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Market Oracle FREE Newsletter

Category: Quantitative Easing

The analysis published under this category are as follows.

Interest-Rates

Tuesday, December 10, 2019

Central Planners: Out of Room and Running Out of Time / Interest-Rates / Quantitative Easing

By: Michael_Pento

One would have to place their trust in unicorns, sasquatch, leprechauns, and the tooth fairy to believe the current economic construct is sustainable. You also need to be woefully ignorant of history. In fact, there has never been a nation that engaged in massive debt monetization and did not eventually face hyperinflation, depression, and mass chaos. There is simply no such thing as magic, and you can’t build an economy on the foundation of debt, asset bubbles, and unlimited fiat money printing.

Perhaps the reason why the market hasn’t imploded yet is that the developed world has coordinated this so-called “strategy” of unbridled central bank lunacy to engage in permanent ZIRP and QE. Therefore, a currency crisis has been averted so far. However, now that these money printers have gone all-in, the next recession or freeze-up in credit markets cannot be averted by a dovish turnaround in monetary policies, as governments already have the gas pedal to the monetary and fiscal floor. The globe now has $255 trillion in debt, and the U.S alone is adding one trillion to that pile each year. The Fed is back in QE, along with the ECB and BOJ. And, no central bank in the developed world has room any longer to cut rates enough to boost consumption. 

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Interest-Rates

Saturday, November 02, 2019

Fed’s Own Forecasts Again Dead Wrong as QE4 Accelerates / Interest-Rates / Quantitative Easing

By: MoneyMetals

Precious metals markets enter November’s trading with bulls eying a potential year-end rally.

Gold and silver prices did manage to post gains on Wednesday and Thursday after the Federal Reserve announced a quarter point rate cut. But the Fed followed up its move with language suggesting interest rate policy is now on pause.

News Anchor #1: The Federal Reserve cut the benchmark rate by a quarter of a percentage point. It's now at 1.5% to 1.75%. The rate cuts come on a global slowdown; they say. Also muted inflation. Now the Fed does signal in this statement a pause for future rate cuts. The Federal Reserve statement changes the words from “act as appropriate” to “assess.”

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Interest-Rates

Saturday, October 26, 2019

The Fed’s “Not QE” Is Morphing into “QE4ever” / Interest-Rates / Quantitative Easing

By: MoneyMetals

Another week, another new and expanded repo market intervention by the Federal Reserve. On Thursday, the Federal Reserve Bank of New York intervened twice with fresh liquidity injections. Fed officials raised their offerings for overnight repos up from $75 billion to a staggering $120 billion.

This comes on top of the $60 billion per month in Treasury bill purchases that will extend well into next year and possibly beyond. Over the past month alone, the Fed's balance sheet has soared by $200 billion.

You might think numbers like these should be quite alarming to investors and to anyone who holds U.S. dollars. But the strange thing about these Fed interventions is that hardly anyone seems alarmed. There’s no sense of rising risk being priced into the stock market. And the mainstream media is barely even mentioning these massive transfers of paper wealth.

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Interest-Rates

Friday, October 18, 2019

Federal Reserve’s New QE Transfers Wealth to Its Owner Banks / Interest-Rates / Quantitative Easing

By: MoneyMetals

Metals investors are positioning themselves for rapidly developing political and geopolitical events, as well as a rapidly expanding Federal Reserve balance sheet.

What started out as a limited intervention to provide temporary liquidity to overnight lending markets has morphed into a massive $60-billion-per-month Treasury-buying campaign. By some measures, it’s even bigger than the last Quantitative Easing program.

The Fed has yet to fully explain why this is all necessary given the lack of an immediate crisis in the real economy. Last week, Fed chair Jerome Powell took great pains to insist that their expanded repo market operations are “not QE” – only to announce a massive new Treasury bill buying program on Friday.

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Interest-Rates

Wednesday, October 16, 2019

This Is Not a Money Printing Press / Interest-Rates / Quantitative Easing

By: Peter_Schiff

Rene Magritte's 1929 painting "The Treachery of Images," depicts a tobacco pipe with a caption that reads "Ceci n'est pas une pipe," (French for "This is not a pipe"). Everyone who has taken a course in modern art knows that Magritte's exercise in contradiction was meant to draw a distinction between a real thing and a representation of that thing. Perhaps we should send Federal Reserve Chairman Jerome Powell a beret and an easel as he is attempting a similarly surrealistic take on monetary policy.

Early last week, the Chairman announced a new, as yet unnamed, Fed program through which the bank will now buy regular amounts of short-term U.S. government debt. Seeking to counter the rumblings that a new form of quantitative easing would be seen as an admission that the economy may be in trouble, Chairman Powell asserted during the annual meeting of NABE on October 8, "This is not QE. In no sense is this QE". In other words, "Ceci n'est pas QE."

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Stock-Markets

Monday, August 12, 2019

Global Central Banks Move To Keep The Party Rolling Onward / Stock-Markets / Quantitative Easing

By: Chris_Vermeulen

The recent news that the US Fed, China and many of the global central banks are continuing to make efforts to lower rates and spark further consumer spending and economic activity is reminiscent of the late 2010~2013 global economic recovery efforts.  This was a time when the economy was much slower than current levels and when central banks were doing everything possible to attempt to raise consumer and business activity related to capital.

The world’s governments and banks operate on a very simple premise – transactions and economic activity must continue to operate within a fairly standard range of consistency in order for tax revenues and transactional fees to drive profits/income.  If extended periods of economic contraction persist, the capacity to function within standard operating parameters diminishes very quickly for these institutions.  A -5% to -10% contraction in asset values, transactional business, tax revenues and/or consumer activity over an extended period of time could result in a catastrophic set of events taking place.

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Interest-Rates

Tuesday, July 30, 2019

US Fed Infinite QE Forever at Zero Bound / Interest-Rates / Quantitative Easing

By: Jim_Willie_CB

The widespread profound and recognized global recession, complete with numerous icon corporate failures, will lead the US Federal Reserve to return to unlimited Quantitative Easing with a Zero Percent chaser. The Jackass calls it a return to Infinite QE Forever at the Zero Bound. Not only is the double step of return to QE with a sequence of interest rate cuts urgently necessary, but the financial markets are demanding it. In fact, they are holding the USFed hostage, as the venerable august body is backed into a policy corner. This time seems different. For ten years, the USFed has relied upon coordinated policy with the Euro Central Bank, having used all the most extreme measures, yet has a systemic failure on its hands. Witness extreme monetary policy failure. The systemic failure is both financial and economic. The bond purchase program wrecked the bond market by driving away legitimate investors, while the ultra-low interest rates wrecked the economy by distorting asset allocation.

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Interest-Rates

Tuesday, July 23, 2019

We Are in for Decades of Ultra-Loose Monetary Policy / Interest-Rates / Quantitative Easing

By: Jared_Dillian

President Trump recently nominated Judy Shelton to the Federal Reserve Board of Governors. She is the United States director for the European Bank for Reconstruction and Development, which I had never heard of until her nomination.

Shelton is a Republican and believes in the adoption of a gold standard. She currently believes in lowering interest rates, after spending the Obama years criticizing the Fed for lowering interest rates.

You may wonder how a person can be in favor of a gold standard and also for lowering interest rates at the same time.

I am wondering that, too.

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Interest-Rates

Friday, April 12, 2019

Trump Calls for New Quantitative Easing to Prop Up U.S. Economy / Interest-Rates / Quantitative Easing

By: MoneyMetals

As gold and silver markets continue in choppy trading this spring, bulls are hoping a dovish Fed will sink the dollar and lift the metals.

Now that the Federal Reserve is on “pause” – presumably for the rest of 2019 – perhaps investors can stop obsessing over interest rate decisions by central planners. Perhaps markets can finally trade based on actual market signals and underlying fundamentals. 

Perhaps ... not.

With 2020 election campaigns already underway, interest rate policy will be a political football in the months ahead. Incumbent administrations almost always favor lower interest rates heading into their re-election bids, and this one is no exception.

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Interest-Rates

Saturday, March 02, 2019

Perception of Powell Put in Place – QE4 Looms / Interest-Rates / Quantitative Easing

By: EWI

By Murray Gunn

For better or worse, the markets perceive that Fed chairman Powell has showed his hand.

The recent Federal Open Markets Committee (FOMC) minutes of the January meeting revealed almost unanimous agreement to announce a plan soon for ending the Fed's policy of balance sheet reduction. This is the first step in an inevitable march towards the fourth round of quantitative easing (QE4).

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Interest-Rates

Friday, February 22, 2019

This Money-Destroying Policy Could Soon Become a Reality / Interest-Rates / Quantitative Easing

By: John_Mauldin

It was my first encounter with what I thought was economic insanity.

More than 10 years ago, I came across the ideas of economist Bill Mitchell of the University of Newcastle in New South Wales.

He was teaching what he called Modern Monetary Theory (MMT). I looked into it and quickly dismissed it as silly.

Actually printing money as an economic policy? Get serious.

Fast forward to today, the idea is adopted by new socialist-like movements in the US and abroad. It’s cited by politicians and mainstream media.

There’s a growing number of rationales for adopting MMT into our philosophical base.

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Interest-Rates

Thursday, February 21, 2019

QE Forever: The Fed's Dramatic About-face / Interest-Rates / Quantitative Easing

By: Ellen_Brown

“Quantitative easing” was supposed to be an emergency measure, but the Federal Reserve is now taking a surprising new approach toward the policy. The Fed “eased” shrinkage in the money supply due to the 2008-09 credit crisis by pumping out trillions of dollars in new bank reserves. After the crisis, the presumption was the Fed would “normalize” conditions by sopping up the excess reserves through “quantitative tightening” (QT)—raising interest rates and selling the securities it had bought with new reserves back into the market.

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Interest-Rates

Monday, February 18, 2019

Stacking The Next QE On Top Of A $4 Trillion Fed Floor / Interest-Rates / Quantitative Easing

By: Dan_Amerman

The Federal Reserve is currently communicating to the markets that it will likely pivot, and pause two strategies. The first pivot is to stop increasing interest rates. The second pivot is to stop unwinding the Fed balance sheet.

While the interest rate pause is getting the most attention - the balance sheet pause could be the most important one for investors over the coming years.

As explored herein, the impact of pausing the unwinding the balance sheet is to create a new floor at about $4 trillion in Federal Reserve assets. And if the business cycle has not been repealed and there is another recession - the Fed fully intends to go back to quantitative easing, potentially creating more trillions of dollars to be used for market interventions, and to stack another round of balance sheet expansion right on top of the previous round.

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Interest-Rates

Wednesday, March 28, 2018

New Research Foretells QE Domination / Interest-Rates / Quantitative Easing

By: F_F_Wiley

The title refers to a consensus-shattering paper that was unveiled at the University of Chicago last month before a Who’s Who of economists and central bankers.

Paul Krugman gave the keynote, but the meeting’s focus was on the paper’s authors—two Wall Street big shots, Morgan Stanley’s David Greenlaw and Bank of America Merrill Lynch’s Ethan Harris, and two academics, James Hamilton and Kenneth West. To keep it simple, I’ll call them GHHW.

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Interest-Rates

Wednesday, November 01, 2017

QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate / Interest-Rates / Quantitative Easing

By: F_F_Wiley

We’ve produced some research over the years that we’d love to see the powers-that-be react to, but none more so than our look at financial flows during the QE programs.

By netting all lending by banks and broker-dealers and then comparing it to the Fed’s lending, we stumbled upon a chart that seemed to show exactly what QE does or doesn’t do. But “doesn’t,” not “does,” was the story, and it couldn’t have been clearer. Or shown a more stimulating pattern. To geeks like us, our Excel click on “Insert, Line” was like stepping from a shady trail to a sunny vista.

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Interest-Rates

Monday, October 02, 2017

The Fed Knew QE Wouldn’t Work From The Start / Interest-Rates / Quantitative Easing

By: John_Mauldin

When is a mystery not a mystery? When Janet Yellen is puzzling over a lack of inflation, that’s when. So says Brian Wesbury, chief economist, and Robert Stein, deputy chief economist of First Trust, in the following essay (featured in my Outside the Box).

The bottom line: QE didn’t work—and Janet knew it was unlikely to work—from the start.

So where did all that easy money go? I think I’ll let the authors tell you. I think you’ll enjoy this brief, clear-headed essay.

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Interest-Rates

Tuesday, November 15, 2016

Trump's Mandate to Yellen: Print More Money or You're Fired! / Interest-Rates / Quantitative Easing

By: Michael_Pento

What kind of President will Donald Trump be? Will he restore America to its former position of greatness, or end up being feckless like a long list of his predecessors? That is yet to be determined.

However, what is clear now is if Donald Trump wants to avoid starting his tenure with an economic crisis similar to that of Mr. Obama he will need to put a lid on long-term interest rates rather quickly. And in order to do that he will have to convince a supposedly politically-agnostic Fed Chair, Janet Yellen, to not only refrain from further interest rates hikes but also to launch another round of long-term Treasury debt purchases known as Quantitative Easing (QE).

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Interest-Rates

Friday, September 09, 2016

‘Helicopter Money Coming’ – Exclusive Interview With Top Hedge Fund Manager Tom Conrad / Interest-Rates / Quantitative Easing

By: Jeff_Berwick

TDV: Hello, Tom, thanks for sitting down with us once again. We last talked to you more than a year ago. At the time you predicted a significant stock market crash and only a month later the Dow reflected your position with a huge intra-day crash. There was huge volatility throughout the fall.

Tom Conrad: Yes, and then again in at the beginning of January of 2016.

TDV: It’s not over yet, of course.

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Interest-Rates

Wednesday, July 27, 2016

Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? / Interest-Rates / Quantitative Easing

By: Ellen_Brown

Fifteen years after embarking on its largely ineffective quantitative easing program, Japan appears poised to try the form recommended by Ben Bernanke in his notorious "helicopter money" speech in 2002. The Japanese test case could finally resolve a longstanding dispute between monetarists and money reformers over the economic effects of government-issued money.

When then-Fed Governor Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was talking about something quite different from the quantitative easing they actually got and other central banks later mimicked. Quoting Milton Friedman, he said the government could reverse a deflation simply by printing money and dropping it from helicopters. A gift of free money with no strings attached, it would find its way into the real economy and trigger the demand needed to power productivity and employment.

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Interest-Rates

Wednesday, July 27, 2016

Are Central Banks Crazy Enough to Think Helicopter Money is the Answer? / Interest-Rates / Quantitative Easing

By: Rodney_Johnson

Central banks around the world have a common problem. They are failures. For the past eight years, central bankers worked tirelessly to generate economic activity. They pushed interest rates below zero and printed trillions of dollars.

And yet, the IMF recently cut its global growth forecast again.

Most economies are stuck in neutral while threats such as the debt crisis in Europe and deflation in Japan keep growing. Now central bankers are talking about a new tool – helicopter cash (free money distributed by a government agency). It won’t work either, but don’t expect that to stop the bankers from trying!

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