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Here Comes Quantitative Easing – Part 3?

From a trusting Agence France-Presse:

Fed approaches crossroads as growth slows

By Andrew Beatty
April 26, 2011

The Federal Reserve’s top policy panel will on Tuesday begin a two-day meeting in Washington, where it will weigh whether the recovery can make do with less central bank stimulus.

The seven men and three women who vote on the Fed’s rate-setting panel will decide whether or not to extend a $600 billion stimulus plan that is scheduled to end in June.

Until recently the choice had appeared straightforward. Growth was picking up nicely and the recovery was, in the Fed’s own words, "on a firmer footing."

But amid higher oil prices and government spending cuts, the economy now appears to be slowing.

The Federal Open Market Committee itself is expected to lower its growth forecasts during the meeting. "We expect a modest downgrade," said Goldman Sachs economist Sven Jari Stehn.

Economists are also worried that consumer prices could be ticking upward, crimping consumer spending and putting the recovery at further risk Americans have seen the price of gasoline rise over eight percent in the last month and the average gallon now costs 35 percent more than it did a year ago.

That has left the Fed with a tough choice between potentially pulling the plug on the recovery or continuing spending, which risks fueling inflation that could quickly spill out of control.

They sure are trotting out every excuse they can think of to keep on printing money quantitative easing.

Most economists expect the central bank to slowly pull away from its crisis-era policies and allow the purchases to end. After a failed attempt last year to normalize policies, the Fed is now expected to roll back two years of exceptionally loose monetary policy very cautiously.

"The FOMC will opt to go slowly in reversing policy accommodation, especially after last year’s failed attempt to wean the economy off monetary stimulus," said Steven Ricchiuto, chief economist of Mizuho Securities US.

Ricchiuto predicted the Fed would not spend any more than the $600 billion already committed, but would reinvest when the bond or other purchases mature, keeping the level of stimulus in the economy steady for at least three months.

The Federal Reserve will have to do something. After all, we can’t have the stock market go through the floor while Mr. Obama is out on the campaign trail telling us how he has saved the economy.

Whatever happens, Fed chairman Ben Bernanke will get a chance to explain the decision when he appears for the Fed’s first-ever post-meeting news conference. But with billions of dollars riding on Bernanke’s comments, the conference is expected to be a cautious affair…

And it will be all about what will be best for the economy – and not Mr. Obama’s re-election.

This article was posted by Steve on Tuesday, April 26th, 2011. Comments are currently closed.

20 Responses to “Here Comes Quantitative Easing – Part 3?”

  1. Rusty Shackleford says:

    On the one hand, if the economy crashes, it will most likely spell doom for chairman Obie. I would put a checkmark in the “good” column for that. On the other hand, millions of people (“folks” as Obie likes to call them) will be very adversely affected. That’s a checkmark in the “bad” column.

    The fact that all of this could have been avoided is now academic. The Fed got their sticky little fingers all up in it and set it on a course for well-known waters. Everyone knows what’s going to happen. As we used to say in the military, “It’s all over but the crying”. Indeed, this trainwreck is going to happen. With the Fed talking about “risk periods” of “three months” or less, you can only imagine when the crash will occur. Certain businesses will stay afloat. But many of us will have to endure the great depression take II. All caused by the socialists who think they know how to administer a command and control economy. Looks like they are going to get their way by causing a great financial catastrophe.

    I am reminded of a line in some movie I saw or book I read years ago where the main character was facing off with the antagonist and he said, “I’ll put up with most anything but if you mess with my family, my crops or my money, then you’re going to see the likes of me you wish you never had.”

    Here, the government is unashamedly doing all three. The end result being the type of economy run by bureaucrats. Hello, Cuba, hello Spain, hello USSR. Yes, it always works so well. It’s so predictable, so….easy to manage.

    *sigh* I have been shaking my head so often these days, I think it’s going to wobble clean off.

    • tranquil.night says:

      When it crashes, we know who and what is gonna get wall-to-wall blame.

    • proreason says:

      It may require guillotines.

    • jambon says:

      The MSM, its supporters and many of its viewers, believe they are entirely immune to the aftermath of a crash. The media is, for the most part, immune and we should rest assured their obedience will be rewarded ala NPR-style stimulus. “We have to keep the people informed” just like Pravda did.

      I don’t own a television so I have a bit of perspective on this: when I happen to sit in a lobby or waiting room (car repairs, dentist, etc.) where a TV plays MSM news i’m appalled at the way the news is delivered. The high-tech glossy package to so softly deliver the socialist take on the world is subliminal. I notice it because I never watch TV but it hits me like a brick in the face when I happen to be near it. It’s so easy to get lured into it – my parents are conservative but they still watch CNN. I ask them why and the only answer I get (after much distillation) is CNN has a glitzy-glossy-glamorous HD delivery that reminds our elders of watching Star Trek in the 60s.

      The fancy delivery and relentless assault of pitting the evil rich against the hapless poor makes a very noxious brew.

      I encourage everyone to unplug their television for a week and do something else instead of watching any TV for 7 days straight. It changes your perspective on things – a lot. It certainly will heighten your awareness to the perils as noted in Rusty’s comments.

    • River0 says:

      It’s no accident that Bernanke chose Royal Wedding Day to explain his grotesque mismanagement. He knows the masses will be distracted, and he won’t be getting much attention. There’s so much froth in the economy that a huge correction is inevitable.

      Fed money is the heroin that’s kept away the pain and stress of grim reality. The ‘free money’ policy of the Fed is what’s driving the inflation that is eating us up. There’s no way this is going to be easy. Bernanke has a tiger by the tail, and he doesn’t want to let go.

  2. JohnMG says:

    …..” Fed chairman Ben Bernanke will get a chance to explain the decision when he appears for the Fed’s first-ever post-meeting news conference”…..

    With Bernanke so willing to bend over for Obama and his propaganda machine, I think it’s time to start referring to him as “Genital Ben”.

  3. Right of the People says:

    “Growth was picking up nicely and the recovery was, in the Fed’s own words, “on a firmer footing.” But amid higher oil prices and government spending cuts, the economy now appears to be slowing.”

    Isn’t it amazing how the oil prices zoomed up once the teeny tiny recovery began just in time to squelch it like our dear leader would want?

    This cabal in the White House need to be stopped and soon before the whole country goes down the crapper.

    • Rusty Shackleford says:

      Just exactly what “government spending cuts” is the author referring to? I haven’t seen nor heard of any even being proposed. Except of course those being bandied about in Paul Ryan’s budget proposal which is so far away from happening, I’d sooner set up my unicorn-watching station and wait for the lines to begin.

  4. tranquil.night says:

    We joke about whether there’s even a question if they’ll continue the policy because it’s so necessary to Obama’s ‘recovery’ – and Bernanke is just another of his appendages – but they do face real problems with another round of printing.

    The spotlight is completely on them now and despite the spin QE2 took bad PR hits when the dual realities of the S&P downgrade and the warning shots from the IMF and ChiComs came out. Even if they stopped buying, it would put the Fed in a place to further increase their limit or increase rates, which is the choice they’ll face now when QE2 ends.

    You can’t really ask for a better case for not raising the debt limit without a commitment to real and total supply-side reform. Boehner’s out there talking hot soup again, but really who knows or really has much faith in what’s going on in those decrepit backrooms? Our creditors sure don’t, they seem to be on their last thread.

    • proreason says:

      Today for the first time, there are some pro-Trump articles in the blogosphere.

      Boner’s tying hard to either make Trump the next president or doom the country if the Donald can’t climb the mountain.

      Time is short.

      And did anybody see Alan West’s putdown of the boy king on Greta: “low level community organizer”. I jumped out of my chair.

    • tranquil.night says:

      I was reading Professor Sowell’s piece, which despite the way in which he frames his opinion and hopes against any final Trump win, still covers every salient point we’ve made about what the GOP should be learning from why voters are drawn to him, rather than lecturing the voters themselves why they shouldn’t be drawn to him.

      It’s good to see this message prevailing; it’s an important benchmark in setting the tone of this very crucial primary and election. We can’t be afraid to firmly and passionately hold Obama accountable to his factual record and its results.

      Oh, and Allen West – my gosh does he continue to impress. Pro, you’d love his speech at the Women Impacting Nation conference recently: http://www.therightscoop.com/west-we-need-strong-women-to-raise-american-men/

      He talked head up about the declining presence of strong men in America, and encouraged mothers to shrug off the castrating formulas of Liberal Feminism and embrace the spirit of fierce, independent Spartan women who raised men of strength and honor. Mama Grizzlies surely have an instant spot in their heart for Col. West.

    • proreason says:

      West is something else.

      About a year ago, I changed my mind about political experience. The conservative meme at the time was that one of the big problems with the Moron was that he simply didn’t have any experience and that was why he was so incompentant. But I realized (even though I call him the Moron) that he isn’t incompetant at all. He’s only incompetant if we presume he is trying to do what conservatives want. Well he isn’t. He’s trying to disassemble the country and reassemble it as a marxist country. He is certainly competant at what HE wants. Lack of executive experience hasn’t stopped him from that. Neither has the fact that he only held a real job once in his life for less than a year.

      So for me, Alan West is plenty experienced enough. So is Trump.

      Boner has been in congresss for 20 some years, but he isn’t experienced enough, because his experience is in waffling, whining, lying, finaggling and disembling. We know for sure now who he is and what he wants, and it isn’t what we want, unless lining some politician’s pocket is what you want.

      I’ll take West, Rand Paul, Sarah, Bachmann over all of the criminals.

      Now having said that, the most important thing is still “to win”. Beating little lenin is so important that everything else falls by the wayside. Palin, Christie, Pawlety, West, Trump…whoever can win is my guy, cause if we don’t win in 2012, I’m afraid it’s game set match. The only thing I can think of that might hold the country if the menace wins again is if people like Alan West absolutely control both houses. That might make it be possible to survive with the Moron still in the White House. But it would be very very difficult to pull off.

    • U NO HOO says:

      “Bernanke is just another of his appendages”

      Yeah, a ruptured appendix and the pain it entails, or entrails, that lead to death.

    • Petronius says:

      pro : “Alan West is plenty experienced enough.”

      You betcha. If memory serves, Abraham Lincoln was elected President after serving a single term in the House of Representatives.

  5. Rusty Shackleford says:

    “Boehner’s out there talking hot soup again,”

    More like “Duck Soup” a la Marx Brothers.

  6. Tater Salad says:

    Barack Obama’s man made gasoline price predicament :

    Open ANWAR for drilling and to produce our own oil instead of buying it from foreign countries at inflated costs while keeping the speculators at bay and to keep our money right here in America

    Add up items #1 thru #8, putting the most emphasis on #8 and you will have the cost of America’s gasoline costs:

    1. http://www.youtube.com/watch?v=MlfmvwxxgHM

    2. http://therealrevo.com/blog/?p=44337

    3. The President of the U.S. is now giving $2.84 Billion taxpayers dollars to Columbia to build an oil refinery. I thought we needed jobs here in the U.S.? This President is a complete loser and it now shows he hates America.
    U.S. Gov’t Agency Plans $2.84 Billion Loan for Oil RefineryIn Colombia

    4. http://wizbangblog.com/content/2011/03/11/enough-oil-to-completely-replace-all-imports.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Wizbang+%28Wizbang%29&utm_content=My+Yahoo

    5. http://canadafreepress.com/index.php/article/35840

    6. As Your Gas Climbs To $5 a Gallon Obama’s EPA Blocks Access To 27 Billion Barrels Of American Oil – http://www.americans-working-together.com/together_we_can/id36.html

    7. Is Saudi Arabia mad at Barack Obama for allowing Egypt to fall? http://grendelreport.posterous.com/saudi-slashes-oil-output-pres-obama-launches

    8. The problem that contributes the MOST to high gas prices is Quantitative Easing (QE2) by the Obama administration and here is why: http://www.futuresmag.com/News/2010/11/Pages/Oil-after-QE2.aspx

    Printing more money tends to push down the value of the dollar. While that would tend to help U.S. exports, it also risks pushing up the price of oil and other commodities, threatening an inflation surge that could be difficult to stop if the economy picks up.

    9. After reading and watching all of the above information provided, there is still one question that needs to be asked and hopefully YOU have the right answer for the 2012 election. How is this “Hope & Change” thing working out for Americans of all parties now? http://www.moonbattery.com/archives/2011/04/hope-change-2.html

    • proreason says:

      gas is going to be between 2 and 3 bucks per gallon by the election day.

      just like last time.

      do you think the Saudis, russians, chavey, iranians want anybody other than Barack Obama to be leading the USA. Of course not.

      Between now and about late summer 2012, gas should go to the $6-8 range. Then the boy king will “promise” to take action to correct the long held grievances the oil producers have been exercising against George Bush, and he will !!!

  7. GetBackJack says:

    Avoiding the gasoline issue and the estimable and admirable Colonel West (yea, baby!) why is it every time a Quantitative Easing occurs my (censored) feels like I slipped in the showers at San Quentin and couldn’t protect myself?

    PS – What Pro has said above?

    For the win.

  8. Not so fast says:

    A radio talk show host on the stock market, Phil Grandy, has said the Government has no option BUT to go to QE III. He says they won’t call it QE III, for obvious reasons, but they HAVE to keep printing money and hand it over to the top 5 banks at Wall Street. The Government and the big 5 are the only players in the stock market. If they were to stop the printing presses it would be a TOTAL collapse of the American Economy in every visible sense. Then THAT would require cleaning out Washington and putting in people who actually give a crap!

  9. tranquil.night says:

    “but they HAVE to keep printing money and hand it over to the top 5 banks at Wall Street.”

    Bingo, and the daily debt service is already way past any reasonable monetary level to hoist onto the banks, unless you’re just going to start flinging practically worthless t-bills their way until the dollar matches them in nil value.

    “Hey guys, uh, we’re just gonna start crediting you each with approximately $50 million in treasuries an hour. No no you certainly can’t sell them! These investments are for winning the future, not selling it out! Erhm..”

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