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Bernanke is at it again, but July 13, 2011

Posted by hslu in Economics, Energy, Global Affair, Gold, jobs, Oil, Politics, stocks.
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Will QE2.5 and QE3 generate jobs?

The answer is “NO.”

It will pop up stock market which Bernanke is intended to do. The rational behind that is people will feel richer and will spend more, hence, stimulate the sagging economy.

But the next run of printing will inevitably increase the commodity prices which will negate any wealth effect bought on by higher stock prices.

Here is the $64 million question:

Will you go out buy a car or a house if your stock portfolio is up by 15% but you food and transportation cost is up by $250 a month?

No way. Not when your neighbors are out of work since March and your wife’s job is on the line.

That’s why QE2 didn’t work and that’s why QE2.5 and QE3 will not work either.

But inflation will be worse all over the world and we will all suffer because of Bernanke’s reckless action.

QE2 and 10-year Bond Yield December 13, 2010

Posted by hslu in Economics, Global Affair.
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QE2 is supposed to lower the long term interest rate which should bring the mortgage rate down as well.

Yet the 10 year Treasury Bond yield has been spiked up since Fed’s announcement.

I have said before that Bernanke is out of silver bullets and this latest Bond action shows just how out of touch with the real world Bernanke is.

Now what? QE3, anyone?

 

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