| | They say that this Fed operation involves buying mortgage bonds - that's a very different operation than prior Quantitative Easing. The cynic in me suggests that the big mortgage bond holders (Fannie, Freddie, Goldman Sachs) might benefit from this - Can't you just hear one of Geitner's buddies at Goldman Sachs saying, "Hey, let's have Geitner talk Bernanke into taking some of these dogs off our books."
40 billion a month of fiat money going into these markets, then spreading out from there as what? If they buy from Fannie and Freddie, will that result in a sucking kind of pressure for more mortgage lending in the housing market? Will we get a new, mini-bubble? If institutions like Goldman Sachs get some of this money, will they buy up Treasuries? Or, corporate debt, or other companies? Is money going to go from the Fed to European Central Banks to pull bad mortgage bonds off their weak spreadsheets? Or will buys be made in ways that shore up bankrupt states like California?
There is only one thing stopping MASSIVE inflation right now - massive uncertainty caused by the Obama administration's policies. When that uncertainty is significantly diminished the huge demand for money will drop and all those reserve accounts in banks and in corporations will open like flood gates of a giant dam.
And this QE is "open ended" - there is no limit to how long it can go on and a stated commitment to continue till we get job growth. That spells the end of the American dollar - it is total commitment to a blind, fanatical print-till-our-problems-go-away philosophy, blind because from that perspective they will never see that the printing is causing the problems.
|
|
