Chart usGOLD   Chart usSILVER  
 
Food for thought
If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning
President Andrew Jackson, 1829  
Search for :
LATEST NEWS  :
MINING STOCKS  :
Subscribe
Write Us
Add to Google
Search on Ebay :
PRECIOUS METALS (US $)
Gold 1225.321.92
Silver 18.540.01
Platinum 1347.50-3.30
Palladium 825.50-7.30
WORLD MARKETS
DOWJONES 1724278
NASDAQ 458523
NIKKEI 16068179
ASX 54198
CAC 40 445927
DAX 9786124
HUI 212-3
XAU 89-1
CURRENCIES (€)
AUS $ 1.4376
CAN $ 1.4133
US $ 1.2908
GBP (£) 0.7887
Sw Fr 1.2067
YEN 140.3680
CURRENCIES ($)
AUS $ 1.1139
CAN $ 1.0949
Euro 0.7747
GBP (£) 0.6111
Sw Fr 0.9349
YEN 108.7450
RATIOS & INDEXES
Gold / Silver66.09
Gold / Oil13.04
Dowjones / Gold14.07
COMMODITIES
Copper 3.11-0.04
WTI Oil 93.99-0.43
Nat. Gas 3.92-0.10
Market Indices
Metal Prices
RSS
Precious Metals
Graph Generator
Statistics by Country
Statistics by Metals
Advertise on 24hGold
Projects on Google Earth
In the same category
QE Doesn’t Create Jobs… So Why Tie It to Employment?
Published : December 21st, 2012
519 words - Reading time : 1 - 2 minutes
( 0 vote, 0/5 ) Print article
 
    Comments    
Tweet
Keywords :   Federal Reserve | Japan |

 

 

 

 

Last week the US Federal Reserve surprised yet again by announcing QE 4: a program through which it would purchase $45 billion of US Treasuries every month.

 

Between this program and the Fed’s QE 3 Program announced in September, the Fed will be monetizing $85 billion worth of assets every month ($40 billion worth of Treasuries and $45 billion worth of Mortgage Backed Securities) ad infinitum.

 

Indeed, the Fed’s new policies are anchored to its goal of getting employment down to 6.5%. This means the Fed will buy these assets non-stop until employment gets down to 6.5%.

 

First and foremost, QE does not create jobs. The UK has announced QE efforts equal to an amount greater than 20% of its GDP and has not seen any meaningful job growth. Similarly, Japan has announced nine rounds of QE for a combined effort equal to 20% of its GDP over the last 20 years and job growth remains dismal there.

 

Based on this, the Fed’s decision to anchor its QE efforts to employment is a bit hard to swallow. Instead, it’s much more likely that the Fed sees something “bad” coming down the pike and is moving preemptively to shore up the system again.

 

Indeed, while most analysts claim the Fed has been printing money day and night, the truth is that the Fed’s balance sheet didn’t budge much at all for most of 2012. Indeed, as late as mid-October the Fed balance sheet was actually $50 billion smaller than it was the year before.

 

Then QE 3 and QE 4 came along and the Fed balance skyrocketed from $2.8 trillion to over $2.9 trillion in a matter of weeks. And it will be expanding at a pace of $85 billion per month going forward.

 

Among other things, this is going to result in higher inflation, greater civil unrest worldwide, and a shortage of high-grade collateral in the financial system.

 

Moreover, the Fed is well past the point of being able to ever exit this situation cleanly. By its own admission, the primary driver of the stock market has been the hope of Fed intervention. If one day the Fed actually tries to pull out its market props, let alone unwind its balance sheet (which will be north of $3 trillion in size in early 2013) the stock market and the system would not be able to withstand it.

 

This is the game going forward. The Fed is playing an increasingly dangerous game by making up policies as it goes. And there is no real indication that it has any idea how to exit this situation cleanly.

 

But two things are certain: costs will be going up… and these policies will work… until they don’t… at which point things will be extremely ugly.

 

On that note, we’ve recently published a Special Report detailing how to prepare for inflation: what investments will profit most from it and why it’s only going to be getting worse going forward.

 

Graham Summers

 

For more insights as well as a FREE Special Report outlining how inflation will tear through the financial system... visit us at:

http://gainspainscapital.com/gpc-inflation/

 

 

 

Data and Statistics for these countries : Japan | All
Gold and Silver Prices for these countries : Japan | All
Tweet
Rate :Average note :0 (0 vote)View Top rated
Previous article by
All articles by
Next article by
Latest comment posted for this article
Be the first to comment
Add your comment
TOP ARTICLES
MOST READ
TOP RATED
MOST COMMENTED
Editor's picks
RSS feed24hGold Mobile
Gold Data CenterGold & Silver Converter
Gold coins on eBaySilver coins on eBay
Technical AnalysisFundamental Analysis
Comment this article
You must be logged in to comment an article8000 characters max.
 
Sign in
User : Password : Login
Sign In Forgot password?
 
Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.
Disclaimer