Get ready for QE3 if things don’t get better soon

June 20, 2012

Ben Bernanke appears to be reluctantly gearing up for a third round of large-scale Federal Reserve bond buying, so-called QE3. Millan Mulraine of TD Securities captures just how likely further monetary easing is becoming following the Fed’s decision on Wednesday to expand Operation Twist.

The burden of proof may now be on the incoming data to prove that a third round of large-scale asset purchases may not be necessary.

Just under two months before the central bank’s yearly gathering at Jackson Hole – where Bernanke announced QE2 – the Chairman emphasized the path of the job market will be a key driver of any decision to further expand the central bank’s $2.8 trillion balance sheet. He told reporters at a press conference:

If we don’t see continued improvement in the labor market, we will be prepared to take additional steps if appropriate.

That suggests another crummy jobs report for June could push policymakers over the edge, potentially even as early as its July 31-August 1 meeting.

2 comments

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QE will push the market for a little while, but it can’t fix what is wrong with the economy. Maybe we should try a fresh, new idea that might actually work:

http://blogs.reuters.com/great-debate/20 12/06/19/a-solution-for-underwater-mortg ages-eminent-domain/

Posted by breezinthru | Report as abusive

QE3! No!!!

The slow economy is not due to lack of capital! Rich people have billions to invest. The problem is due to lack of demand caused by historically low levels of employment.

We can continue down this path “QE” (printing money) which is really just a method to devalue our currency including everyone’s conservatively invested retirement savings.

Or, we can accept that budgets and trade must be balanced. Balancing the budget will take some hard decisions. To balance trade we must accept that “free” trade is NOT inherently good but must be managed to protect our economic interests.

I would rather see my neighbors with jobs and me paying higher prices for goods made here than see my savings lose their value and my tax rates go sky high.

Posted by smith_9000 | Report as abusive