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Forget Deflation Qe2 Coming To The Rescue!

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The PTB aren't giving up on life as we know it. The monetary nuclear option is at DEFCON 5.

QE2 is packed and Obama's hitting the red button.

Forget all bets, HPC is going to be nuked.

My link

Jim Grant, one of the most respected voices in the financial industry, joins Zero Hedge and others, who see that the only choice the Federal Reserve has now that the temporary and shallow reprieve from the clutches of the deflationary depression is over, is to print more money in the form of another iteration of QE. Whether this will be another $2.5 trillion, like last time, which was the price of an 18 month delay of the inevitable, or a $5 trillion concerted global effort, as Ambrose Evans-Pritchard believes, is irrelevant: the only option the central printers, pardon, bankers, have left is to flood the market with yet more worthless paper (keep an eye out on the doubling in the price of gold the second QE2 is publicly announced, which will also double as the obituary for all fiat paper). In an interview with Bloomberg TV, Grant says that the first order of business tomorrow when the Fed's new additions officially join their new groupthink perpetuating employer will be "to try once more to print enough dollars to make something happen in the U.S. economy.” The ever-sarcastic Grant manages to completely skewer Janet Yellen, Steve Diamond and Sarah Bloom Raskin, to ridicule the Fed's 100% track record of not only focusing on the wrong thing time after time, but getting the response consistently wrong with 100% precision, and also manages to makes fun of the Fed's credentialed WSJ lackeys, who courtesy of the Fed's "editorial" control over the reporting process, get a direct line into leakable Fed strategy.

On Fed monetary policy:

"Deflation is a funny thing. It's a word that is much in the news, much in the markets, but is all too infrequently to find. So the Fed says that deflation is broadly declining prices. But could not also be progress? In other words, if the world produces more at lower prices, is that so bad? Americans spend half of their weekends, it seems, looking for bargains.”

"So the Fed is telling us that bargains galore is something that the Fed must resist with radical volumes of credit creation… I guess what I would ask the Fed is would it please stop and help us understand why this is bad? So in 2002 and 2003, Alan Greenspan, then chairman, and Ben Bernanke, then a newly fledged governor, were out giving speeches saying that deflation is a clear and present danger, and we must - they said at the Fed - must cut rates dramatically, which they did to 1 percent."

"But the price indices today are much weaker than they were in 2003. So where is the Fed? Why not broach the topic of deflation again?"

"So what I blame the Fed for, among other things, is a lack of intellectual rigor and forthrightness."

On Federal Reserve Chairman Ben Bernanke:

"I think this is not being forthcoming with us, the people, about the nature of his concerns."

"In 2003, he was all deflation all the time. Well now the Cleveland Fed's median CPI was like 1.7 percent year-over-year, now it's 0.5 percent year-over-year. So where is the concern?"

"I think the concern will surface. We'll see more on Friday when the CPI comes out. But I think something ahead of the markets is a likelihood of the Fed stepping on the gas once more, so called quantitative easing - I think that's likely to happen…The Fed is already clearing its throat. You can see this in the newspaper leaks."

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Its interesting you believe in a free lunch theory - lower prices for everyone but with no consequences for you, your family, your loved ones or friends.

Seems too good to be true....

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At the G20 the US tried to force Euroland (Germany) down this path. It seems that Germany will NOT go this path, it will force the bond holders to take a haircut instread. In Britian we do both & watch deflation turn stageflation but HPC is baked in!


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The next round of QE needs to be bigger. The first round was good, it made a huge positive difference.. but it was not enough to really get the economy going. The next round will need to be bigger and more sustained. I think the $2.6 trillion of new QE is what will come.

Then after that has gotten into the market they will back off and give the free market time to see how it reacts. Just like they stopped QE this time and watched how the free market acted without more QE. The market did ok for a few weeks, then began heading downwards with increasing pace again.

The fed is watching things like the inflation rate and the unemployment rate, capacity use and so on to see how things are going. The hope among many was that now that stimulus has been given the free market will become self sustaining again. Generate its own growth.

My prediction has been and remains they would stop QE for a while, then after a few weeks or months the economy would start heading downhill.. until eventually they started QE again.

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