Seeking Alpha

FOMC Minutes: QE ending in October

  • The Fed is on track to end the taper and QE with a $15B cut in purchases in October. Up until that point, the $10B trimmings will continue.
  • As for an exit plan from the massive build-up of its balance sheet, the FOMC members generally agreed to continue reinvesting proceeds of maturing paper until after rate hikes begin. Officials also generally agree that the rate of interest paid on excess reserves will play a "central role" in tightening monetary policy.
  • A more detailed exit plan is set for later this year.
  • FOMC minutes from June 17-18 meeting
Comments (59)
  • WaveRider007
    , contributor
    Comments (653) | Send Message
     
    I wonder how much of a time frame delay exists from the time when the trimming began and when the trimming will actually be seen in the economic numbers. 1 year, 6 months, 3 years? Obviously they overshot the actual required QE calculation.
    9 Jul 2014, 02:11 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    There was no required QE calculation. They measured the extent of QE by monitoring economic activity. The Fed's balance sheet will be oversized for a long time. They will let the securities mature over time and return excess capital back to banks and Treasury. The FRB did an excellent job managing the financial chaos that existed globally. They are a powerful institution and should be respected. The bashers need to come up with a better dooms day scenario. They have and will be wrong.
    9 Jul 2014, 04:13 PM Reply Like
  • samuraitrader
    , contributor
    Comments (882) | Send Message
     
    we will never know what would have happened if the Fed had let things play out without inflating the balance sheet like they did. in a few years we will see the effect of their insanity.
    9 Jul 2014, 06:34 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    We do know. we would have had the rough , exciting operation of capitalism - nature red in tooth & claw. Financial darwinism.
    It would have been bloody, but fun.
    Certainly better than this weak tea, central planning, academic stuff that is clogging our arteries.
    9 Jul 2014, 06:39 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    We could have had "Gladiators". Instead we have "Tea &Cookies With Yellen".
    We could have enjoyed the sight of many old and venerable financial institutions being ripped apart by the lions in the colosium.
    Sigh, unfortunately we got Weak Tea from a bunch of Princeton academics.
    9 Jul 2014, 06:48 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    We could have had 25-30% unemployment as in Europe. The ECB has balls. That's why they crushed the EU economy rather than engage in QE.

     

    I was so disappointed when even the ECB gave up on torturing its citizens and decided to go the QE route. I was hoping for 50% unemployment in some parts of Europe. That's the free market we all dream about.
    9 Jul 2014, 06:51 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    "The ECB has balls"
    Well , literally speaking , only the UK has Mr. Balls
    9 Jul 2014, 06:56 PM Reply Like
  • lords
    , contributor
    Comments (126) | Send Message
     
    QE end or not these guys do not know what they are doing and always as in the past come out with very convincing reason to justify there stupidity. They know they have failed time and again but now the size of failure is so large it is slowly becoming known to more and more people.

     

    These guys are totally insane and morally corrupt. Do not belive in any thing they say.
    9 Jul 2014, 11:06 PM Reply Like
  • wizjinx
    , contributor
    Comments (442) | Send Message
     
    It's only insane if it creates a catastrophe, which we don't know is going to happen. I've seen no evidence of this doomsday you and others refer to. Is the situation over? No! Yet if over the next few years the FED reinvests the money and deflates the balance sheet slowly and w/o major disaster, you and others like you may be eating crow. The question is, will you admit you were wrong?
    10 Jul 2014, 04:22 AM Reply Like
  • wizjinx
    , contributor
    Comments (442) | Send Message
     
    Exactly. I don't foresee any major issues going forward, especially with Yellin in charge. She is prudent, Prudent.
    10 Jul 2014, 04:23 AM Reply Like
  • wizjinx
    , contributor
    Comments (442) | Send Message
     
    Fun? Unbridled capitalism isn't fun, it's destructive.
    10 Jul 2014, 04:24 AM Reply Like
  • wizjinx
    , contributor
    Comments (442) | Send Message
     
    You make it sound like a football game, my friend. It's not, people's lives and livelihoods were and still are at stake. Bloody, a term you used in a previous post, doesn't even begin to describe the carnage that would have run amok had the FED and the government done nothing. More than likely, you would have been badly affected as would we all, unless, that is, you're one of the uber-wealthy folks. If so, disregard my comment as it doesn't apply.
    10 Jul 2014, 04:28 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    The "Free Market Dream" is all about 50% unemployment.

     

    Wow.
    10 Jul 2014, 05:00 AM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    DVL, Why not? Most people are lazy and deserve to suffer without the Govt helping them, right? Isn't that the Libertarian dogma?
    10 Jul 2014, 10:53 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    Macro Investor,

     

    Are your arms tired...from spending so much time building strawmen?

     

    Perhaps, in these threads, you'll begin to debate actual libertarianism and not your bizarre fantasies about what you imagine libertarianism to represent.
    10 Jul 2014, 11:43 AM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    DVL, what do you think of ECB's and EU budget tightening policies that soared unemployment past 30%? The US should have done the same, no?
    10 Jul 2014, 12:53 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    Macro Investor,

     

    What the heck are you talking about?
    17 Jul 2014, 11:44 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    I am saying that the US should have gone for balanced budgets of the sort tried in the EU and led to 30% unemployment. Are you not in favor of balanced budgets in the middle of a recession?
    18 Jul 2014, 12:05 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    "Balanced budgets lead to 30% unemployment."

     

    ...and you claim to be an honors graduate from one of the best business schools.

     

    Wow.

     

    You were tricked out of tuition money.
    18 Jul 2014, 08:02 AM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    So you are in favor of balanced budgets in the middle of a recession, eh? Why can't we have EU like employment?
    18 Jul 2014, 08:13 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    Macro Investor,

     

    You are mixing up several economic issues that have nothing to do with each other. Balanced budgets don't cause unemployment in the same way that dog barking doesn't cause rain.

     

    You really should learn more about macroeconomics before you spout off on these threads.

     

    Are you a high school graduate?
    18 Jul 2014, 08:23 AM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    So, You agree with the EU balancing the budget in the middle of a recession? The Asian countries did the same in 1998. They also had 30% unemployment shortly after. Why can't we have that in the USA?
    18 Jul 2014, 08:33 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    My local 7-11 was out of Snickers bars. Then, an hour later, the house across the street from the 7-11 caught on fire.

     

    Therefore, the lack of candy bars at 7-11 caused the house fire.

     

    http://bit.ly/10RuykH

     

    (Your welcome for this little educational lesson that I've just provided for you)
    18 Jul 2014, 08:39 AM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    Why are you avoiding the question: are you in favor of balancing budgets in the middle of a recession? Even the US tried it in 1929 and swiftly went for 40% unemployment.
    18 Jul 2014, 08:46 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    Lost cause here...moving on...
    18 Jul 2014, 06:53 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    So you simply wouldn't answer the simple question: Are you in favor of balancing budgets in the middle of a recession? Yes or no?
    18 Jul 2014, 07:50 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    Some thoughts:
    http://seekingalpha.co...
    9 Jul 2014, 02:14 PM Reply Like
  • labas112
    , contributor
    Comments (413) | Send Message
     
    The minute they start raising rates, the interest on US debt will go parabolic.
    9 Jul 2014, 02:21 PM Reply Like
  • bdy
    , contributor
    Comments (157) | Send Message
     
    Lol . The circus is leaving town??? Noooo!
    9 Jul 2014, 02:38 PM Reply Like
  • samuraitrader
    , contributor
    Comments (882) | Send Message
     
    Let the games begin.
    9 Jul 2014, 02:45 PM Reply Like
  • berniespear
    , contributor
    Comments (251) | Send Message
     
    Isn't the market supposed to crash now!? Isn't that what we've been spoonfed?!
    9 Jul 2014, 02:54 PM Reply Like
  • wmateri
    , contributor
    Comments (560) | Send Message
     
    Head fake today. Drop tomorrow.
    9 Jul 2014, 07:21 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    I love romantics, they are forever dreaming ...
    9 Jul 2014, 07:24 PM Reply Like
  • minecanary
    , contributor
    Comments (749) | Send Message
     
    How can it drop? For the FED, buying bonds is so 2013. Now they just buy stocks directly hoping to earn a cushion for when the bonds they are holding tank.
    9 Jul 2014, 09:10 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    Can you point me to your source for where you learned that the fed is buying stocks?
    9 Jul 2014, 09:14 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    It is done in secret so of course there is no proof. Duh!
    9 Jul 2014, 09:15 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    Yeah! Thats the ticket!
    The Fed has nothing but extreme disdain and contempt for the people in general including congress of course. They are seriously patronizing.
    And wild accusations and completely off the wall statements just cement in their mind that there will be no serious challenge when they deliberately set out to take over $1 Trillion in interest (over 6 years) out of the pockets of savers.
    9 Jul 2014, 09:21 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    There has been no serious political pushback from the people who had over $1 Trillion taken out of their pockets in the past 6 years. To me that is astounding.
    And the only congress men who have a gripe about the fed ( Like Ron paul) wind up giving lectures on the gold standard and other utopian daydreams. Instead of focusing on the theft going on right in front of their eyes.
    Very Strange. We truly deserve everything thats being dished out.
    9 Jul 2014, 09:26 PM Reply Like
  • minecanary
    , contributor
    Comments (749) | Send Message
     
    FT ran the initial story on 6/15. $29 trillion overall...4+ bill of FED buying.
    I don't think it was mentioned here on Seeking A-holes
    11 Jul 2014, 09:44 AM Reply Like
  • minecanary
    , contributor
    Comments (749) | Send Message
     
    Since my other reply will be deleted... See the FT from 6/15
    http://on.ft.com/1y3lWKM
    11 Jul 2014, 09:58 AM Reply Like
  • minecanary
    , contributor
    Comments (749) | Send Message
     
    If you don't like the FT story, try this one
    http://seekingalpha.co...
    11 Jul 2014, 12:12 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    Since China's Central Bank is buying stocks, that is proof positive that the Fed is doing so as well and for far longer than China. That's solid logic.
    11 Jul 2014, 01:52 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10023) | Send Message
     
    Gold miners spiking even higher on the news...
    9 Jul 2014, 02:59 PM Reply Like
  • caupachow
    , contributor
    Comments (494) | Send Message
     
    before 2015 a new form of QE will be announced.
    9 Jul 2014, 03:02 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1758) | Send Message
     
    "the FOMC members generally agreed to continue reinvesting proceeds of maturing paper until after rate hikes begin"

     

    So basically indirect QE....
    9 Jul 2014, 03:21 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    That my friend is the beast that has been created. It's geared up to handle the largest US Govt. deficit in existence.
    9 Jul 2014, 04:30 PM Reply Like
  • Bouchart
    , contributor
    Comments (868) | Send Message
     
    This just means the Fed won't be expanding its balance sheet. Nobody's even talking about trimming that anytime soon.
    9 Jul 2014, 03:39 PM Reply Like
  • MisterJ
    , contributor
    Comments (931) | Send Message
     
    They could forgive the Treasury papers simply and book them out. Wouldn't change a thing anyways.
    9 Jul 2014, 04:08 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    The balance sheet will be oversized for a very long time. They have all the time in the world. They have a zero loss policy so they cannot dump securities at a loss. The only risk is if US defaults and if that happens, say good bye civilization.
    9 Jul 2014, 04:15 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    Basically as long as inflation remains low, stock/bond markets dont have a meltdown, and the Dollar remains within its recent ranges, the Fed can do anything it wants.
    They have not been tested on these types of issues in over 6 years. Dont give them an A+ yet.
    9 Jul 2014, 04:17 PM Reply Like
  • RS055
    , contributor
    Comments (3889) | Send Message
     
    Please look over my little blogpost on the next "tightening" cycle.
    http://seekingalpha.co...
    9 Jul 2014, 04:19 PM Reply Like
  • 6151621
    , contributor
    Comments (1180) | Send Message
     
    The FED balance sheet is so big and they are such a large part of mortgage and treasury market that by reinvesting they will continue to suppress the rates to some extent. If it's not enough then expect more QE as the debt is too large to carry at higher rates. As others have said above: Indirect QE after October until this isn't sufficient then it's back to the direct version.
    9 Jul 2014, 04:20 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    I love it!
    9 Jul 2014, 06:16 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (819) | Send Message
     
    I'm not sure heroine addicts like it when you let them know the huge amount of junk they liked is coming to a close.
    9 Jul 2014, 06:36 PM Reply Like
  • Macro Investor
    , contributor
    Comments (8782) | Send Message
     
    Have you been out of the market for the past 5 years of QE?
    9 Jul 2014, 06:52 PM Reply Like
  • Vintage_Video_Games
    , contributor
    Comments (130) | Send Message
     
    So if you think the FED is bluffing you should invest in metals, volatility and cash?

     

    If they are not bluffing and the market did not blow up at the mention of the end of QE, then invest in what? Equities? They have been so darn run up, I do not want to get into a 5 year bull market!

     

    This is so exciting and interesting!

     

    Where will the US govt get their money from now?!
    9 Jul 2014, 09:14 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
     
    Waiting for another poor GDP print. Then we'll see how this goes.
    9 Jul 2014, 09:25 PM Reply Like
  • berniespear
    , contributor
    Comments (251) | Send Message
     
    when's that come out rubber duck? that could be the big move up or down day for sure
    9 Jul 2014, 09:31 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
     
    First numbers come out end of July.
    9 Jul 2014, 09:58 PM Reply Like
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