Sunday, November 14, 2010

Quantitative Easing Explained

HT: Mike Carlson


At 11/14/2010 5:01 PM, Blogger Benjamin Cole said...

Baloney, but funny.

At 11/14/2010 5:09 PM, Blogger Buddy R Pacifico said...

Will QE II result in the printing of 600 billion in new U.S. dollars?
Not necessarily, becuase the Fed has not fully committed to buying 75 billion of treasuries for a full eight months.

If Goldman Sachs gets all of the Fed's bond business then I call shenanigans on Ben.

At 11/14/2010 5:15 PM, Blogger morganovich said...

hey benji-

have you noticed that yields on the long end are actually UP since QE2 began?

so much for "it's working". in fact, it is backfiring. QE will drive no growth and create no jobs. how does loose money fix overcapacity when consumers are already in too much debt and corporate balance sheets are flush?

it can't. it provides nothing but inflation and asset bubbles. the former has been defined out of existence, and the fed has no idea how to even identify, much less deal with the latter.

worse, the ROW has caught on to what a disaster this is and are pulling back from our bond auctions driving yields UP not down.

this is going to be a catastrophe.

At 11/14/2010 6:02 PM, Blogger Ron H. said...

"If Goldman Sachs gets all of the Fed's bond business then I call shenanigans on Ben."

Which one? The one who comments here, constantly calling for higher inflation, or the one who has actually delivered it?

At 11/14/2010 6:12 PM, Blogger Buddy R Pacifico said...

Ron H, Benjamin!

At 11/14/2010 6:26 PM, Blogger juandos said...

buddy! buddy! buddy!

Now that's funny!

At 11/14/2010 8:40 PM, Blogger Jason said...

QEII is just the start. Unless the Bowles-Simpson commission findings are agreed upon (first by the commission!) by congress, then enacted into law, we will be up to QE-1500 (QEMC, har har) in the next decade.

It may not make sense, but a country that can print it's own money should never default on it's debts.

Sad days may be ahead...

At 11/15/2010 9:17 AM, Blogger juandos said...

"QEII is just the start. Unless the Bowles-Simpson commission findings are agreed upon (first by the commission!) by congress, then enacted into law, we will be up to QE-1500 (QEMC, har har) in the next decade"...

No, I don't think the Bowles-Simpson commission report is worth the paper its written and the two people heading the commission have absolutely no credibility in the real world since they are and have been for a very long time people living off the taxpayers...

We all know what the problem is and that problem is spending on the 'nanny state' programs...

There are endless graphs showing that federal government spending per person (and just where does that money come from?) has steadily increased since 1936 and in fact accelerated since the sixties...

74 cents of every tax dollar collected by the IRS (as shown page 37 of the 1040 EZ form booklet) goes towards constitutionally questionable spending...

That needs to be mitigated somehow and much sooner than later...

At 11/15/2010 9:50 AM, Blogger morganovich said...

yields on the long end are all up big again and breaking out today.

nice work ben.

your little experiment running the presses has spooked the key buyers of our debt.

don't be surprised to see china start using their forex reserves to start buying up our assets now that you have made the dollar so unappealing.

i mean, would you rather own our debt or our coal?

At 11/15/2010 6:40 PM, Blogger Benjamin Cole said...

Turkey and the trimmings won’t cost much more this year than last, according to the Virginia Farm Bureau, but some Virginians think the estimate is missing some important ingredients for a feast.

The bureau says it should cost $43.39 to serve a 16-pound turkey, stuffing, sweet potatoes, rolls, cranberries and peas for 10 adults. The price also includes a tray of carrots and celery, as well as pumpkin pie with whipped cream.

Virginia officials say its survey of grocery stores indicates all that food will cost on average 1 cent more this year than it did last year, when the cost of Thanksgiving dinner fell for the first time in three years.

In comparison, the American Farm Bureau said the average national cost of Thanksgiving dinner this year is $43.47, a 56-cent price increase from last year. [that's a 1.3 percent rise -- PK] The survey was first conducted in 1986 and is intended to be an informal gauge of price trends around the nation.

PS on QE2--

This is what we want--we want people to think we will have economic growth and some more inflation...we do not want to fall into a Japan-style deflation.

Property and equity values have fallen 75 percent in Japan in the last 20 years.

That is your future under Republican monetary leadership. Deflation.

Like the look of your retirement when your stock portfolio is down by three-quarters and you can't sell your house for more than the mortgage?

Just keep bashnig QE2.

At 11/15/2010 8:16 PM, Blogger Buddy R Pacifico said...

Benji, Thanksgiving dinner won't cost much more then last year because turkey is a loss leader for grocery stores.

The cost of turkeys in Virginia is up 25 percent!


"Lower production, strong exports, and lower stock levels have all combined to place upward pressure on whole turkey prices. The average price for whole hen turkeys (8-16 pounds in the Eastern market) was 97.9 cents per pound in third-quarter 2010, almost 20 cents higher than a year earlier (up 25 per cent)."

Inflation is lurking in the wings for turkeys and most other commodities,

At 11/15/2010 9:16 PM, Blogger morganovich said...


inflation is not growth.

also, even walmart, the most aggressive retailer in the US on price, is admitting that inflation is arriving.

"The information Walmart obtained from an internal survey--according to MKM Partners--showed a 0.6 percent price increase during the last 60 days. Accordingly, that translates into an annual inflation rate of 4 percent a year. That figure is double the rate Bernanke has targeted for 2011."

if the most aggressively deflationary part of the economy is showing 4% inflation, the economy as a whole is considerably higher.

there is no deflation in the US. it's purely a statistical error/misrepresentation by the BLS.

in general, food prices are way up from last year. ditto commodities. rents are up. healthcare is up. so where is all this deflation benji?

you cannot use easy credit to cure overcapactiy. all that happens is that the velocity of money drops. i recommend reading MIT economist Mass on this topic.

corporate balance sheets are flush and consumers cannot borrow any more. you are advocating pushing on a string.

QE2 is the action of a banana republic, not a world superpower.

QE2 is already failing. look at the long end of the curve. we have spooked the real buyers. 50bp in 10 days is a BIG deal.

At 11/16/2010 3:38 AM, Blogger Parag said...

Quantitative easing is aimed at keeping Wall Street bonuses at record high levels QE is aimed at depressing the value of the dollar so the the USG and the Fed can pay their debts with toilet paper. QE is aimed at funneling more of the assets owned by the middle class into the pockets of the lower class and the financially elite class. QE is aimed at impoverishing Main Street in order to enrich Wall Street and its Prime Dealers.

At 11/16/2010 4:21 PM, Blogger morganovich said...

if QE2 is supposed to be propping up wall st bonuses, it's doing a pretty lamentable job.

bonds and the stock market are selling off. they all peaked just before it began and have tumbling since.

bizarrely, even gold is selling off.

if one were trying to prop up wall st bonuses, this is sure not what you'd hope for.


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