Well Quantitative Easing 2 ended in July 2011 and at that time I blogged in ‘The So-Called End of Quantitative Easing (Money Printing)’ that QE 3 would be coming and it seems to have finally arrived. Don’t forget that the FED (Federal Reserve) has done economic stimulation since QE 2 with ‘Operation Twist’, wherein starting from September 2011 the FED started buying $400 billion worth of longer-term Treasuries (bonds with 6 to 30 years) in exchange for selling some of its shorter-term Treasuries (bonds with less than 3 years). The purpose of Operation Twist was to lower the longer-term Treasury yields in order to make it easier for people to borrow money for homes, cars, and projects and the FED could do this without printing new money.
In this new round of money printing, the FED has decided to purchase $40 billion in Mortgage Backed Securities [MBS] per month without an end date until the labour market (aka job growth) improves substantially and price stability is achieved. In the announcement, the FED also stated that it would continue Operation Twist the end of the year ($267 billion) and keep the federal funds rate (aka interest rate) between 0 to 0.25 percent atleast until mid 2015. Below you get a 90 second summary of the announcement and the reactions.
Well many have called it QE 3, while others have called it QE Infinity, which goes well with Marc Faber’s statement “QE 3 will come, and QE 4, QE 5, QE 6, QE 7, whatever you want. The money printer will continue to print, that I am sure.” Its not such a shocker to see what has happened with gold and silver after the announcement.
Below is a 17-minute clip by Peter Schiff wherein he talks about Ben Bernanke’s speech and that the FED is blowing more air into the real estate market for another bubble.
Operation Screw: The Fed goes all-in on QE
Just like Peter says in the clip, if you leave your savings in the bank in paper dollars, your screwed. And here is Marc Faber on the recent episode of RT’s Capital Account also talking about it.
Marc Faber on Hedging the Bernanke Put and QE3 with Gold, Land and Equities!