Skip to comments.Is A US Boom On The Horizon? The end of Quantitative Easing Will be Great for Our economy.
Posted on 05/13/2011 6:51:02 AM PDT by SeekAndFind
If one believes as I do that QE II has been negative for the economy it is logical to now anticipate the opposite as we near the end of the program. Just as the effects of QE II were felt before its actual implementation, so too will the effects of its end be anticipated. That appears to be happening now. Commodity prices that started rising before the start of QE are now peaking before the end. Interest rates that rose with QE are now falling.
For the economy, the end of QE should be positive as commodity prices ease and inflation expectations wane. The US dollar appears to be stabilizing within the range that has existed since 2008. In fact, with large existing short dollar positions, a US dollar rally seems likely.
Lower commodity prices should ease some of the pricing pressures reported this year by the ISM and allow companies to maintain profit margins. Lower gas and food prices from a stronger dollar should provide much needed relief to lower income consumers. The end of QE could also extend the tentative rise in lending we have seen the last couple of months. Bankers should feel more comfortable lending if interest rates, the dollar and inflation expectations stabilize.
Looking out a bit further, the outlook for US growth could - and I emphasize could - improve significantly. In fact, I am beginning to wonder if the pieces might be falling into place for a boom no one currently expects. There is a lot that must go right for it to happen but it is certainly possible and would catch the markets by surprise.
The key to any marked improvement in the economy is residential investment. Gross private domestic investment is down roughly $500 billion from peak in 2006.
(Excerpt) Read more at realclearmarkets.com ...
This guy must be on dope. There is nothing, and nothing on the horizon that indicates we will be out of this for several years.
The economy doesn't lack liquidity. But businesses don't have sufficient incentive to hire workers since they are being punished at every turn when they try to make a buck. The bankruptcy laws don't apply anymore when Obama takes aim at you. Obama wants to tell you how much you can pay executives. Obama's thugs will go after you if you try to open a new factory in a right-to-work "Red" state. Obama's thugs won't let you drill for oil.
I am amazed that the economy is showing any signs of growth at all.
The really sad part is that the Obamination could rape a nun on live tv, and his stupid minions would simply refuse to believe what they saw and continue to support him.
The problem is that without dramatic cutting of spending or increased tax revenues the US will need to continue to to issue debt. Without QEIII the interest rates on the debt would skyrocket past 10%. Barry, Tim, and Ben are stuck.
We are watching financial WWIII:
QEI,II,&III = Weaker dollar, inflation, world unrest due to higher food prices. But have the positive side of continued big government, better performance for US companies as they are more competitive on world markets.
Ending QE = Stronger dollar, but have negative effects of
smaller government (to RATs), and poorer performance of US companies as their products are more expensive due to less favorable exchange rates.
Ain't gonna happen. There is a huge shadow inventory that still needs to be wrung out of the market.
I think they are already talking about QEIII. That should finish us off.
Investments will stay low until Obama is out of office because he makes everything a risk.
The only thing we can do to even start digging ourselves out of the hole we are in, is to rid ourselves of the marxist usurper - der Fuhrer Comrade Hussein 0bama.
The problem is that the merry-go-round just keeps spinning faster and faster with each new round of QE. QE enables the U.S. to print money faster and faster by buying Treasury bonds no one else will buy and keeping interest rates near zero. Everyone is hanging on for dear life, but the minute the QE stops, all hell will break loose as the merry-go-round suddenly stops and everyone goes flying off. Interest rates will have to zoom up to sell all of those unwanted Treasuries, U.S. interest payments consume what’s left of tax receipts, and more Treasuries must be printed and sold at higher rates.
Massive inflation suddenly hits. The dollar devalues. Hard-working people watch their life-savings evaporate. Thousands of arbitrage bubbles burst that were based on rolling cheap 30-day paper to finance long-term debt and “investment”, triggering a massive financial panic.
It’s going to be really, really bad when QE stops and the longer QE goes on, the faster the merry-go-round is spinning when it suddenly stops and the greater the carange when everyone goes flying into space.
Of course QE or as laymen call it, printing scrip on toilet paper, isn't good for the economy. However, stopping the practice isn't the cure for a tanked economy because the QE by itself wasn't the problem that caused it to tank in the first place; it only exascerbated it. You have to stop this drunken sailor attitude of government that the money it spends is theirs.
A boom will develop just after the elections (day 3) in 2012 and it will be awesome.
But, it requires a Repub President, Senate and House.