Category: Quantitative Easing
The analysis published under this category are as follows.
Saturday, October 26, 2019
The Fed’s “Not QE” Is Morphing into “QE4ever” / Interest-Rates / Quantitative Easing
By: MoneyMetals
Another week, another new and expanded repo market intervention by the Federal Reserve. On Thursday, the Federal Reserve Bank of New York intervened twice with fresh liquidity injections. Fed officials raised their offerings for overnight repos up from $75 billion to a staggering $120 billion.
This comes on top of the $60 billion per month in Treasury bill purchases that will extend well into next year and possibly beyond. Over the past month alone, the Fed's balance sheet has soared by $200 billion.
You might think numbers like these should be quite alarming to investors and to anyone who holds U.S. dollars. But the strange thing about these Fed interventions is that hardly anyone seems alarmed. There’s no sense of rising risk being priced into the stock market. And the mainstream media is barely even mentioning these massive transfers of paper wealth.
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Friday, October 18, 2019
Federal Reserve’s New QE Transfers Wealth to Its Owner Banks / Interest-Rates / Quantitative Easing
By: MoneyMetals
Metals investors are positioning themselves for rapidly developing political and geopolitical events, as well as a rapidly expanding Federal Reserve balance sheet.
What started out as a limited intervention to provide temporary liquidity to overnight lending markets has morphed into a massive $60-billion-per-month Treasury-buying campaign. By some measures, it’s even bigger than the last Quantitative Easing program.
The Fed has yet to fully explain why this is all necessary given the lack of an immediate crisis in the real economy. Last week, Fed chair Jerome Powell took great pains to insist that their expanded repo market operations are “not QE” – only to announce a massive new Treasury bill buying program on Friday.
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Wednesday, October 16, 2019
This Is Not a Money Printing Press / Interest-Rates / Quantitative Easing
By: Peter_Schiff
Rene Magritte's 1929 painting "The Treachery of Images," depicts a tobacco pipe with a caption that reads "Ceci n'est pas une pipe," (French for "This is not a pipe"). Everyone who has taken a course in modern art knows that Magritte's exercise in contradiction was meant to draw a distinction between a real thing and a representation of that thing. Perhaps we should send Federal Reserve Chairman Jerome Powell a beret and an easel as he is attempting a similarly surrealistic take on monetary policy.
Early last week, the Chairman announced a new, as yet unnamed, Fed program through which the bank will now buy regular amounts of short-term U.S. government debt. Seeking to counter the rumblings that a new form of quantitative easing would be seen as an admission that the economy may be in trouble, Chairman Powell asserted during the annual meeting of NABE on October 8, "This is not QE. In no sense is this QE". In other words, "Ceci n'est pas QE."
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Monday, August 12, 2019
Global Central Banks Move To Keep The Party Rolling Onward / Stock-Markets / Quantitative Easing
By: Chris_Vermeulen
The recent news that the US Fed, China and many of the global central banks are continuing to make efforts to lower rates and spark further consumer spending and economic activity is reminiscent of the late 2010~2013 global economic recovery efforts. This was a time when the economy was much slower than current levels and when central banks were doing everything possible to attempt to raise consumer and business activity related to capital.
The world’s governments and banks operate on a very simple premise – transactions and economic activity must continue to operate within a fairly standard range of consistency in order for tax revenues and transactional fees to drive profits/income. If extended periods of economic contraction persist, the capacity to function within standard operating parameters diminishes very quickly for these institutions. A -5% to -10% contraction in asset values, transactional business, tax revenues and/or consumer activity over an extended period of time could result in a catastrophic set of events taking place.
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Tuesday, July 30, 2019
US Fed Infinite QE Forever at Zero Bound / Interest-Rates / Quantitative Easing
By: Jim_Willie_CB
The widespread profound and recognized global recession, complete with numerous icon corporate failures, will lead the US Federal Reserve to return to unlimited Quantitative Easing with a Zero Percent chaser. The Jackass calls it a return to Infinite QE Forever at the Zero Bound. Not only is the double step of return to QE with a sequence of interest rate cuts urgently necessary, but the financial markets are demanding it. In fact, they are holding the USFed hostage, as the venerable august body is backed into a policy corner. This time seems different. For ten years, the USFed has relied upon coordinated policy with the Euro Central Bank, having used all the most extreme measures, yet has a systemic failure on its hands. Witness extreme monetary policy failure. The systemic failure is both financial and economic. The bond purchase program wrecked the bond market by driving away legitimate investors, while the ultra-low interest rates wrecked the economy by distorting asset allocation.
Tuesday, July 23, 2019
We Are in for Decades of Ultra-Loose Monetary Policy / Interest-Rates / Quantitative Easing
By: Jared_Dillian
President Trump recently nominated Judy Shelton to the Federal Reserve Board of Governors. She is the United States director for the European Bank for Reconstruction and Development, which I had never heard of until her nomination.
Shelton is a Republican and believes in the adoption of a gold standard. She currently believes in lowering interest rates, after spending the Obama years criticizing the Fed for lowering interest rates.
You may wonder how a person can be in favor of a gold standard and also for lowering interest rates at the same time.
I am wondering that, too.
Friday, April 12, 2019
Trump Calls for New Quantitative Easing to Prop Up U.S. Economy / Interest-Rates / Quantitative Easing
By: MoneyMetals
As gold and silver markets continue in choppy trading this spring, bulls are hoping a dovish Fed will sink the dollar and lift the metals.
Now that the Federal Reserve is on “pause” – presumably for the rest of 2019 – perhaps investors can stop obsessing over interest rate decisions by central planners. Perhaps markets can finally trade based on actual market signals and underlying fundamentals.
Perhaps ... not.
With 2020 election campaigns already underway, interest rate policy will be a political football in the months ahead. Incumbent administrations almost always favor lower interest rates heading into their re-election bids, and this one is no exception.
Saturday, March 02, 2019
Perception of Powell Put in Place – QE4 Looms / Interest-Rates / Quantitative Easing
By: EWI
By Murray Gunn
For better or worse, the markets perceive that Fed chairman Powell has showed his hand.
The recent Federal Open Markets Committee (FOMC) minutes of the January meeting revealed almost unanimous agreement to announce a plan soon for ending the Fed's policy of balance sheet reduction. This is the first step in an inevitable march towards the fourth round of quantitative easing (QE4).
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Friday, February 22, 2019
This Money-Destroying Policy Could Soon Become a Reality / Interest-Rates / Quantitative Easing
By: John_Mauldin
It was my first encounter with what I thought was economic insanity.
More than 10 years ago, I came across the ideas of economist Bill Mitchell of the University of Newcastle in New South Wales.
He was teaching what he called Modern Monetary Theory (MMT). I looked into it and quickly dismissed it as silly.
Actually printing money as an economic policy? Get serious.
Fast forward to today, the idea is adopted by new socialist-like movements in the US and abroad. It’s cited by politicians and mainstream media.
There’s a growing number of rationales for adopting MMT into our philosophical base.
Thursday, February 21, 2019
QE Forever: The Fed's Dramatic About-face / Interest-Rates / Quantitative Easing
By: Ellen_Brown
“Quantitative easing” was supposed to be an emergency measure, but the Federal Reserve is now taking a surprising new approach toward the policy. The Fed “eased” shrinkage in the money supply due to the 2008-09 credit crisis by pumping out trillions of dollars in new bank reserves. After the crisis, the presumption was the Fed would “normalize” conditions by sopping up the excess reserves through “quantitative tightening” (QT)—raising interest rates and selling the securities it had bought with new reserves back into the market.
Monday, February 18, 2019
Stacking The Next QE On Top Of A $4 Trillion Fed Floor / Interest-Rates / Quantitative Easing
By: Dan_Amerman
The Federal Reserve is currently communicating to the markets that it will likely pivot, and pause two strategies. The first pivot is to stop increasing interest rates. The second pivot is to stop unwinding the Fed balance sheet.
While the interest rate pause is getting the most attention - the balance sheet pause could be the most important one for investors over the coming years.
As explored herein, the impact of pausing the unwinding the balance sheet is to create a new floor at about $4 trillion in Federal Reserve assets. And if the business cycle has not been repealed and there is another recession - the Fed fully intends to go back to quantitative easing, potentially creating more trillions of dollars to be used for market interventions, and to stack another round of balance sheet expansion right on top of the previous round.
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Wednesday, March 28, 2018
New Research Foretells QE Domination / Interest-Rates / Quantitative Easing
By: F_F_Wiley
The title refers to a consensus-shattering paper that was unveiled at the University of Chicago last month before a Who’s Who of economists and central bankers.
Paul Krugman gave the keynote, but the meeting’s focus was on the paper’s authors—two Wall Street big shots, Morgan Stanley’s David Greenlaw and Bank of America Merrill Lynch’s Ethan Harris, and two academics, James Hamilton and Kenneth West. To keep it simple, I’ll call them GHHW.
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Wednesday, November 01, 2017
QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate / Interest-Rates / Quantitative Easing
By: F_F_Wiley
We’ve produced some research over the years that we’d love to see the powers-that-be react to, but none more so than our look at financial flows during the QE programs.
By netting all lending by banks and broker-dealers and then comparing it to the Fed’s lending, we stumbled upon a chart that seemed to show exactly what QE does or doesn’t do. But “doesn’t,” not “does,” was the story, and it couldn’t have been clearer. Or shown a more stimulating pattern. To geeks like us, our Excel click on “Insert, Line” was like stepping from a shady trail to a sunny vista.
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Monday, October 02, 2017
The Fed Knew QE Wouldn’t Work From The Start / Interest-Rates / Quantitative Easing
By: John_Mauldin
When is a mystery not a mystery? When Janet Yellen is puzzling over a lack of inflation, that’s when. So says Brian Wesbury, chief economist, and Robert Stein, deputy chief economist of First Trust, in the following essay (featured in my Outside the Box).
The bottom line: QE didn’t work—and Janet knew it was unlikely to work—from the start.
So where did all that easy money go? I think I’ll let the authors tell you. I think you’ll enjoy this brief, clear-headed essay.
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Tuesday, November 15, 2016
Trump's Mandate to Yellen: Print More Money or You're Fired! / Interest-Rates / Quantitative Easing
By: Michael_Pento
What kind of President will Donald Trump be? Will he restore America to its former position of greatness, or end up being feckless like a long list of his predecessors? That is yet to be determined.
However, what is clear now is if Donald Trump wants to avoid starting his tenure with an economic crisis similar to that of Mr. Obama he will need to put a lid on long-term interest rates rather quickly. And in order to do that he will have to convince a supposedly politically-agnostic Fed Chair, Janet Yellen, to not only refrain from further interest rates hikes but also to launch another round of long-term Treasury debt purchases known as Quantitative Easing (QE).
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Friday, September 09, 2016
‘Helicopter Money Coming’ – Exclusive Interview With Top Hedge Fund Manager Tom Conrad / Interest-Rates / Quantitative Easing
By: Jeff_Berwick
TDV: Hello, Tom, thanks for sitting down with us once again. We last talked to you more than a year ago. At the time you predicted a significant stock market crash and only a month later the Dow reflected your position with a huge intra-day crash. There was huge volatility throughout the fall.
Tom Conrad: Yes, and then again in at the beginning of January of 2016.
TDV: It’s not over yet, of course.
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Wednesday, July 27, 2016
Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? / Interest-Rates / Quantitative Easing
By: Ellen_Brown
Fifteen years after embarking on its largely ineffective quantitative easing program, Japan appears poised to try the form recommended by Ben Bernanke in his notorious "helicopter money" speech in 2002. The Japanese test case could finally resolve a longstanding dispute between monetarists and money reformers over the economic effects of government-issued money.
When then-Fed Governor Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was talking about something quite different from the quantitative easing they actually got and other central banks later mimicked. Quoting Milton Friedman, he said the government could reverse a deflation simply by printing money and dropping it from helicopters. A gift of free money with no strings attached, it would find its way into the real economy and trigger the demand needed to power productivity and employment.
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Wednesday, July 27, 2016
Are Central Banks Crazy Enough to Think Helicopter Money is the Answer? / Interest-Rates / Quantitative Easing
By: Rodney_Johnson
Central banks around the world have a common problem. They are failures. For the past eight years, central bankers worked tirelessly to generate economic activity. They pushed interest rates below zero and printed trillions of dollars.
And yet, the IMF recently cut its global growth forecast again.
Most economies are stuck in neutral while threats such as the debt crisis in Europe and deflation in Japan keep growing. Now central bankers are talking about a new tool – helicopter cash (free money distributed by a government agency). It won’t work either, but don’t expect that to stop the bankers from trying!
Monday, July 11, 2016
ECB and BOJ Now Trapped in Endless Counterfeiting / Interest-Rates / Quantitative Easing
By: Michael_Pento
The Fed was able to end its massive $3.7 trillion series of Quantitative Easing campaigns without the stock market and economy falling apart. The end of QE 3, in October of 2014, did cause temporary turmoil in the major averages; but all in all, it did not lead to a protracted market decline, nor did it immediately send the economy into a recession.
The consensus view then became that the Fed’s strategy of unprecedented interest rate and monetary manipulations was a huge success, and it would be able to slowly raise the Fed Funds rate with impunity.
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Wednesday, June 29, 2016
The Fed’s Money Printing Brings a Strange Outcome / Interest-Rates / Quantitative Easing
By: Rodney_Johnson
I keep reading that the U.S. debt is out of control. That we’re spiraling toward a certain financial death, evidenced by the fact that we now owe more than 100% of annual GDP.According to a recent study by Rogoff and Reinhart, this is well beyond the threshold of where economies struggle. And we’re not alone. Several other countries have the same high level of debt outstanding, and Japan is at the top of the list, owing almost 250% of GDP. Clearly, we’re all going to die.
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