September 19, 2011
Daily Forex Fundamentals, written by Danske Bank, says the FOMC will probably get QE3 rolling by the end of the year or early in 2012.
“Following the continued deterioration in economic data, we expect the Fed to take action in the form of a twist in the central bank’s portfolio towards longer maturity government bonds,” the Danish bank writes.
Unless we see significant improvements in economic data over the next couple of months we deem it likely that the Fed will initiate QE3 (buying either more government bonds or mortgages). This could happen either by end 2011 or early next year. We will particularly be looking to employment data, where we need sustainable and significant improvement in the coming months, in order for QE3 to be taken off the table.
The Federal Open Market Committee (FOMC) meets on Wednesday and more information on QE3 is expected at that time.
The main scenario for the Wednesday meeting will be for the Fed to start shifting its portfolio of government bonds towards holding more long-term securities and fewer short-term securities. This extension of the portfolio’s maturity is designed to push down long-term interest rates. We see this as a highly likely outcome of the meeting.
The interest rate currently stands at 0.25% and the Fed may move it down to 0.10%, “in order to increase the banks’ incentive to lend.”
Big banks, however, are not in the business of lending money to Main Street. Since the fall of Glass-Steagall, banks have been in the business of buying and selling complex derivatives and writing credit default swaps. “Fees are good, bonuses come in, and the fed or government will always be there to bail them out if things get hairy,” notes UrbanDigs.com.
Interest rates at or near 0% guarantee capital destruction. “Capital destruction is the main byproduct of monetary inflation, a concept totally foreign to the inflation engineers at the USFed and its satellite central banks,” writes Jim Willie for Financial Sense.
They are agents of magnificent systemic devastation. In the wake of each QE round are discouraged creditors who turn away in disgust. The damage and inflation feeds upon itself in stages of intense wreckage. The motive, need, and desperation for QE3 is being formed here and now, to be announced by late summer probably. Prepare for QE to infinity, endless hyper-inflation, a process that cannot be stopped, as the urgent needs grows. Any attempt to halt the process results in almost immediate total annihilation. So continuation of QE rounds serves to manage the deterioration process and guide the financial structures gradually and orderly into oblivion.
Add to capital destruction mounting inflation. The Fed considers this a good thing. “So now we are beginning to hear murmurings about the possible invigorating effects of ‘just a little inflation.’ Perhaps 4 or 5 percent a year would be just the thing to deal with the overhang of debt and encourage the ‘animal spirits’ of business, or so the argument goes,” writes Paul Volcker, former Fed boss, for the New York Times.
Bernanke and the Fed are moving us toward an inflationary depression. The Federal Reserve was established in 1913 specifically for that reason, as Rep. Charles Lindbergh noted. “The new law will create inflation whenever the trusts want inflation. From now on, depressions will be scientifically created,” he warned.
Bernanke admitted the Fed created the Great Depression with its monetary whipsaw weapon. It is now working on the Greatest Depression.
The Federal Reserve is not about saving business and creating jobs. It’s about a slow-motion destruction of the economy that will pave the way toward the bankster nirvana of a global economy that will present humanity with the most effective and insidious mechanism for slavery ever devised.
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This article was posted: Monday, September 19, 2011 at 8:49 am