the speculation around the moves in monetary policy seems to be something the fed wants out there to keep that the center of focus but behind closed doors, is there really any chance of tapering of qe3? I can refer to an article I read a while back with opinions from Carl Riccadonna, UBS' Drew Matus, Morgan Stanley's Vincent Reinhart, Uri Aboutboul and Jan Hatzius of Goldman Sachs . The article seems to give the perspective of these fund managers / investment banking managers regarding the big then unfounded concern over the QE tapering. So many economics and traders say the fundamentals wouldn't allow for it without serious deflation. Do you guys really think the FED is going to taper on this stuff? Here's some opinions put out back in June before Bernanke addressed the public. This was the time the talk of them reducing the amount of QE was showing in the market. It seems to me that these guys Carl Riccadonna & Uri Aboutboul, have fair statements: Deutsche Bank's Carl Riccadonna: "We do not expect Mr. Bernanke to yet show confidence that the time to taper QE is near, but the most important aspect of his media Q&A will be whether he signals that an H2 taper remains plausible. Of course, he could go one step further by signaling if it was likely given the Fed's updated economic projections, but we expect he will refrain from being so explicit given lingering uncertainty over the near-term economic outlook." NYU High Frequency Trading Expert Uri Aboutboul: "Despite consensus opinion, there has yet to be any material evidence supporting the concerns of possible reduction of monthly QE expenditures. The program seems to be a permanent aspect of the bank's monetary policy. To be blunt, if the Fed were to stop its quantitive easing program short of a rise in real mutually-consented interest rates, major deflationary pressures, which have been around since the housing crises, will manifest their way into markets. That does not seem to be a risk the current administration is willing to take. Chairman Bernanke has no other options but to maintain the current policies." The housing market, stock market, etc play so much into this that it seems like QE is the new norm. Is there really a good chance the fed is gonna slow down the amount? cause it seems to me the banks would be hurting without the QE. I guess my main question is if Bernanke's plan is to keep pumping QE into the economy and then when he steps down say "I did all I could. While I was chairman, what I did created growth in every quantifiable way and anything going on now is the new management"? I mean this shit looks like it could get ugly.
How can it not get ugly? The Public Sector is on a spending spree in the middle of a bad economy, is borrowing half of their minimum payments, has raised taxes which has resulted in a reduction of their income, has publicly announced that they know the "govt will run out of money eventually", etc... The Banksters need some inflation to keep their normal game going but deflation would benefit them if their debtors (the Public Sector) would keep on making payments. They might be willing to oversee the transition of the US to the next Argentina if the US would keep making it's payments. That would be ugly for those that are used to living in the richest country ever...
do you think we can expect the same quantitative easing policies throughout the end of the year? Will the deflationary pressures if easing is slow seep into consumer goods? We will surely see rising interest rates but will demand fall in things like automobile, housing, etc - which are all dependent on the banking sector? Have we really gotten to the point where our whole country's economy is the hands of one man? And they call this a capitalist system lol
Monetary policy goes to OBLIVION... destroying everything and bankrupting nearly all US citizens through inflation and currency debasement. Politicos/and the parasite class are too greedy and stupid to do otherwise. Only question... How long does it take?
where exactly do you see deflation? even using government flawed measures inflation is at 2% right on target by some other methods inflation is much higher assets like housing might deflate but it's not deflation - it's reversion to the mean
I heard somewhere that 2014 US budget deficit is projected to be about 700 billion. Present rate of CB monthly purchase of treasuries is about 500 billion yearly. The bond market is saying that is not going to happen. IMHO i think data is manipulated/slanted to the up-side to support tapering. (Todays blowout consumer confidence for example ..bullshit). But now rather than a single expected hurdlle, the Aug NFP, there is now more on the horizon. Syria, oil prices, sp500 correction, funding Obamacare, government shutdown in October. Maybe markets are de- sensitized , jaded, to some of the above and we just lob a couple missles and fed signals December taper of 15% ??? Anything to keep the wheels from falling off.
If QE is slowed, the banks will tighten lending, interest rates will rise, etc. That will cause less people to qualify for borrowing. I see the QE as a hedge against the big banks' bets in case they go sour so without it, their lending standards will likely become even higher. I don't see consumer demand keeping up in that type of environment. Not with this type of employment situation - 90% of the jobs created this year were part-time gigs. How will purchases like cars and large items people pay for with credit increase?
Banks aren't doing the bulk of the lending. It's the Fed (look at the multiplier)- by design... with interest on reserves policy. If you want proof: http://www.newyorkfed.org/householdcredit/2013-Q2/index.html Household debt has increased barely $60B since the QE started. House debt has fallen by much more. People's appetite is to pay down debt (destroy money), not create it. I think this QE doesn't matter so much in actual $$-flows right now, versus its impact on confidence. Unless accompanied by fiscal stimulus, it won't create inflation. Not until people have the genuine desire to borrow on mass, and over-regulation eases. That doesn't appear likely in the horizon for the next 2 years. It's going to take more time to repair confidence and get household/home debt to start growing again. Therefore, taper isn't justified by inflation fundamentals until much more fiscal stimulus happens. This 1% rate spike is a headfake (may I say created by pundits and the press). If taper does happen early, I guarantee you the 3 day spike that might happen in rates is the near term high on rates. Our government finances, despite what you read in the press, are amongst best in the developed world, only enhanced by the Fed reducing the effective net size of the treasury obligation. There is a shortage of treasuries, as crazy as that sounds. On top of the deflationary tendencies and housing demand being so elastic to higher rates (look to Friday's home sales #), bonds are a great buy here.
The banks are lending for consumer purchases. I was speaking in the context of supply/demand. What will banks do to lending practices once the free money stops pouring in?
Do you even understand what you say? Despite all Fed buying 30 year down 20% How can you explain it's down 20% if there is shortage. You don't have even basic logic