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Fed Getting Nervous

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They could revive programs to buy mortgage securities or government debt. They could lower the rates banks pay for emergency Fed loans. The Fed also could create a new program to spark more lending to businesses and consumers in a bid to lure them to ratchet up spending and grow the economy.

They are going to print. The magic printing press is being warmed up.

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Fed officials offered a slightly more downbeat view of the economy.

They now predict the economy will grow between 3 percent and 3.5 percent this year. That's down from forecast of 3.2 percent to 3.7 percent made in April.

Didn't Bernanke say that the US needs 3.5% growth to generate jobs?

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http://yglesias.thinkprogress.org/2009/10/more-growth-needed/

Ryan Avent offers more context:

And consider this: the last time the unemployment rate hit its current level was during the recession of 1981-1982 (during which the unemployment rate actually peaked at 10.8% during the final quarter of the recession). Here are the quarterly growth rates for the six quarters immediately following the end of that recession: 5.1%, 9.3%, 8.1%, 8.5%, 8.0%, 7.1%. And at the end of that period, the unemployment rate was still above 7%.

As he says, this implies that even if worried about the sustainability of the Q3 growth pattern prove misguided and we can keep growing at 3.5 percent, “American unemployment will remain near 10% through the end of 2010, at least.”

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Wonder when they will start buying assets, not financial ones, directly. Didn't Bernanke write about buying up mines and land and everything else in his infamous helicopter paper?

yes that's next. they will start with corporate bonds.

they have to do something, after all they do have a price stability mandate that applies equally well to deflation as it does to inflation.

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They are going to print. The magic printing press is being warmed up.

They have realised what we knew all along - QE has failed in the USA. So the new policy is.....er, hmmmmmm, MORE ???!!!! Monster QE is about to arrive this autumn in a blaze of glory pre election time over there. $5Trillion. Qe has failed here too. We just need a few more months and see the unavoidable cuts biting.........house price precipice....printy time here Boe?

Edited by plummet expert

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They have realised what we knew all along - QE has failed in the USA. So the new policy is.....er, hmmmmmm, MORE ???!!!! Monster QE is about to arrive this autumn in a blaze of glory pre election time over there. $5Trillion. Qe has failed here too. We just need a few more months and see the unavoidable cuts biting.........house price precipice....printy time here Boe?

the reason QE failed is that they bought government bonds. They need to buy private sector assets.

Also, and this is key, they need to state they will not sell them all back when the economy recovers.

That is how you create expectations of inflation.

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the reason QE failed is that they bought government bonds. They need to buy private sector assets.

Also, and this is key, they need to state they will not sell them all back when the economy recovers.

That is how you create expectations of inflation.

QE is used to buy loans.....so they are loans in themselves....

If the lender pays nothing to obtain purchasing power, then the loans themselves are worthless...

All they do is cause inflation...and who gives a damn if they default...they cost nothing, they are worth...nothing.

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QE is used to buy loans.....so they are loans in themselves....

correct.

If the lender pays nothing to obtain purchasing power, then the loans themselves are worthless...

no, the lender is paying.- by printing the money to buy the assets the FED will create new claims on the government - since the new money is valid for paying taxes.

All they do is cause inflation...and who gives a damn if they default...they cost nothing, they are worth...nothing.

none of our financial assets, private or public, are worth anything in aggregate - they all sum to zero.

when the assets get sold back the printed money will dissappear again. However, to succeed they need to make people think they shan't sell back all the assets.

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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