Skip to comments.Bottom Line: The Fed Is Trapped By Inflation (No QE3 Announcement Today)
Posted on 11/02/2011 4:41:28 AM PDT by blam
Bottom Line: The Fed Is Trapped By Inflation
Lance Roberts, Street Talk Live
Nov. 2, 2011, 6:38 AM
There will be NO announcement of QE 3 today.
Because the Fed has trapped itself into a corner. The first two rounds of Quantitative Easing (QE1 and 2) were viable for the Fed as inflation was running at deflationary levels in 2009 and at the bottom of their target range of 1-3% in 2010.
In both instances the implementation of asset purchase programs, which immediately juiced liquidity in the financial markets, had an immediate and pronounced effect on the level of inflation.
Today, with inflation currently approaching 4% on a year-over-year basis the Fed is not only outside its inflation mandate of 1-3% but any further cost pressures on the consumer is going to drive the economy into a recession. As we showed recently in our post on 3rd quarter GDP with food and energy consumer more than 23% of wages and salaries there is very little wiggle room for the average American.
Without access to credit, declining incomes on a year-over-year basis and uncertainty about employment there is tremendous strain on the consumer to make ends meet. The Fed knows this. They also know that without help from somewhere the economy is in trouble. The hope is that they can "talk" the markets along.
(Excerpt) Read more at businessinsider.com ...
Once you have successfully changed the definition of inflation (increase in the money supply) to what should be called price inflation (increase in the prices of some products), you are well on your way to hiding the amount of inflation that you are actually facing.
Hey potus Barky,
Let’s just raise taxes on “the rich”, then
That will solve our economic problems!
Well, at least it will be “fair”
The chickens are coming home to roost on the Fed’s earlier money printing. Inflation was bound to follow and now it’s beginning.
I better go see if I can find my old “Whip Inflation Now” button from the 70’s.
Gerald Ford...I remember.
I sort of suspect that Rick Perry throwing the “t” word around had an effect also