360 Horizon: Quantitative Easing

Showing posts with label Quantitative Easing. Show all posts

05 April 2013

All This Quantitative Easing . . . And The Lowest Money Velocity In 50 Years?

One picture speaks 10,000 words . . .

but I'll add a few anyway:

The Fed has created $2.2 in new money since the 2008 crisis
About half of this money is currently parked in the Federal Reserve by banks and is collecting interest
Much of the other half of this money is sitting on banks' books to shore up new reserve requirements.
Hence, the remainder of the money outstanding is changing hands more slowly than at any time in the past 50 years, meaning banks are not lending as readily as they have in past good times/bad times. Nor are consumers borrowing and spending as they once did
As consumers pay off debt, money is "retired" and goes to money heaven
When money is retired and evaporates to money heaven, it cannot be used as a basis for more fractional reserve lending. Hence, new money must be created with the hope banks will finally get up off that money and lend it to people who will start consuming again and increasing the exchange of said money (i.e., a pick up in "velocity" of money exchanges). We are a nation now addicted to consumption to boost GDP. Savers are anti-American.
Hence the Fed will continue to create new money to try and get the banks to lend and the consumer to borrow and spend. Bernanke's heir apparent, Janet Yellen of the San Francisco Federal Reserve Bank, is already signalling she will focus on GDP growth as much as lower unemployment. To reignite growth, money must start circulating at a faster velocity.
Hence, keep your eyes on this chart for any uptick in the near future
Meanwhile, bet on QE to continue well into 2014 as M2 shows no basing as of yet on this chart

26 September 2012

Slide show of Greek protest turning into riots, yesterday, September 26, 2012

Chris Hedges: How Do You Take Your Poison?

IMF: Global Financial System As Risky As Before The Credit Crisis

Credit Suisse banker arrested for role in Credit Crisis of 2008

Richard Heinberg: Don't Worry, There's Plenty of Oil

Germany Becomes First Country In The World To Surpass 30 GWp From Solar Power

Charles Hugh Smith: Why QE May Not Boost Stocks After All

New Marketing Pardigm For Cars: Buy A Tesla (Nasdaq: TSLA) Electric Car, Get Free Fuel From The Sun, Forever!

14 October 2011

Jim Rogers Tells Larry Kudlow, "I'm much more a Capitalist than you, Larry. Let the damn banks fail!

Here's inimitable Jim Rogers being his usual testy self. At one point he looses his temper and says, "I'm much more a Capitalist than you are, Larry. Let the damn banks fail! Why are we saving the bondholders?"

Rogers also predicts Greece is not salvageable, Greece will go bust, and the Fed and ECB will waste more time and money with QE trying to backstop Greece.

17 June 2011

Peter Schiff's take on Chancellor Merkel of Germany caving in to the demands of socializing losses while privatizing gains in the Greek mess.

I'm with Schiff on this one. Let the bond holders get wiped out if needs be. It is outrageous that German taxpayers will be coming to the aid of the banks and hedge funds which took on the risk. All Merkel's cave in will do is to increase Moral Hazard in the investing banks and hedge funds.

Schiff also explains why he believes QE3, QE4, QE5, and so on are slam dunks as the Fed invents a new way to print money to buy Treasuries, i.e., the Fed will simply no longer call it "Quantitative Easing" with a set amount of money to be printed. Instead, as Schiff points out, the Fed will target interest rates in the USA and will do so by printing whatever amount of money is needed to keep them low. That amount will not be trumpeted up front in the media. Instead, it will be printing presses rolling 24/7, some days faster than others, depending on interest rates. Schiff points out that both he and Bill Gross of Pimco believe this is how the Fed will continue to pump money into Wall Street without calling it "Quantitative Easing".