Submitted by Phoenix Capital Research on 03/09/2012 18:16 -0500
QE 3 isn’t coming folks. The Hilsenrath article a few days ago was just a leak to prop the market higher. And it falls well within the Fed’s latest scheme: to prop the market up verbally rather than actually engaging in monetary policy.
Going back to July 2011, the Fed has largely resorted to verbal or symbolic intervention rather actual monetary action. In terms of actual actions, since that time the Fed has:
Promised to extend its Zero Interest Rate Policy (ZIRP) through late 2014.
Had various Fed officials promise that the Fed was ready to “act” anytime the market took a dive.
#1 is completely and totally meaningless. ZIRP is a trap and it’s a trap that the Fed cannot escape for three reasons:
US commercial banks are sitting on over $200 TRILLION in interest rate based derivatives.
In 2011, the US made $454 BILLION in interest payments. And that’s with interest rates at or near 0%. According to the Congressional Budget Office, the estimated interest that will be due on the US’s debt load by 2015 will be $533 billion: an amount equal to 1/3 of all federal income taxes collected that year (assuming the economy grows). Imagine what happens if rates rise.
US Corporations currently owe $7.3 trillion in debt (an amount equal to roughly half of the US’s GDP). Any rise in interest rates means corporate payouts increasing dramatically and corporate profits shrinking.
So promising to extend ZIRP is ultimately pointless. It’s the
http://www.zerohedge.com/contributed/2012-10-09/fed-cannot-and-will-not-be-unleashing-qe-3-next-week?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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