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Qe 2.0 Taking Shape

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Calculated risk had a great piece linked from the New York Fed.

http://www.calculatedriskblog.com/2010/10/feds-sack-managing-federal-reserves.html

Basically the new paradigm which is not going to be adjusting the interest rates, but adjusting the size of the fed balance sheet. And adjusting the fed balance sheet in a controlled measured fashion, like how they have been doing with interest rates historically.

What is also taking shape is that QE 2.0 probably won't be one giant expansion like QE 1.0 was. But instead some of the private bankers in New York are guessing it will be 500-750 billion shots at a time. Possibly every six months, until they are no longer needed. My personal feeling is the fed balance sheet will have to expand to between 10-15 trillion USD, before the economy has enough liquidity. Its currently at 2.3 trillion, so a long ways to go.

As I've been saying we'll probably never see 1% base rates again. Its all about the fed balance sheet now, and what asset classes they decide to buy. I also think in the debt markets personal debt to individuals is going to fade away in importance. The game now is big corporates and sovereign debt.

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Calculated risk had a great piece linked from the New York Fed.

http://www.calculatedriskblog.com/2010/10/feds-sack-managing-federal-reserves.html

Basically the new paradigm which is not going to be adjusting the interest rates, but adjusting the size of the fed balance sheet. And adjusting the fed balance sheet in a controlled measured fashion, like how they have been doing with interest rates historically.

What is also taking shape is that QE 2.0 probably won't be one giant expansion like QE 1.0 was. But instead some of the private bankers in New York are guessing it will be 500-750 billion shots at a time. Possibly every six months, until they are no longer needed. My personal feeling is the fed balance sheet will have to expand to between 10-15 trillion USD, before the economy has enough liquidity. Its currently at 2.3 trillion, so a long ways to go.

As I've been saying we'll probably never see 1% base rates again. Its all about the fed balance sheet now, and what asset classes they decide to buy. I also think in the debt markets personal debt to individuals is going to fade away in importance. The game now is big corporates and sovereign debt.

Enough liquidity for what?

It will not generate REAL growth and with the resource shortages already rearing its head as people buy commodities to avoid this QE we will be in a hyper inflationary environment.

Also how will the fraud and corruption be cleansed from the system if it is allowed to perpetuate?

The best way to deal with a depression is to have one.

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Enough liquidity for what?

It will not generate REAL growth and with the resource shortages already rearing its head as people buy commodities to avoid this QE we will be in a hyper inflationary environment.

Also how will the fraud and corruption be cleansed from the system if it is allowed to perpetuate?

The best way to deal with a depression is to have one.

Liquidity so commerce can happen all around the country. Right now many people want to do work, and many people want to buy more, but they don't have the money.

As the price of commodities goes up massive amounts of money will continue to pour into bringing online the next reserves. I'm bullish on commodities with or without QE though. Billions of people are joining the global economy and just starting to get some buying power. And when you think about it many commodities are still cheap. A whole barrel of oil for 80$! Imbedded in a barrel of oil is something like the work energy output of a man for over 5 year labour.

In modern Britain you can't even get a tradesman for 80$ an hour, let alone a professional.

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Liquidity so commerce can happen all around the country. Right now many people want to do work, and many people want to buy more, but they don't have the money.

As the price of commodities goes up massive amounts of money will continue to pour into bringing online the next reserves. I'm bullish on commodities with or without QE though. Billions of people are joining the global economy and just starting to get some buying power. And when you think about it many commodities are still cheap. A whole barrel of oil for 80$! Imbedded in a barrel of oil is something like the work energy output of a man for over 5 year labour.

In modern Britain you can't even get a tradesman for 80$ an hour, let alone a professional.

You're talking out of your aa3e.

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The west gets the forced devaluation of earnings and savings, the east gets the invesment capital to outcomepte the west further (nay totally).

After a few years the whole economy top to bottom apart from the few hesiting the monetary / political gains from overt money printing will have their standard of living utterly destroyed.

The global implications of QE2

http://www.ft.com/cms/s/0/4e74bd74-cfb9-11df-a51f-00144feab49a.html

Already, the scale of capital flows into the Asian and Latin American blocs has been exceeding that seen at the peak of the last cycle in 2006/07, with Asian inflows about 60 per cent above that level. Recent research at the International Monetary Fund has shown conclusively that G4 monetary easing has in the past transferred itself almost completely to the emerging economies, whether or not their own economic circumstances warranted such a move.

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Ya but from a rational perspective capital should be inflowing to latin America and Asia. Most of the big heavy capital stuff we already have in a nation like Britain. Rail, highways, water control, electricity, housing for millions.

To give an example, one of the most aggressive development programs is going on in Vietnam. They plan to expand their electric grid from 10 gigawatts to something like 80 gigawatts rapidly. Putting their generation capacity in line with Britain. Well 70 gigawatts of capacity is going to cost probably 140 billion USD. Then they will need a transmission and distribution system to go along with that.

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Chicago's Charles Evans Joins Call For QE2 (Charles Evans is the President of the Chicago Fed.)

http://www.zerohedge.com/article/chicagos-charles-evans-joins-call-qe2-spot-gold-passes-1340-barrier

Evans: The forecast is not commensurate with what I take our dual mandate responsibilities to be. The unemployment rate is too high; inflation is lower than what I think price stability is. I would clearly favor more accommodation. If we were to do more large scale asset purchases, namely Treasurys, that would have a beneficial effect. There would be some reduction in long-term yields. That would be of some help. But given the nature of the outlook, much more accommodation than that is probably what’s called for. We have to think a little more carefully about the potential tools that we have available to us....

Evans: Short term interest rates are at zero. That’s a classic tell for a liquidity trap. People are saving tremendously. Businesses are sitting on a pile of cash. They’re doing what they need to do to make good profits, but through cost cutting and not by growing the top line. There is a lot of caution and risk aversion. Households feel that. The employment risks that they face, that limits spending, so saving is high. That is a classic tell for a liquidity trap as well. Staring at our forecast, I knew this when we first put out those projections. I knew it was going to be bad. And it is not improving. We’re pushing out the growth prospects. I just think it calls for much more than we’ve put in place. My view on accommodation at the moment is not data dependent. I think we’re there.

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Liquidity so commerce can happen all around the country. Right now many people want to do work, and many people want to buy more, but they don't have the money.

As the price of commodities goes up massive amounts of money will continue to pour into bringing online the next reserves. I'm bullish on commodities with or without QE though. Billions of people are joining the global economy and just starting to get some buying power. And when you think about it many commodities are still cheap. A whole barrel of oil for 80$! Imbedded in a barrel of oil is something like the work energy output of a man for over 5 year labour.

In modern Britain you can't even get a tradesman for 80$ an hour, let alone a professional.

The french did this..they introduced liquidity to the point of going to war to feed all the starving young men who had no jobs.

Dean men dont need food.

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The french did this..they introduced liquidity to the point of going to war to feed all the starving young men who had no jobs.

Dean men dont need food.

Before the 20th century the main expense of governments in the western world was the military. So the only way to ramp spending was to go to war. It had the side benefit of killing off a lot of the surplus labour, plus employing large numbers of young men.

Imo today war is not needed, for western nations the military is already less than 10% of government spending.

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Before the 20th century the main expense of governments in the western world was the military. So the only way to ramp spending was to go to war. It had the side benefit of killing off a lot of the surplus labour, plus employing large numbers of young men.

Imo today war is not needed, for western nations the military is already less than 10% of government spending.

well know, I forget all the names, but it was general trade that suffered a shortage of money in france, so they CONFISCATED lands, Church lands I beleive and issued large notes..for BANKERS use, based on a parcel of land.

it was full proof...till there was, within months, another shortage of cash....so they issued a load more of smaller notes...and so this went on.

today, they are proposing the same....issue more notes to cover a SHORTAGE.

do you see where I think this is going?

Its human nature to deny the reality that its not the means of exchange thats short...its things to MONETISE it for. No problem issuing more money if there is wealth behind it....there isnt....we see private wealth creation falling, yet in order to maintain the appearance of growth in GDP, they Spend more ont he government side...which sucks money OUT of private investment and makes it worse next round.

this gives the impression in the wealth generation area of a shortage of funds...banks not lending, companies failing...etc etc.

QE had some effect of course...but...not enough....next time, we'll do it bigger...

the result will be the same, each new issue will be bigger, more targeted.....IT CANT WORK...the means of exchange is NOT THE PROBLEM.

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To give an example, one of the most aggressive development programs is going on in Vietnam. They plan to expand their electric grid from 10 gigawatts to something like 80 gigawatts rapidly. Putting their generation capacity in line with Britain.

Have you been to vietnam?

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Its all about the fed balance sheet now, and what asset classes they decide to buy.

It's not just what assets they buy - but who they buy them from.

The fed balance sheet can expand all it likes as far as I can see - the broader measures need to increase for J6P to feel the effect.

I don't believe Bernanke has been buying assets from the non-bank sector yet?

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It's not just what assets they buy - but who they buy them from.

The fed balance sheet can expand all it likes as far as I can see - the broader measures need to increase for J6P to feel the effect.

I don't believe Bernanke has been buying assets from the non-bank sector yet?

Since the Fed shareholders are banks, why would he?

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Not sure what your point is?

I believe he's gently trying to get aa3 round to the idea that the fed isn't actually there to help anyone but the banks.

i.e. all his "this will help the economy" stuff is pie in the sky fantastic horsecrap, they simply do not give a shit.

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Have you been to vietnam?

Without knowing anything else about the nation if I look and see Vietnam currently only has 10 GW of electric capacity for 85 million people.. I can guess what the standard of living is like. Britain has 80 GW of capacity for 60 million people. And Germany has 120 GW for 80 million people.

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It's not just what assets they buy - but who they buy them from.

The fed balance sheet can expand all it likes as far as I can see - the broader measures need to increase for J6P to feel the effect.

I don't believe Bernanke has been buying assets from the non-bank sector yet?

Imo the only way to do it is to buy longterm government bonds. Then the government spends the money into the economy.

In the UK the £200 billion printing allowed the government to run a gigantic deficit.. which stopped the type of pain seen in Greece, Ireland and other nations who did government cutbacks alongside the credit crunch in the private sector.

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I believe he's gently trying to get aa3 round to the idea that the fed isn't actually there to help anyone but the banks.

i.e. all his "this will help the economy" stuff is pie in the sky fantastic horsecrap, they simply do not give a shit.

Its a good point.. but for the mega banks they need end demand to be there so people and companies borrow lots of money at a healthy spread.

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  • 259 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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