Quantitative Easing, otherwise known as printing money to buy our own debt, is the very beginning of hyper-inflation. It is laying the foundation.
Why the big words? Deception. Everyone knows printing money leads no where good. And this is leading toward one world currency. Stay watchful…
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Ben Bernanke under pressure to prop up US economic recovery
When Ben Bernanke addresses the annual symposium of central bankers in Jackson Hole tomorrow he does so against arguably the most challenging backdrop in his tenure as Federal Reserve chairman.
At the end of a week of gloomy reports, Bernanke faces mounting expectations from markets that the Fed will step in to prop up the US’s faltering economic recovery. News of stalling business activity and dismal home sales have fanned talk of a double-dip recession at a time when all the easy options have run out. At the same time, divisions appear to be emerging among his committee of policymakers.
Bernanke’s speech at the Wyoming symposium, entitled The Economic Outlook and the Federal Reserve’s Policy Response, will be scoured for any signs that he will live up to his nickname of “helicopter Ben” and scatter more money over the faltering US economy.
Following a slew of downbeat economic indicators, market expectations are growing that there will be more quantitative easing from the Fed before the end of the year. Under the radical scheme, also used in the UK last year, central banks pour money into buying assets such as government bonds from banks and the commercial sector, pumping more cash into the financial system and at the same time cutting market rates.
The Fed’s latest policy meeting was reportedly the most contentious in Bernanke’s four-and-a-half-year term there, but resulted in a decision to carry out what has been described “QE-lite”. It decided to reinvest the proceeds of its maturing holdings of mortgage-backed securities by putting the funds into Treasury bonds.
Many economists say the next move will be more full-blown QE. But not everyone agrees it is the best way to prop up a fragile recovery. With the US growth outlook already “alarmingly bad”, bond yields had fallen sharply, noted Rob Carnell at ING Financial Markets. If part of the aim of QE was to lower market rates, what was the point of embarking on it when they were already falling on their own?
“The market’s fixation with QE is misguided,” said Carnell. “Buying more bonds when fixed-income markets are already rallying strongly is a bit of a waste of time, and about the only ‘good’ argument for doing so would be that it might help to prevent a rout in equity markets. They will, at least temporarily rally on action of this kind.
“The problem is that the key word here is ‘temporarily’. A policy that will not provide anything more than a shot in the arm for market confidence will sooner or later be swamped by the tide of bad news still flowing.”
Others are sceptical that Bernanke will feel he is in a position to drop any hints on more QE given the recent report in the Wall Street Journal that seven out of 17 officials disagreed with or expressed reservations about “QE-lite”.
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