Federal Reserve announces new round of stimulus to boost weak economy. (1 Viewer)

[beaux]

http://news.yahoo.com/fed-spend-40b-month-bond-purchases-163255641.html

WASHINGON (AP) — The Federal Reserve says it will spend $40 billion a month to purchase mortgaged-back securities because the economy is too weak to reduce high unemployment. The Fed says it will keep buying the securities until the job market shows substantial improvement.

The Fed also extended a plan to keep short-term interest rates at record-low levels through mid-2015. Both steps were announced after the Fed's two-day policy meeting.

The bond purchases are intended to lower long-term interest rates to spur borrowing and spending. The Fed has previously bought $2 trillion in Treasury bonds and mortgage-backed securities since the 2008 financial crisis.

Skeptics caution that further bond buying might provide little benefit. Rates are already near record lows. Critics also warn that more bond purchases raise the risk of higher inflation later.

 

[pantagrapher]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

 

[Socrates11]

Oh boy, I'm sure it'll work this time!!

 

[joetrow]

I'm really surprised. I figured high corn and oil prices would keep them from doing this.

What benefits will we see from giving the banks more money? How will this help reduce unemployment? Most of their trades are millisecond trades that don't provide any lasting capital for the businesses they "invest" in. They have plenty of money to loan out. I understand Bernanke isn't an idiot, but I really don't get his logic.

 

[Slapdash]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

 

[Slapdash]

I'm really surprised. I figured high corn and oil prices would keep them from doing this.

Supply side issues aren't the responsibility of the Fed.

 

[NCCommish]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

 

[humpback]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

In before "it wasn't enough".

 

[NCCommish]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

In before "it wasn't enough".

I will say that about the stimulus but not about this.

 

[GroveDiesel]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

 

[tommyGunZ]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

 

[NCCommish]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

So how will this create jobs? Banks are already sitting on their hands, they have money to lend now.

 

[cstu]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

So how will this create jobs? Banks are already sitting on their hands, they have money to lend now.

Why would banks loan out money when they are getting a guaranteed 0.25% return with no risk? This seems to be the opposite of what the government should be encouraging.

Under what authority do the Federal Reserve Banks pay interest on balances maintained at Reserve Banks?

The Financial Services Regulatory Relief Act of 2006 authorized the Federal Reserve Banks to pay interest on balances held by or on behalf of depository institutions at Reserve Banks, subject to regulations of the Board of Governors, effective October 1, 2011. The effective date of this authority was advanced to October 1, 2008 by the Emergency Economic Stabilization Act of 2008. The text of both Acts is available on the Library of Congress' THOMAS Legislative Information website.

 

[humpback]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

 

[NCCommish]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

So how will this create jobs? Banks are already sitting on their hands, they have money to lend now.

Why would banks loan out money when they are getting a guaranteed 0.25% return with no risk? This seems to be the opposite of what the government should be encouraging.

Under what authority do the Federal Reserve Banks pay interest on balances maintained at Reserve Banks?

The Financial Services Regulatory Relief Act of 2006 authorized the Federal Reserve Banks to pay interest on balances held by or on behalf of depository institutions at Reserve Banks, subject to regulations of the Board of Governors, effective October 1, 2011. The effective date of this authority was advanced to October 1, 2008 by the Emergency Economic Stabilization Act of 2008. The text of both Acts is available on the Library of Congress' THOMAS Legislative Information website.

Yeah that seems like bad policy.

 

[Slapdash]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

 

[glock]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

Just closed...

 

[Slapdash]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

 

[SWC]

it will not create jobs but it will put money into the economy and the hope is that dumb consumers will somehow get that money and will not save it and will instead buy a bunch of crap and build a bunch of crap and then that type of crap will mean more jobs but really it will probably just mean that fat cats will not pass the money down to us shmoes and they will just buy more stocks which is great for my 401k and pension but i doubt we will see any jobs accept maybe in the housing area where lately the lower rates have meant more new home starts so we will just see more of teh same the stock market will keep ripping along even thoug the economy sucks down here on the floor but the house market will start to come back a little but not manufacturing take that to the years of experience on this one bank brohans the banks have a trillion smackaroos right now why do they need more money they do not that is why and watch out inflation is my prediction and remember that i am also the old swcer who called it on randall the touchdown cobber robber to so that it to the fiscal poliyc bank brohans

 

[NCCommish]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

Right there are some people in the market who are benefiting. Probably some retirees will benefit short term as well. But it should be readily apparent that means nothing for employment or we wouldn't need this to start with. It isn't like the Dow hasn't been riding pretty high for a while now.

 

[tommyGunZ]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

Right there are some people in the market who are benefiting. Probably some retirees will benefit short term as well. But it should be readily apparent that means nothing for employment or we wouldn't need this to start with. It isn't like the Dow hasn't been riding pretty high for a while now.

making money cheaper and providing guidance assuring the public that money will continue to be cheap for 3+ more years encourages investment. More investment means more jobs.

 

[Slapdash]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

Right there are some people in the market who are benefiting. Probably some retirees will benefit short term as well. But it should be readily apparent that means nothing for employment or we wouldn't need this to start with. It isn't like the Dow hasn't been riding pretty high for a while now.

This sentence makes zero sense unless you think the Fed can never effect unemployment.

 

[Slapdash]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

 

[tommyGunZ]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

Why?

 

[GroveDiesel]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

With the fed buying $40B in mortgages a month in order to decrease rates?

 

[Slapdash]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

Why?

Because the increased expectation of growth with overwhelm the effect of the asset purchases on rates. Increased demand for credit will overwhelm the increased supply initiated by the Fed. Take a look at how the 10 year respnded to the announcement. Despite how it is put in popular parlance, the Fed wants rates to increase. Check out this link for more info: http://macromarketmusings.blogspot.com/2012/09/is-fed-really-causing-sustained-drop-in.html

 

[tommyGunZ]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

Why?

Because the increased expectation of growth with overwhelm the effect of the asset purchases on rates. Increased demand for credit will overwhelm the increased supply initiated by the Fed. Take a look at how the 10 year respnded to the announcement. Despite how it is put in popular parlance, the Fed wants rates to increase. Check out this link for more info: http://macromarketmusings.blogspot.com/2012/09/is-fed-really-causing-sustained-drop-in.html

Ah, ok. That makes sense. If QE3 really does enhance consumer confidence so dramatically that increased demand is greater than the Fed's additional purchases of $40B per month, that will be a good thing, even if my mortgage rate ticks up when I buy.

 

[ren hoek]

New Fed policy: We'll know it when we see it.

 

[Politician Spock]

CLEAR!!!

 

[moderated]

perfectly timed for the election, pretty much guarantees Obama re-election.

 

[NCCommish]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

Right there are some people in the market who are benefiting. Probably some retirees will benefit short term as well. But it should be readily apparent that means nothing for employment or we wouldn't need this to start with. It isn't like the Dow hasn't been riding pretty high for a while now.

This sentence makes zero sense unless you think the Fed can never effect unemployment.

Yeah I am pretty much right there. Only demand can effect unemployment. I don't think yet more easing creates one jot of demand. At this point this is just more of the same. They have done this twice. Now they are going to continue to do it. And I have little reason to believe banks will lend more didn't after the last two, I have little reason to believe a public in which only 30% believe we are headed in the right direction is going to borrow more and so I have little reason to believe this will do anything but make some rich guys richer. I hope I am wrong.

 

[pantagrapher]

perfectly timed for the election, pretty much guarantees Obama re-election.

Well then

 

[Topes]

 

[Ryan99]

This makes no sense. If the Fed's buying toxic assets, this is another treasonous act of handing taxpayer money to banks. If the Fed's not buying toxic assets, there's already a market for those. Banks' balance sheets are just fine, they're flush with cash. This is just another give away to banks.

 

[Sarnoff]

If the Fed's buying toxic assets, this is another treasonous act of handing taxpayer money to banks. If the Fed's not buying toxic assets, there's already a market for those. Banks' balance sheets are just fine, they're flush with cash. This is just another give away to banks.

So it's Win-Win. It may even be Win-Win-Win. [/michael scott]

 

[humpback]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

 

[Sand]

Federal Reserve Finally Working Expectations Channel With Open-Ended QE

By Matthew Yglesias | Posted Thursday, Sept. 13, 2012, at 12:39 PM ET

QE 3 is here, and it's pretty big. They've announced a form of "open-ended" quantitative easing in which the central bank commits to "purchasing additional agency mortgage-backed securities at a pace of $40 billion per month."

But there's something much much much more important here than the numbers. It's the guidance. It's not the Evans Plan and it's not Nominal GDP Level Targeting but it's good and it's right here (emphasis added):

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words build that apartment building right now. I reserve the right to flip-flop, but my initial assessment is that this is a huge positive step.

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

So how will this create jobs? Banks are already sitting on their hands, they have money to lend now.

The supposition that banks are sitting on their hands is media nonsense. Here are a couple articles. Consumer loans really didn't take much of a dip, at least through 2008. Industrial and commercial did, but those were way, way overextended anyway. We are now back to 2007 or so levels now.

 

[Mr Two Cents]

This will so crush the middle class eventually, Bernanke is an idiot.

Your money today is worth less than it was yesterday.

 

[Slapdash]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

Just stating a fact.

 

[shader]

This will so crush the middle class eventually, Bernanke is an idiot. Your money today is worth less than it was yesterday.

Maybe, who knows. They've played so many games the last few years, I'm not embarrassed to say I have no idea what's going to happen anymore. Some things seem to work, some don't. Some claim financial armageddon is around the corner, yet the market soars. Gold skyrockets, oil is up, food is up, stocks are up...seems like inflation to me, but yet official inflation numbers don't seem all that high...I kind of get sick of following it these days. Work hard, try to stay valuable in the marketplace and do your best to provide for your family.

 

[Slapdash]

This makes some investors happy but I haven't seen any proof QE1 or 2 did squat.

The proof is in the market reactions.

Right there are some people in the market who are benefiting. Probably some retirees will benefit short term as well. But it should be readily apparent that means nothing for employment or we wouldn't need this to start with. It isn't like the Dow hasn't been riding pretty high for a while now.

This sentence makes zero sense unless you think the Fed can never effect unemployment.

Yeah I am pretty much right there. Only demand can effect unemployment. I don't think yet more easing creates one jot of demand. At this point this is just more of the same. They have done this twice. Now they are going to continue to do it. And I have little reason to believe banks will lend more didn't after the last two, I have little reason to believe a public in which only 30% believe we are headed in the right direction is going to borrow more and so I have little reason to believe this will do anything but make some rich guys richer. I hope I am wrong.

I would think most economists would say that the Fed is the single most important factor in determining the nominal level of aggregate demand.

 

[Mr Two Cents]

This will so crush the middle class eventually, Bernanke is an idiot. Your money today is worth less than it was yesterday.

Maybe, who knows. They've played so many games the last few years, I'm not embarrassed to say I have no idea what's going to happen anymore. Some things seem to work, some don't. Some claim financial armageddon is around the corner, yet the market soars. Gold skyrockets, oil is up, food is up, stocks are up...seems like inflation to me, but yet official inflation numbers don't seem all that high...I kind of get sick of following it these days. Work hard, try to stay valuable in the marketplace and do your best to provide for your family.

This is our future.“While Wall Street cheers the actions by the Fed to further enlarge its already bloated Balance Sheet, those of us who live on Main Street should get accustomed to further increases in our food and energy costs. What I find rather perverse, is the statement by the FOMC that "longer term inflation expectations remain stable". Yeah, maybe on the salaries and wages front but sure as hell not on the raw materials front.Take a look at where hedge fund money is now flowing - right back into the hard or tangible assets category again. Get used to higher gasoline and heating oil prices and brace yourself for the food sticker shock you are going to experience in the weeks and months ahead. I do not know whether to laugh at such utter stupidity or to weep for my nation's future. After the Fed has already conjured into existence the piddly sum of $2.5 Trillion for QE 1 and QE2, we now get another $40 billion/month of agency debt purchases for as far as the eye can see. A lot of good the first $2.5 Trillion did. This latest one will do the same - nothing as far as curing what the real problem is in the US economy. This is supposed to keep long term interest rates low to encourage home mortgage borrowing. Right, I am sure all those folks who were holding their breath waiting for the yield on the Ten Year to drop further from the 1.4% level it was trading at six weeks ago before taking out that mortgage. Guess what, thanks to all this money creation from the both the Fed and the ECB, the bond market is now shifting away from the deflationary scenario towards one of inflation, regardless of the Bullsh*t in the FOMC about inflation expectations remaining subdued. The yield on the Ten Year is now 1.8% AFTER all this FOMC nonsense. Nice work guys! Maybe you can do yet another round and drive the Ten year over 2% for us. It also looks as if the long bond might be breaking down the technical charts also. That tells us that LONG TERM INFLATION EXPECTATIONS ARE INCREASING. The exact opposite of what these serial liars told us this morning. Make no mistake about it, the bond markets and the commodity markets are signaling inflation. Pay no attention to the worthless claptrap being spouted by these monetary buffoons. The real picture is in the price charts which are always forward looking. By the way, the rally in the stock market, which is now sitting at higher levels than when the current inept-in-chief took over, is a perfect picture of what happens when inflation hits the paper asset category.

 

[humpback]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

Just stating a fact.

Saying "Finally some concern for the employment rate from the Fed" is ridiculous.

 

[Mr Two Cents]

This will so crush the middle class eventually, Bernanke is an idiot. Your money today is worth less than it was yesterday.

Maybe, who knows. They've played so many games the last few years, I'm not embarrassed to say I have no idea what's going to happen anymore. Some things seem to work, some don't. Some claim financial armageddon is around the corner, yet the market soars. Gold skyrockets, oil is up, food is up, stocks are up...seems like inflation to me, but yet official inflation numbers don't seem all that high...I kind of get sick of following it these days. Work hard, try to stay valuable in the marketplace and do your best to provide for your family.

They are hiding real inflation prices, look at what you pay for just gas and food now compared to a year ago. There is your answer to real inflation. You are right they are playing games and most of society has no clue. Bernanke is a fraud and continues to destroy the value of the dollar. My earlier post said gold, silver, guns, food. water storage and ammunition, I WAS NOT joking. If you cannot get physical bullion make sure to buy stocks or ETF's that are "allocated" not "unallocated". Also stay away, if you can, from stocks, miners, funds that do most of their mining in South Africa, Peru, Argentina, Bolivia and Mexico. Also stay away from allocated funds/stocks that have any connection to J.P. Morgan, you have to look at their prospectus to find that information. They are the worst manipulators of the precious metals sector. PM me if you care about what gold and silver stocks, funds I "trust".This of course is just my worth.

 

[tommyGunZ]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

Just stating a fact.

Saying "Finally some concern for the employment rate from the Fed" is ridiculous.

Why? It's been almost 2 years since QE2 and as Slapdash pointed out, inflation is at historic lows. If the Fed's mission is to walk the employment/inflation tightrope, it's quite obvious in retrospect that they've erred on the side of inflation since QE2 ended.

 

[Mr Two Cents]

Glad I waited to re-finance my mortgage. Giving it another couple of weeks and then hitting it hard. These rates could end up going under 3%. Totally insane.

I'll bet rates increase.

Why?

Because the increased expectation of growth with overwhelm the effect of the asset purchases on rates. Increased demand for credit will overwhelm the increased supply initiated by the Fed. Take a look at how the 10 year respnded to the announcement. Despite how it is put in popular parlance, the Fed wants rates to increase. Check out this link for more info: http://macromarketmusings.blogspot.com/2012/09/is-fed-really-causing-sustained-drop-in.html

Ah, ok. That makes sense. If QE3 really does enhance consumer confidence so dramatically that increased demand is greater than the Fed's additional purchases of $40B per month, that will be a good thing, even if my mortgage rate ticks up when I buy.

It is all an illusion.

 

[Mr Two Cents]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

Just stating a fact.

Saying "Finally some concern for the employment rate from the Fed" is ridiculous.

Why? It's been almost 2 years since QE2 and as Slapdash pointed out, inflation is at historic lows. If the Fed's mission is to walk the employment/inflation tightrope, it's quite obvious in retrospect that they've erred on the side of inflation since QE2 ended.

You are a funny man, inflation is at an historic low.

 

[ren hoek]

Ben is finally waking up!!

Finally some concern for the employment rate from the Fed as opposed to their overhawkishness on the inflation side.

He's right, the last few years have had the lowest inflation since the Great Depression.

I thought we agreed to be friends if you just knocked off this craziness?

I no rite? Didn't the Fed give out something like 16 trillion dollars in secret loans to foreign banks over the past decade or so?

 

[ren hoek]

"No one is surprised by the Fed's action today to inject even more money into the economy through additional asset purchases. The Fed's only solution for every problem is to print more money and provide more liquidity. Mr. Bernanke and Fed governors appear not to understand that our current economic malaise resulted directly because of the excessive credit the Fed already pumped into the system.

"For all of its vaunted policy tools, the Fed now finds itself repeating the same basic action over and over in an attempt to prime the economy with more debt and credit. But this latest decision to provide more quantitative easing will only prolong our economic stagnation, corrupt market signals, and encourage even more misallocation and malinvestment of resources. Rather than stimulating a real recovery by focusing on a strong dollar and market interest rates, the Fed's announcement today shows a disastrous detachment from reality on the part of our central bank. Any further quantitative easing from the Fed, in whatever form, will only make our next economic crash that much more serious."

http://www.policymic.com/articles/14688/ron-paul-says-qe3-will-lead-to-a-worse-economic-crash-than-what-we-saw-in-2008%3E

 

[pantagrapher]

This will so crush the middle class eventually, Bernanke is an idiot.

Your money today is worth less than it was yesterday.

Maybe, who knows. They've played so many games the last few years, I'm not embarrassed to say I have no idea what's going to happen anymore. Some things seem to work, some don't. Some claim financial armageddon is around the corner, yet the market soars. Gold skyrockets, oil is up, food is up, stocks are up...seems like inflation to me, but yet official inflation numbers don't seem all that high...I kind of get sick of following it these days. Work hard, try to stay valuable in the marketplace and do your best to provide for your family.

They are hiding real inflation prices, look at what you pay for just gas and food now compared to a year ago. There is your answer to real inflation. You are right they are playing games and most of society has no clue. Bernanke is a fraud and continues to destroy the value of the dollar. My earlier post said gold, silver, guns, food. water storage and ammunition, I WAS NOT joking. If you cannot get physical bullion make sure to buy stocks or ETF's that are "allocated" not "unallocated". Also stay away, if you can, from stocks, miners, funds that do most of their mining in South Africa, Peru, Argentina, Bolivia and Mexico. Also stay away from allocated funds/stocks that have any connection to J.P. Morgan, you have to look at their prospectus to find that information. They are the worst manipulators of the precious metals sector. PM me if you care about what gold and silver stocks, funds I "trust".

This of course is just my worth.

One favorite dodge at this point is to insist that the government is lying about the true inflation rate (not to mention what’s really going on in Area 51). Luckily, we have independent estimates, like the Billion Price Index; sorry, but they are consistent with the official data: Link

So I guess the question becomes: how many people are in on this conspiracy?