As we mentioned yesterday, there are those who are already calling for QE∞2? As we discussed, the focus of QE∞ was on mortgage backed securities. And the writer we considered yesterday shared thoughts about the fact that QE∞2 was already taking place quietly, in the form of the FED purchasing bonds from the U.S. Treasury.
Michael Gayed, Chief Investment Strategist for Pension Partners notes that QE∞ focused on banks, with a specific target on mortgages, while the next phase may focus on banks on a more global scale. Consider the following CNBC interview.
It’s interesting that he doesn’t think politicians can “let” the economy fall off a fiscal cliff. At this point, it seems more like they’re causing it, in the long run, with no other ultimate solution in sight. From his perspective, which clearly comes from a Keynesian background, the next step should be for banks around the world to begin a concerted effort to prop up the international economy.
He expects it to involve the ECB, China’s Central Bank, IMF and other banking authorities target interest rates in an effort to stimulate the economy. Ugh, seems like we’ve been here before. Anyone remember 2008?
However, it’s clear that the FED does expect to have to act again very soon.
Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.
Recovery? According to the charts from John Williams that we often refer to, U.S. inflation is almost 23%. Not only that, but those who are unemployed are staying unemployed longer than ever before, as the following chart illustrates.
The rate has more than doubled in the past five years. Is this what economic recovery looks like? Perhaps the little squiggly from about 41% to about 39% is what they’re referring to.
The interesting thing about facts is that they get in the way of what the politicians and central bankers are accomplishing. So they come up with formulae designed to back up their agenda and force feed their garbage to voters via a complicit media. Sounds a bit like a conspiracy to me, but a lot of folks really don’t want to believe that. Maybe we should ask the 7 million who have now been unemployed for over fifteen weeks.
Stimulus isn’t working. Only paying the piper will work. But, in either case, precious metals will work to preserve and perhaps increase value. Consider this carefully as we continue to hear from talking heads how wonderfully things are moving along, though the recovery is “proceeding slower” than anticipated. Is slower now a negative term? In other words, if something is moving it’s proceeding as planned. But if it’s going backwards it’s proceeding slower than planned?
For your prosperity,
J. Keith Johnson
The Gold Informant