Looks like they might let the markets take a nice swan dive this summer
Fed Statement hints towards no QE3
203 hours till FY2012 state/local budget (cuts) kick in ...
Time and time again, throughout history, it has been proven by historical fact, that once a country resorts to printing more currency to pay it's bills, it does not stop. Why, you may ask? Because its a one way road, once embarked upon there is no turning around.
Ludwig von Mises summed it up best for us years ago;
"There is no means of avoiding the final collapse of a boom brought about credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
When he speaks of "credit expansion" its nothing more more than increasing the currency supply through fractional reserve banking practises. Just another way of creating (printing) more currency. The currency crisis will happen, just a question of sooner or later.
This is the road that the powers have embarked upon. There is no turning back now. Much too late. So, for those debating whether or not there will be a QE III it's a fore gone conclusion. Of course there will be more currency creation, for they are now damned if they do and damned if they don't! Get out of paper and stay out. Or get burned.
The question I have is there going to be any type of pause between QE2 and whatever they call the next round of credit expansion. I played some of my trades that way, but now begin to wonder if that was the wrong theory. I thought the Fed would talk up the dollar some more to try and drive the oil price down to around 85 bucks (dragging equities with it). Still time for that, but doesn't seem like the Bernanke is overly concerned with commodity prices. Transitory, I suppose.
The question I have is there going to be any type of pause between QE2 and whatever they call the next round of credit expansion.
It's not really QE if it keeps the balance sheet at the same level, by reinvesting stuff as it comes due. It was announced a long time ago that they would do that. I suppose some in the Fed think that's enough to keep things at current levels, but I'd still bet more on the side that it will hurt, and only then will there be big QE3.
Serious question....is there any type of Stealth QE or money printing the Fed can get away with, something that would go undetected by even the best financial gurus. Or, are all their money printing schemes transparent.
...and I like the term in use: QE Lite.
Very fitting. QE isn't stopping. We all knew it wouldn't. It's just the lite version until the next full version comes out. The Fed sure does like to upgrade to the latest QE version, don't they?
I am betting no QE3 at least in the short term so I was pretty happy with the Bernank's comments.
But my new favorite is Jean-Claud Trichet.
“On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. “The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union.”