Seeking Alpha

"(QE3) is explicitly linked to what happens with the economy," says San Francisco Fed President...

"(QE3) is explicitly linked to what happens with the economy," says San Francisco Fed President Williams. The MBS purchases will continue or even expand to include other assets "until the job market looks substantially healthier." Sounding like he believes what he is saying, Williams calls the program an "automatic stabilizer," able to be tweaked depending on the fickle statistics-based surveys of the BLS each month.
Comments (51)
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    One problem...QE3 won't do a bloody thing to improve the job market. See also QE1 and QE2.
    24 Sep 2012, 03:42 PM Reply Like
  • Hendershott
    , contributor
    Comments (1510) | Send Message
     
    You don't know where we would be without QE1 or QE2.
    24 Sep 2012, 09:26 PM Reply Like
  • Metals are Precious
    , contributor
    Comments (713) | Send Message
     
    HENDERSHOTT

     

    I agree with you. However where are we going to be because of it down the road???

     

    map
    24 Sep 2012, 09:39 PM Reply Like
  • Hendershott
    , contributor
    Comments (1510) | Send Message
     
    Also unknown, but the Fed voted 11-1 that without QE3 we would be in trouble. And apparently soon. I know everyone screams inflation but Japan belies that prediction. They are now on QE8 and still deflating. I do think you'll make money on your gold though.
    24 Sep 2012, 10:18 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    He means "automatic destabilizer."
    24 Sep 2012, 03:50 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    What scares me is that this is open ended....it will soon me 80 billion a month..150 billion a month..and buying stocks...bonds..Mortga... estate.....it will be very scary and not end well...not well at all..
    24 Sep 2012, 03:52 PM Reply Like
  • Metals are Precious
    , contributor
    Comments (713) | Send Message
     
    Maybe call it Socialization??

     

    map
    24 Sep 2012, 09:41 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    Not really socialization, but massive corporate welfare is maybe a better description.
    24 Sep 2012, 11:42 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    Add a bag of politics to the FED. Stir well, and you get QE3 on steroids. This can't end well.
    24 Sep 2012, 04:05 PM Reply Like
  • Ted Bear
    , contributor
    Comments (583) | Send Message
     
    I wish i was smart enough to understand all of this.

     

    If we have an economy of 'X' size, and we attempt to bloat it to 'Y' size, under the current scheme with the Fed inventing money out of thin air, and the Treasury printing to accommodate, can we literally do this ad nauseum?

     

    Does this just go on and on.....sort of a balance sheet with the same entry on both sides, so it expands at will, and never has to contract until both sides decide to cancel their obligations?

     

    Which don't really exist to begin with?

     

    Anyone explain it to me in simple terms?
    24 Sep 2012, 04:09 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Not only does it go on, it gets exponential. Then you live in a modern day weimar republic. Fun for all. Have you got a wheelbarrow close?
    24 Sep 2012, 05:03 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Its a wealth transfer from the general populace to the financial markets. Picture a castle on a hill made up of elected politicians and those that finance their campaigns, with a peasant village down below making it possible.

     

    Gov regulations and taxes make it possible for the castle to get bigger and bigger, and the village to become poorer and poorer. Think Marquis St. Evremonde in the Tale of Two Cities. The market check against this behavior is revolt. In the US, that can happen at the ballot box. Should the populace in the US miss that opportunity, the poverty can become so dire and the population so desparate, that it becomes ripe for a dictatorship (ie, we must suspend voting because the crisis is so bad - out of the heart the mouth speaks)

     

    http://bit.ly/SrQeEQ

     

    Thus, the way to over throw a dictator is a violent revolt. However, this could take generations before the poverty was so dire that the population makes the assessment that since everything else is gone, they might as well risk their life as well. As you can see, the market will correct things, but this is a nasty route to go.

     

    In short QE can go on for a long time. It can go on as long as the general populace has wealth to be transferred. In other words they can bleed you as long as you have blood left to be bled.
    24 Sep 2012, 05:13 PM Reply Like
  • Hendershott
    , contributor
    Comments (1510) | Send Message
     
    For starters, there's no printing by the treasury or any other entity. The Fed expands it's balance sheet and buys the debt instruments. The balance sheet contracts when the instruments mature if the Fed doesn't use the proceeds to buy something else. The point is to reduce the cost of capital, allowing more business ventures to be viable. Absent the Fed, rates on various instruments would rise as private sector demand is insufficient. Buying mortgage backed securities keeps mortgage costs low and helps the real estate industry to recover, providing jobs in construction, materials etc.
    24 Sep 2012, 09:34 PM Reply Like
  • Hedgephone
    , contributor
    Comments (1264) | Send Message
     
    Clear, Concise, Accurate -- from poor to rich flow the QE3 riches!
    24 Sep 2012, 10:44 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    H

     

    You would have done well as a propagandist for jean baptiste Colbert.
    25 Sep 2012, 06:07 AM Reply Like
  • Master Che
    , contributor
    Comments (106) | Send Message
     
    Boy; what a bunch of rubbish...
    24 Sep 2012, 04:39 PM Reply Like
  • into dark shadows
    , contributor
    Comments (323) | Send Message
     
    Rubbish,
    garbage in!

     

    Rubbish out!

     

    The world is going to hell in a hand basket and our President only has time for the T.V. show "The View?"
    God help us all,
    if we don't right the horrible mistake the people made in 2008,
    the republic falls!

     

    The Muslim Brotherhood and "The Project" will be our fate!
    Loss of freedom is never regained!
    24 Sep 2012, 05:07 PM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    If you want a pretty deep discussion of this issue, consider reviewing this thread from a couple days ago:

     

    http://seekingalpha.co...
    24 Sep 2012, 05:20 PM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    But I can tell you, these actions will not do ANYTHING for the economy to sway the election. They may move markets, but NOT the economy.
    24 Sep 2012, 05:22 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    Mark, I can think of a few different ways for QE funds can end up in someones reelection fund, how will you know it is not happening??

     

    The FED can push the $$$ to it's member banks at will now.

     

    Remember that the DNC was an investor in Solyndra....
    24 Sep 2012, 07:49 PM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    The ability of FRN $$$ to find their way surreptitiously into anyone hands is only limited by the corruption and ingenuity of those who have the ability to make it happen.

     

    For instance, a man who never had a pirvate sector job in his entire life and only worked as governor and President is worth probably more than $100 million, being able to spend $3 million on his daughter's wedding. Who would have ever considered that Clinton could amass such a fortune being a public servant (sarcasm!)
    24 Sep 2012, 11:01 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4011) | Send Message
     
    Look at it this way. Trillions of sheets of toilet paper are used and destroyed every year, but more is produced to replace it. It's the same with money. Toilet Paper Ben is simply utilizing this principle with the money supply. There will certainly be an enormous increase in the supply of toilet paper because it's cheaper to produce than dollar bills but it will be equally valuable.
    24 Sep 2012, 06:48 PM Reply Like
  • Metals are Precious
    , contributor
    Comments (713) | Send Message
     
    What i get out of that comment is that i am buying more phyical metals..That comment scares me half to death!!

     

    If it is suppose to work then why hasn't it been used in every recession?

     

    map
    24 Sep 2012, 07:33 PM Reply Like
  • Hendershott
    , contributor
    Comments (1510) | Send Message
     
    Has it occurred to you that the economic changes the US and the world are facing are not cyclical? Up until the dotcom crash, recessions were largely caused by inventory building that responded too slowly to incremental changes in demand. We don't have inventory led recessions now. The financial crisis came from the capital side as did the preceding boom. Now there seems to be a real problem with end demand shrinking in the developed nations causing a similar effect in China and other export economies.
    24 Sep 2012, 10:28 PM Reply Like
  • Metals are Precious
    , contributor
    Comments (713) | Send Message
     
    Personally. i believe we never came out of the last recession...In fact this could be a nicely covered up Depression. Figures point to this being a possibility.

     

    Unemployment is closer to 20% than 8 %

     

    map
    24 Sep 2012, 10:45 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    So much for the theory that this is not a blatant money grab because the FED is only purchasing Agency MBS's...LOL

     

    Now the FED has truly given itself a blank check to spend your devalued dollars where ever an how ever it likes with ZERO checks and balances and ZERO transparency.

     

    If you are connected you just hit the lottery!!!!

     

    Can you imagine what kind of market shenanigans are going to take place moving forward.

     

    If it was not such a travesty it would be comical...
    24 Sep 2012, 07:35 PM Reply Like
  • Hedgephone
    , contributor
    Comments (1264) | Send Message
     
    some connected folks are laughing all the way to the bank... (Not me tho lol)
    24 Sep 2012, 10:52 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    The new stock model will be to sell high, buy Low and wait for the FED to re inflate wash rinse repeat...

     

    How does an investor price this into their stocks...LOL
    24 Sep 2012, 08:08 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Ignorance prevails in this thread. No one in this thread knows how monetary policy works. A lot of comments driven by pure emotion; hate.

     

    But, if someone looks carefully, the real reason these guys hate "money printing" is that their most intimate desire of seeing despair, deflation...isn't ocurring.

     

    Life is great, there is fresh air outside, malls are packed....life isn't hoarding gold and being a awkward anti social gold lunatic.
    24 Sep 2012, 10:21 PM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    Really, deflation is not occurring....ha. That's the "supposed" reason the Fed is doing QE. Thanks Anon.
    24 Sep 2012, 11:04 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Yeah, all those unemployed and underemployed don't exist. The smashed dreams and enslavement to public dependence, well let them eat cake.

     

    Not anonymous. We have the Marquis St Evremonde here.
    25 Sep 2012, 06:15 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4011) | Send Message
     
    Good one. I have some investment advice for you. Buy shares in companies that manufacture wheelbarrows.
    25 Sep 2012, 07:37 AM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    The Geoffster, no thanks.:)

     

    I bought recently land in PR, very cheap and zero taxes for 25 years.
    25 Sep 2012, 04:36 PM Reply Like
  • Metals are Precious
    , contributor
    Comments (713) | Send Message
     
    Malls are packed ?? Are you serious. How many stores are actually empty where you live?? Empty means closed....

     

    You don't see people in despair either? No one you know is underwater on their mortgage?

     

    Not sure what planet you live on. Gold has jumped from 1k a few years ago to almost double that now...Guess no one is buying it huh..

     

    Wow.I also have plenty of friends by the way...

     

    map
    24 Sep 2012, 10:51 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    I inherited gold bars that are worth more than what you can buy in 10 years.

     

    See, I hold gold too, but gold isn't the solution to the ailments of humanity.
    25 Sep 2012, 04:31 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Then shouldn't you sell these bars and redistribute the wealth to the poor.

     

    Isn't it interesting that those that preach redistribution, never engage in it themselves.
    25 Sep 2012, 04:42 PM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    The solutions to the ailments of humanity are not "human". It is the nature of humans to engage in behavior that is fundamentally contributory to the "ailments."
    25 Sep 2012, 04:59 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    I give 50% of my capital gains to St. Jude Children Hospital and local home shelters.

     

    I believe in giving back to the poor. I'm not a selfish guy that believes that cutting tax rates to the rich would help. By giving back I'm investing for a stronger society.
    25 Sep 2012, 04:59 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Only 50%. So I guess you are willing to let others die so you can keep the other 50%. Remember, the failure to increase your giving, always means someone else is losing out. I guess you just don't care about them, so you can have your comfort.

     

    Now, what about those gold bars? Isn't it time to give those away too?
    25 Sep 2012, 05:21 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    So Romney is letting people die too. He only pays a 13% effective tax rate.

     

    Republicans are disgusting, I agree with you.
    25 Sep 2012, 05:32 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    "I inherited gold bars that are worth more than what you can buy in 10 years."

     

    Ah yes, the attempt to redirect. Nice try, but its not going to work here. The attempt to establish another's guilt, does not declare your innoncence.

     

    First you claimed how rich you were, then you claimed how altruistic you were. So which is it? You claim Romney is letting people die because he fails to provide a benefit for them, the you are guilty of that same crime.

     

    For someone who is so quick to demonize self interest, you sure are quick to defend your own. Now admit it. Based on your premise, what ever you keep for your benefit is causing someone else to die. As such, you are not altruistic, but self interested. Whatever you give, you do so, so you can brag about it. In other words your giving is not altruistic but self interested. Don't feel bad. Its a human survival instinct. Its just that you need to start using your human ability to reason instead of just your emotions.

     

    Well, then, if you have a right to your self interest, then so does everyone else. So while you might enjoy your giving, you also enjoy what you keep. You are not altruisitic, because if you were, you wouldn't be bragging about how much wealth you have, because you would have given away everything you have except just the bare minimum you needed to survive so you could work 7 days a week 18 hours a day for the rest of your life, so you could say you are working based on your abilities so you could give according to other's needs. Then, and only then, could you claim to be altruistic.

     

    But even if you could claim that, your specious reasoning that we should use gov guns to coerce everyone to do adopt your theory is flawed because it assumes that this would create the produce from which people can take and consume. The problem with this approach, is that in order to try and carry this out, it means you have to put someone in charge of the guns. As soon, as you do that, all you have done is set up the Animal Farm scenario. The human instinct to survive takes over, and those with the power start to act in their self interest (just as you have demonstrated) at the expense of everyone else.

     

    So while it makes you feel good to pat your self on the back, and ignore your hypocrisy, what you advocate for will result in exactly what you claim to hate. The result of any pursuit of a classless society, always results in two classes. Those with the control of the guns and all the wealth, and those that gave them that control (also known as the suckers).

     

    So while you might call Republican's disgusting, you must now throw yourself in with that lot, because based on your own arguments, you are no different.
    25 Sep 2012, 06:48 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    The top tax rate for the 1% is 35%. It should be 45% or more.

     

    If I made $100 million dollars per year, I could give 80-90% of the gains easily. Pay up greedy selfish guys.
    25 Sep 2012, 05:26 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    Spoken like a true communist...

     

    Just so I have it straight, You have inherited gold bars and bought land on the giant Bannana Plantation called PR.

     

    Sounds like every independently wealthy person I have ever met "Please Mr. Government take more of my money"

     

    Easy to make such altruistic claims, I'm gonna go ahead and call BS #12...lol
    25 Sep 2012, 05:56 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    The person who saves $1 does far more for society than a person that gives away $1. It is only capital that allows for the tools that allow us to be more productive, and thereby increase our standard of living.

     

    There is no such thing as a altruistic society. There reason there isn't, is because they would all starve to death in quick order. You cannot share your way to a prosperous society, you have to produce your way to a prosperous society. That means you need signals from nature's pricing mechanism that tell you what is productive and what is not. Sharing blinds you to those prices.

     

    So does that mean you let people starve? Of course not, but what it does mean is that you shift your focus from sharing to investing. Investing means being sensitive to prices, which only comes when you are free of coercion. As such, the use of gov coercion to make people share (another way of saying theft), destroys the pricing mechanism for investing, and all that is left is plunder. The result is a murderous, looting mob that burns through all the capital like a cloud of locust. The final outcome is Cuba and N Korea, with a large swath of desparately poor people all serving a small, wealthy ruling class.

     

    There is a difference between what you would like to be true, and what is true, and no amount of rhetoric will change that.
    25 Sep 2012, 07:12 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Keep defending Lloyd Blankfein, John Corzine and Thain. The Galtian overlords give you the thanks.

     

    That's what the republicans stand for? Defending the bankers....how low can they go?
    25 Sep 2012, 09:21 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    There is a difference between imposing a tax, and imposing a tax you can collect. Its a common hypocrisy how those that disparage self interest are quick to protect their own.

     

    http://bit.ly/QEBMov
    26 Sep 2012, 07:29 AM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    Somalia doesn't enforce tax collections, it doesn't have services to the public and the cherry on the top...massive spending on civil wars.

     

    The utopia of conservatives, hmmm....why aren't you there? I mean zero taxes leads to prosperity, right???
    26 Sep 2012, 11:15 AM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Somalia is ruled by warlords. Warlords are the ultimate manifestation of gov control over people's lives, as such it is the ultimate manifestation of the Coercives want - state control of people. The result is massive austerity like places that have lots of state services for people that are also very austere like N Korea or Cuba.

     

    Its not the presence of gov corecion inducing services, but the presence of gov coercion protecting you from coercion. This is the fatal flaw in your plan, is that you want to use coercion to try and produce capital. Coercion only has two uses. It can be used to steal (like a communist/socialist leader or a Somali warlord), or it can be used as a defense against stealing.

     

    The goal then of a gov should be used to wring coercion out of transactions. If you use gov to impose coercion like in forcing people to donate to your favorite charity (ie gov wealth transfer programs), you have set your society onto the path whose ultimate manifestation is Somalia or Cuba. A warfare state where everyone resents everyone else, which are the same sort of resentments manifesting themselves in Europe (see Catalonia).

     

    The bottom line here is that you don't advocate for peace and prosperity, you advocate for coercion. As such, you advocate for a violent, warlike society, like Somalia. As such, I shouldn't wonder why you haven't moved there, since you have far more in common with them than I do.

     

    You have been sold a fraudulent bill of goods your whole life. Now its time for you to start listening to reason. You need to embrace the principals of enlightenment and abandon your extremist coercive ideology. Peace and prosperity is the way to go.
    26 Sep 2012, 11:39 AM Reply Like
  • WMARKW
    , contributor
    Comments (10275) | Send Message
     
    Anon.....you are probably right. We didn't have Federal Income Taxes until 1913, and we did pretty well without them. There really is no reason for taxes. Government spending is not funded by taxes - need not be funded by taxes.

     

    Taxes are an illusion created by the "government" to achieve a goal that only they know about. The reality is the government can be funded by printing money. The size of the government and the number of $ printed need only be managed by their impact on inflation.

     

    We currently have excess capacity and resource underutilization. The government could undertake massive spending programs (hopefully not wasteful) and have a positive impact on the economy, but no one has the political will to fight that battle, much less the understanding.
    26 Sep 2012, 11:35 AM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
     
    We did not do well before 1913. Born to a poor family in 1900 was very different from being born now in such a family.
    26 Sep 2012, 12:05 PM Reply Like
  • jhooper
    , contributor
    Comments (5481) | Send Message
     
    Well that's not necessarily true. If you look at the 1880s and 1890s real income was going up because the cost of everything was coming down. As such, the demand for labor (note the large influx of immigrants to the US from Europe during this time because of the all the jobs that were being created - similar to the capital flight from Europe to the US that we see now) kept wages stable. It was the drop in cost of consumer goods that was giving everyone what amounted to a wage increase.

     

    The reason their lifestyle was less than now, is they did not have the technology that we do.

     

    So the comparison is not how better modern day standards of living compared to those of 100 yrs ago, but how much better our current standards of living could be if we did not have so much coercion imposed into our everyday transactions.

     

    W makes a good point, but we need to go just a bit further to really understand the physics of what is going on. All govs are ultimately funded by the wealth their societies create. Thus whether you exprorpriate that wealth (income taxes, sales taxes, etc), or whether you issue interest bearing (treasury notes) debt to get the wealth, or even if you inflate the wealth away with noninterest bearing notes, the true cost to the society is what portion of their productivity the gov causes to be consumed.

     

    What people don't understand is that everyone bears the cost of gov consumption equally. The problem is they just don't see it, thus they tend to advocate for policies that tax them because they don't even know they are being taxed. We all pay a consumption tax at the same rate, because the cost of gov (military to welfare) is inside the cost of everything, everybody consumes. In short the reduction in everyone's lifestyle compared to what it could be is how the gov is funded.

     

    Marginal tax rates with regards to income taxes are just as important to funding a gov as management fees from the subsidiary are to funding the parent. It all eliminates in consolidation, and what you are left with is the consolidated productivity of the populace.
    26 Sep 2012, 12:19 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|