This Fed won’t stop
In one of the most dovish interviews of a Fed member that I’ve ever seen, voting member Charles Evans “would favor more accommodation.” He believes that we would be worse off without QE2 and Fed policy isn’t why commodity inflation took off, he thinks it was solely the demand side. He expressed his full support for the Aug 9th FOMC statement that stated an explicit time frame for keeping interest rates ‘exceptionally low.’ While he said that it’s not certain what the next step the Fed will take, we can be sure that as long as his thought process is still shared by his fellow doves of Bernanke, Yellen and Dudley, this Fed won’t stop with their attempts at easing if the US economy doesn’t improve soon. I want to emphasize ‘soon’ because this Fed has shown ZERO patience with the lag of the economic cycle, an economic cycle that needs time to work without the constant distortion and influence of Fed contraband. Be sure that if Friday’s Payroll figure is very disappointing, we will hear non stop QE3 talk until the Sept 20-21 FOMC meeting. I fully understand the concept of ‘if at first you don’t succeed, try, try again’ but if by the 3rd or 4th time you keep failing by doing the same exact thing (creating cheap money and US$ debasement), isn’t it prudent to take a step back with some introspection and self assessment? Gold is at the highs of the day no coincidence.
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August 30th, 2011 at 9:00 am
paraphrasing him from his interview on cnbs this morning:
“printing free money and giving it to the banks wasn’t powerful enough to solve the unemployment problem in the US; so how is it possible that when this world reserve currency is heavily leveraged and poured into the markets, ones desperate for yield in the land of ZIRP, that it -is- powerful enough to cause a bubble in commodity prices?? it just doesn’t make sense to me.”
August 30th, 2011 at 10:40 am
Per hearing “non stop QE3 talk until the Sept 20-21 FOMC meeting,” this benchmark might prove whether “talk” is the only arrow remaining in the [bankrupt] Fed’s quiver. Is Evans vying for the Fed chairmanship? It’s gonna be hard to top Bernanke’s incompetence.
August 30th, 2011 at 10:48 am
was it in this or somewhere else I heard (paraphrased) “we gotta build stuff / paper pushing should be 2nd” or 10th
August 30th, 2011 at 11:02 am
I hear alot of how this cannot continue. Ok, so then where do they get the money? Raid everyone’s retirement plans… not unless you want a few million marching down Pennsylvania ave with pitchforks and torches. To stop printing they need an alternative source of funding to cover the annual deficit. The obvious answer proposed by everyone is simply to cut SS, medicare, medicaid and defence by at least 1/3 and all other discretionary programs by at least that much in order to make a serious dent AND close all corporate loopholes. This would close the deficit gap but tank GDP …. but it would close the deficit. Good luck on getting any agreement on that front. Go tell that pensioner you’re going to shave at least 1/3rd off their SS check. They can’t even get an agreement to cut barely twice that much over a 10 year period… Jawbone the confidence game, Obfuscate and kick the can down the road is the gameplan, trying to slowly inflate your way out. I visualize of a 2 horse race. Horse 1: Debt. Horse 2: GDP. Both starting at about the same line. Horse 1, growing 10% annually while horse 2 grows @ 2%… graph the gap between those two horses in abut 5 years. Social planners take note. Printing press, covert style, will be opted for solution. Cuts will be symbolic with lots of hype. Disclosure: accumulating gold shares, notably jrs.
August 30th, 2011 at 12:05 pm
It is not the second or third. This is roughly the 36th stimulus plan! We are way past any point of logic. Stimulus is a failure! Try something else. More importantly, we need some new “Experts!”.
August 30th, 2011 at 8:19 pm
Printing money like a counterfeiter is a good idea for your self interests if they remove the penalty phase of the equation. If easing is such a good idea, why can not we all print the money and spend it without the penalty. Laws should not create privileged classes that can do things that no one else is allowed to do. This is pure corruption.
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BR: Distinguish between counterfeiting, printing, and deficit spending. They are not identical . . .