The Federal Reserve recently said that they're "ready to end QE3, but not the QE concept." Huh?
When I first read this I thought to myself, "I guess that means we still have QE Eternity."
If you're one of the many millions of Americans (the vast majority) wondering what "QE" is all about think of it as industry gobblygook, or market-speak, for continuous bailouts. By easing a large quantity of money into the economy the Federal Reserve - with a wink and a nod from Congress - is trying to make sure that Wall Street's market players don't go bust ... again.
Of course, in addition to getting saved, the market players on Wall Street make a lot of money in the process. Whether Wall Street wants to admit it or not, it really is corporate welfare at its finest.
If you're wondering what QE looks like in graph form, the red and blue areas below represent what the Federal Reserve has been purchasing.
By purchasing toxic "assets" other market players won't purchase, the Fed is effectively dumping trillions of dollars into our economic system. In returnthey we get toxic crap (red area) and low interest Treasury bonds (blue area) in return.
In case you're wondering, yes, the process of dumping more than $4 trillion into our economy has also artificially inflated it. The chart below makes it clear that every time the Fed puts money into the system our markets do well. When they don't make purchases ... well you get the picture.
Final thought: We are living on borrowed time.
- Mark
When I first read this I thought to myself, "I guess that means we still have QE Eternity."
If you're one of the many millions of Americans (the vast majority) wondering what "QE" is all about think of it as industry gobblygook, or market-speak, for continuous bailouts. By easing a large quantity of money into the economy the Federal Reserve - with a wink and a nod from Congress - is trying to make sure that Wall Street's market players don't go bust ... again.
Of course, in addition to getting saved, the market players on Wall Street make a lot of money in the process. Whether Wall Street wants to admit it or not, it really is corporate welfare at its finest.
If you're wondering what QE looks like in graph form, the red and blue areas below represent what the Federal Reserve has been purchasing.
By purchasing toxic "assets" other market players won't purchase, the Fed is effectively dumping trillions of dollars into our economic system. In return
In case you're wondering, yes, the process of dumping more than $4 trillion into our economy has also artificially inflated it. The chart below makes it clear that every time the Fed puts money into the system our markets do well. When they don't make purchases ... well you get the picture.
Final thought: We are living on borrowed time.
- Mark
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