General

Re: QE3 Unleashed! - Ron Paul Says We Should Panic?

Kakugo — Fri, 14 Sep 2012 20:48:02 GMT

Autolykos:

As Gary North has written, it would be easy (technically speaking) for the Fed to motivate member banks to lend out their excess reserves: simply start charging a fee (a negative interest rate) for holding them. The fact that the Fed hasn't done this is telling.

Exactly. For all their faults the people at the Federal Reserve aren't idiots (criminals don't need to be) and know very well the effects of dumping huge masses of liquidity on the system. They probably think (quotations and links are welcome to confirm/disprove this suspicion of mine ) by pulling levers and pressing bottoms they can regulate the flow to have both politically acceptable price inflation and their intended results (steady nominal growth and a drop in unemployment).

There are also some talks (especially in Europe) about the effects previous liquidity injections have had on commodities. Somebody is starting to see a relation (or at least he's openly talking about it) between printing all those digital euros, yens etc and the dramatic price increases we've seen lately despite a noticeable drop in demand.

The inflationistas are seemingly firmly in charge but it appears their grip is starting to slip. Finally.

Re: QE3 Unleashed! - Ron Paul Says We Should Panic?

Autolykos — Fri, 14 Sep 2012 15:11:02 GMT

As Gary North has written, it would be easy (technically speaking) for the Fed to motivate member banks to lend out their excess reserves: simply start charging a fee (a negative interest rate) for holding them. The fact that the Fed hasn't done this is telling.

Re: QE3 Unleashed! - Ron Paul Says We Should Panic?

Wheylous — Fri, 14 Sep 2012 15:04:22 GMT

I'm just wondering what the government will do once the banks start lending all the money. Maybe it would be better if the Fed were given a lump of money to spend as they see fit so that they can use fiscal instead of monetary stimulus. If I am correct, the main cause of business cycles is monetary control, so if the Fed were allowed to use fiscal stimulus once they reach the "liquidity trap" then we might soften business cycles (not because the government will being doing something useful but because it will be doing something less hurtful).

I do wonder why the market is taking so long to recover, however. I mean, the recession was supposedly pretty large, but still - we should be seeing a faster recovery. I guess that minimum wage does create inflexibility in the labor market, and there are a whole bunch of regulations...

Maybe if the market remains moribund for like 3 or 4 more years and the Fed announces QE4 then I would really get worried and buy hard assets.

Re: QE3 Unleashed! - Ron Paul Says We Should Panic?

boniek — Fri, 14 Sep 2012 14:55:15 GMT

limitgov:

And once Spain goes down, the euro will be in worse shape, which will hopefully boost the dollar.

Euro is lost cause IMO, but there's no guarantee that people will flock to dollar. In fact I hope they will flock to something more tangible and less prone to inflation and stop giving any sort of credibility to government paper.

QE3 Unleashed! - Ron Paul Says We Should Panic?

limitgov — Fri, 14 Sep 2012 14:52:06 GMT

http://www.infowars.com/ron-paul-country-should-panic-over-feds-decision/

Is it time to pull your money out of the bank? Or will the dollar be ok for the time being, since the euro is in bad shape?

And once Spain goes down, the euro will be in worse shape, which will hopefully boost the dollar.