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The Fed's Taper Talk with a Twist - RecovQEry with out QE!

The Fed thinks they can start to taper and end QE and somehow keep interest rates low and preserve the recovery!

What are the odds of that happening?

The recovery only lasts as long as it is a recovQEry. Pull QE and....... POP!


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Again, QE fundamentally does

Again, QE fundamentally does very little to help the actual economy. There is some psychological effect, but otherwise, what is it actually doing?

All it is doing is changing the balance sheets of the banks, by removing an interest-bearing asset and adding a non-interest bearing one. It also keeping interest rates low, but the Federal Reserve is also paying a rate on excessive reserves, which is setting a minimum interest rate.

I guess it is giving them more short-term liquidity, but fundamentally, the banks will only be worse off long-term than they were before QE. Because while they've gained no new assets while taking part in QE, they are losing all that future interest. And the fact that they have liquidity does nothing to change the fact that they need to be liquid because of bad assets on their books.

The Federal Reserve's role is way too overvalued. They have one tool: modifying short term interest rates. This has a marginal effect on long-term rates. Fiscal policy plays a much bigger role.

Plan for eliminating the national debt in 10-20 years:



Housing is already heading down and the labor market

is not improving so I don't understand how the Fed is going to spin tapering as ok because the economy is "improving"

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