Wednesday, March 7, 2012

Even after Bernanke says no easing the Fed can't stay away from printing press

Last week, Federal Reserve Chairman Ben Bernanke said he did not see the need at this time to continue any real form of quantitative easing, as inflation was signalling a sharp rise in prices.  The markets reacted accordingly, and dumped both equities and commodities, and the dollar quickly gained strength across the board.

However, a Keynesian is a Keynsian no matter how much they try to stick to a 12-step program, and just as quickly as the central banker said no to QE infinity, a spokesperson for the institution came out today and said that QE could still be in play, only in a more steralized form.

Steralized form?  Should we now refer to Ben Bernanke as Dr. Evil, MD?


While we have yet to see the actual report, almost certainly emanating from Jon Hilsenrath, it appears that the QE3 rumormill has started, initially with speculation that the Fed's activity will be merely "sterilized" or more Twist-type purchases, unclear however if in TSYs or also in MBS. Via the WSJ:
  • Fed Officials consider "sterilized" option for Future bond buying
  • Operation Twist Reprise, QE Other Options For Fed Bond
  • Still Unclear Whether Fed Will Launch Another Bond-Buy – Wall Street Journal via Zerohedge

Of course, the markets reacted postitvely to the thought of more booze to keep the party going, and any economist with half a brain can see that Dow 13000... heck DOW 10000+ has simply been tied to trillions pumped into the monetary system by the Bernank bartender.

If the markets cannot stand on their own for even a WEEK without Fed stimulus, then the hopium dream that America is in recovery is better left to those ignorant fools who desire the Blue Pill.

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