QE3 announced tomorrow by helicopter Ben?

purch

JimBar wrote: »

The Godfather of newsletter writers, Richard Russell,

I wish he would make me an offer I can't refuse :eek:

P.S. Nice cut and paste by the way.

Generali

Well Mr Bernanke gave us QEIII. An open ended commitment no less:

http://www.ft.com/cms/s/0/ee95102a-fdba-11e1-8fc3-00144feabdc0.html#axzz26O0gmOXS

The US Federal Reserve has launched an open-ended effort to spark the recovery by injecting an additional $40bn into the economy each month through purchases of mortgage-backed securities.
Unlike previous programmes, the Fed’s third round of quantitative easing – nicknamed QE3 – does not have a defined limit and will continue until the labour market improves. Combined with its existing purchases of long-dated Treasuries under its Operation Twist programme, the Fed will be buying assets at a pace of $85bn a month for the rest of the year, a similar pace to its QE2 programme during 2010.

It shows that the Fed still has concerns about deflation IMHO. Gold up 2% so someone likes it.

chewmylegoff

We all should have bought gold yesterday. Would be up 2% in just one day, that's an annualised compound return of 78,567,264% if my calculations are correct.

Masomnia

I just like his beard.

How unusual is this focus on the labour market? Certainly will suit Obama.

Generali

Masomnia wrote: »

I just like his beard.

How unusual is this focus on the labour market? Certainly will suit Obama.

The Fed's mandate requires them to look after the economy as a whole, not just inflation.

Bernanke has been explicit since he first became Fed Head that he sees deflation as a threat to be avoided at almost any cost. He sees high unemployment as being a cause of deflation as unemployed people don't spend money on goods, this causes a glut of goods compared to the money chasing them which in turn causes prices to fall.

The cure, according to Mr B, is to create more money. (I oversimplify).

While we're here, one of the reasons that a Gold Standard will always fail is that it effectively prevents the money supply from expanding with GDP. In a Gold Standard system, any growth above 1 or 2% must be deflationary. That deflation distorts price signals from the market and also causes problems in credit markets as companies struggle to repay debts from reduced prices.

It's worth remembering that not only has every fiat money system prior to this one failed but so has every other sort including metallic ones like a Gold Standard.

DiggerUK

Todays rise in the price of gold (pog), may well be down to QE3.
If it is, then it is the first time that the pog has reacted so quickly to a QE announcement.
I suspect it has more to do with other normal market forces, and there will be a longer time lag before this latest QE trends the pog up.

I'd ask you all to check out the time of the price spike, with the time of the announcement. From what I can see they don't overlap.

As to JimBar, well well, who have we tonight Mathew.
..._

wotsthat

chewmylegoff wrote: »

We all should have bought gold yesterday. Would be up 2% in just one day, that's an annualised compound return of 78,567,264% if my calculations are correct.

I bought some gold and quite a big chunk of Rio Tinto before the ECB announcement.

So far my plan's on track. I'll be retiring Tuesday morning and never be poor and humble again.

P.S. Jimbar - when I say gold I do mean gold. I've bought that physical stuff too - it says so on the piece of paper.

purch

Masomnia wrote: »

How unusual is this focus on the labour market?

The "Labor" market has always been the #1 priority.

It is by far the most watched an influential economic number released every month in the U.S.

A working American is a consuming American. (thats a Dr. Jim line)

Without consumption their economy is doomed.

DiggerUK

Generali wrote: »

.........It's worth remembering that not only has every fiat money system prior to this one failed but so has every other sort including metallic ones like a Gold Standard.

The gold standard was fit for purpose, whilst gold production expanded at the pace it did in the late 19th century, and the major powers controlled access to the major gold mining areas of the world.

Fiat was fit for purpose, whilst the major powers controlled which fiats were top dogs in the 20th century.

But when fiat does not command the confidence it has done, gold will still command confidence. QE3 strengthens gold, not fiat.
..._

Loughton_Monkey

DiggerUK wrote: »

The gold standard was fit for purpose, whilst gold production expanded at the pace it did in the late 19th century, and the major powers controlled access to the major gold mining areas of the world.

Fiat was fit for purpose, whilst the major powers controlled which fiats were top dogs in the 20th century.

But when fiat does not command the confidence it has done, gold will still command confidence. QE3 strengthens gold, not fiat.
..._

For reasons unknown, it is tradition that precious metals rampers on these boards use handles IN_CAPITAL_LETTERS with underscores.

I have no idea why this is, but I would ask you to comply. It helps us all to know what posts are not worth reading.