?

 

[whitty]

Someone needs to update Wikipedia...

Quantitative easing (QE) is an unconventional[1][2] monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions with newly created money, in order to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value.[3][4][5][6] Quantitative easing increases the excess reserves of the banks, and raises the prices of the financial assets bought, which lowers their yield.[7]

 

[thatguy]

no movement on PMs with QEJ?

 

[Lovey80]

Wonder when we'll start seeing the inflation kicking in...... At least it's before the elections.... This year and the next few are going to be craaaaazy!!!!!!!!

The real inflation won't kick in for a long time yet. This dodgy system will see the Chinese and the Japanese follow suit in order to protect their export markets. Ensuring of course that America's biggest export (inflation) remains just that. This could continue for a very long time until creditor nations such as Japan and China make the move to stop holding US currency and debt. For Japan it will be a demographic inevitability, for China it will most likely be an internal unrest problem that forces their hand IMO.

 

[TheEnd]

Wonder when we'll start seeing the inflation kicking in...... At least it's before the elections.... This year and the next few are going to be craaaaazy!!!!!!!!

The real inflation won't kick in for a long time yet. This dodgy system will see the Chinese and the Japanese follow suit in order to protect their export markets. Ensuring of course that America's biggest export (inflation) remains just that. This could continue for a very long time until creditor nations such as Japan and China make the move to stop holding US currency and debt. For Japan it will be a demographic inevitability, for China it will most likely be an internal unrest problem that forces their hand IMO.

O.k so how long are we talking until something gives, say the stock market falling to pieces or unemployment sky rocketing etc.... Or are the U.S elections the next big thinh to sit and wait for? And when exactly will QE3 start???

 

[FlashInThePan]

The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate," the Federal Open Market Committee said today in a statement at the end of a two-day meeting in Washington.

The FOMC said it would probably hold the federal funds rate near zero "at least through mid-2015." Since January, the Fed had said the rate was likely to stay low at least through late 2014. The Fed said "a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens."

Chairman Ben S. Bernanke is enlarging his supply of unconventional tools to attack unemployment stuck above 8 percent since February 2009, a situation he has called a "grave concern." The decision provoked a renewed backlash from Republicans, including Senator Bob Corker of Tennessee, who said Bernanke's policies damage the Fed's credibility while doing little to spur the economy.

Stocks soared after the Fed's statement. The Standard & Poor's 500 Index jumped 1.6 percent to 1,459.92 at 2:24 p.m. in New York. The yield on the 10-year Treasury note rose to 1.78 percent from as low as 1.71 percent.

http://www.bloomberg.com/news/2012-...illion-in-mortgage-securities-each-month.html

Frankly though, I'm surprised today's surge in gold and silver wasn't higher on the news.
I'm also surprised with the Fed announcing what is essentially indefinite QE.
I thought they loved giving the market occasional doses of hopium and you can't do that if it's permanently priced into the market.

A 20% move in the last month is quite exceptional relative to the rest of the market as the monetary metal markets were probably pre-empting helicopter Bens move as reverse logic to his posturing and rhetoric.

 

[Lovey80]

Wonder when we'll start seeing the inflation kicking in...... At least it's before the elections.... This year and the next few are going to be craaaaazy!!!!!!!!

The real inflation won't kick in for a long time yet. This dodgy system will see the Chinese and the Japanese follow suit in order to protect their export markets. Ensuring of course that America's biggest export (inflation) remains just that. This could continue for a very long time until creditor nations such as Japan and China make the move to stop holding US currency and debt. For Japan it will be a demographic inevitability, for China it will most likely be an internal unrest problem that forces their hand IMO.

O.k so how long are we talking until something gives, say the stock market falling to pieces or unemployment sky rocketing etc.... Or are the U.S elections the next big thinh to sit and wait for? And when exactly will QE3 start???

It's important to note that this QE will have some inflationary pressures. Because the Fed is monetising government debt that is keeping some of the inflation in America. 40 Billion a month though in the pond of uncountable trillions in circulation will be hard to gauge of how inflationary and when. The current unwinding/de leveraging of the private sector will certainly have a stifling effect on inflation in the short term. But remember that every note printed is making the USD more worthless. With every note printed it is making the US "assets" held by creditor nations ever less valuable. How long a country like China is prepared to prop up the US at the sacrifice of it's own citizens is anyones guess. It has to come sooner or later and thats when the real inflation will come flooding home to US shores and maybe hyper-inflationary. How long the US maintains the petro-dollar will also be another large tipping point. US military might is being used to sustain this already with military action in Iraq, Libya and soon Syria and Iran. They wont be able to do the same with peoples republic of China though.

P.S. QE3 hasn't started already?