Fed Sets The Printing Press Rolling Again To Juice Recovery

[DisQ]

Inflation is coming

leading to hyperinflation

thats what printing leads to eventually, deflation is never the outcome.

Dr Marc Faber has spoken about it as well recently.

Fed sets the printing press rolling again to juice recovery

By Stephen Foley, Associate Business Editor

Wednesday, 11 August 2010

The US Federal Reserve decided last night to extend its $1.55 trillion programme of quantitative easing in an attempt to rejuvenate an economic recovery that the central bank admitted was turning out "more modest" than it expected.

The interest rate-setting Federal Open Market Committee bowed to calls from across the financial markets to extend its support, saying it would pump new money into the markets at a rate equivalent to about $200bn a year, and it left the duration of its efforts open-ended.

"The pace of recovery in output and employment has slowed in recent months," it said, in a much-studied accompanying statement. "The committee anticipates a gradual return to higher levels of resource utilisation in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated."

Quantitative easing (QE) is the central bank practice of printing new money and using it to buy bonds on the open market. It is designed to push market interest rates lower when traditional tools, such as official interest rates, have been exhausted. The Fed yesterday kept official rates in the rock-bottom range of zero to 0.25 per cent, where they have been since December 2008. It repeated that they would stay "exceptionally low... for an extended period".

Under its QE programme, the Fed has bought $300bn of US treasuries and $1.25 trillion of mortgage-related securities, designed to bring down the cost of borrowing for homebuyers. The total money that the Fed has put to work in the markets declines slowly as those bonds mature – and about $200bn had been expected to mature by the end of this year.

Now, instead, it will reinvest the money from repaid mortgage bonds into the purchase of additional US treasuries, subtly switching the focus of its support for the economy from the housing market to the wider credit markets.

Ben Bernanke, the chairman of the Fed, described the latest policy response as "credit easing", as opposed to quantitative easing. Other economists have described the measure as "QE lite".

http://www.independent.co.uk/news/business/news/fed-sets-the-printing-press-rolling-again-to-juice-recovery-2049048.html

David Prosser: Now the pressure mounts on the Bank of England

Wednesday, 11 August 2010

One by one, the world's leading economies are revising their view that sufficient stimulus has been extended to get them past the worst. Japan's Prime Minister says that with little sign of sustained recovery, he is thinking of another round, while the gentle extension of quantitative easing (QE) unveiled by the US Federal Reserve last night reflects the growing anxiety about the ability of the world's largest economy to put the downturn behind it.

So should the Bank of England follow suit? After all, it is nine months since it raised its QE funding and, that exceptional second-quarter GDP figure notwithstanding, there is now real concern that this country's recovery may already be running out of steam.

It is a tough call, as the minutes of the Bank's most recent Monetary Policy Committee (MPC) meetings hint. There are now members of the MPC who believe an extension of QE is worth considering. Equally, there are others who believe the time has come to begin tightening monetary policy.

The dilemma is acute. When the Bank embarked upon the unprecedented programme of QE – £200bn so far, remember – the fear was that the recession would turn into a deflationary spiral. We may now fear a return to the days of downturn – the dreaded double dip – but we are also having to contend with inflation that has proved surprisingly resistant. Returning to QE during a time of inflationary pressure would really cause a stir.

Still, the Chancellor has made it clear that the days of fiscal policy stimulus are over. He is pulling that particular rug from under the economy as fast as he possibly dares. In that sense, the MPC is now the only game in town for those who fear that the recovery cannot be sustained.

We should not forget that the status quo – with interest rates at a 350-year low and QE money still out there – is in itself expansionist. But the MPC will soon have to make it clearer which way it plans to jump next.

http://www.independent.co.uk/news/business/comment/david-prosser-now-the-pressure-mounts-on-the-bank-of-england-2049049.html

[Dubai]

Holy fvck. Buy land, chickens, guns and ammo today!

[DisQ]

Holy fvck. Buy land, chickens, guns and ammo today!

hpc legend cgnao said:

Remember: those who panic early lose the least.

[Errol]

If a bear attacks your camp you don't need to be faster than the bear. You only need to be faster than the slowest camper.

[Bloo Loo]

This isnt printing.

its using the "Profits" as the result of printing...ie, money drawn out of circulation by interest payments and repayments of bonds, back into the banking system.

Not sure why they would want to do this if the banking system is fully solvent and healthy,

come on people, get those big fat 40 year mortgages...its your duty to help save a banker...he has a bonus and 4 holidays to support.

[Pent Up]

We Can't print. Inflation is already getting out of control here. The US is different. If we print it'll all kick off Wiemer style.

[Bloo Loo]

We Can't print. Inflation is already getting out of control here. The US is different. If we print it'll all kick off Wiemer style.

According to the article, neither the FED nor the BoE is printing.

the Fed are Spending. The BoE...I cant see the relevence....just another banker saying give me ice cream or I'll die.

[DisQ]

According to the article, neither the FED nor the BoE is printing.

the Fed are Spending. The BoE...I cant see the relevence....just another banker saying give me ice cream or I'll die.

Its early days & these are "adjust" but isn't BoE target is 2%

Inflation in the UK in June stood at 3.2% on the Consumer Prices Index (CPI) measure, above the Bank's target rate.

The Retail Prices Index (RPI) inflation measure stood at 5%.

http://www.bbc.co.uk/news/business-10934302

[Laura]

If a bear attacks your camp you don't need to be faster than the bear. You only need to be faster than the slowest camper.

I'm happy knowing that gold is a known bear repellent.

Mine is hung from the trees ......... the gold that is, not the bear.

Edited August 11, 2010 by Laura

[Guest DissipatedYouthIsValuable]

If a bear attacks your camp you don't need to be faster than the bear. You only need to be faster than the slowest camper.

In case of charge by yak.

1) Try to run faster than yak

2) Do your best

[Minos]

I'm happy knowing that gold is a known bear repellent.

Mine is hung from the trees ......... the gold that is, not the bear.

I never knew you had a growler. Have you taught it any tricks?

[@contradevian]

We Can't print. Inflation is already getting out of control here. The US is different. If we print it'll all kick off Wiemer style.

Not sure where the wage rises are going to come from

[DisQ]

from the above

we are also having to contend with inflation that has proved surprisingly resistant. Returning to QE during a time of inflationary pressure would really cause a stir.

Still, the Chancellor has made it clear that the days of fiscal policy stimulus are over. He is pulling that particular rug from under the economy as fast as he possibly dares. In that sense, the MPC is now the only game in town for those who fear that the recovery cannot be sustained.

We should not forget that the status quo – with interest rates at a 350-year low and QE money still out there – is in itself expansionist. But the MPC will soon have to make it clearer which way it plans to jump next.

[azogar]

This isnt printing.

its using the "Profits" as the result of printing...ie, money drawn out of circulation by interest payments and repayments of bonds, back into the banking system.

Not sure why they would want to do this if the banking system is fully solvent and healthy,

come on people, get those big fat 40 year mortgages...its your duty to help save a banker...he has a bonus and 4 holidays to support.

it's not printing - it's voodoo