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With QEII making the Fed the marginal buyer of Treasuries, its ending means Bernanke will...

With QEII making the Fed the marginal buyer of Treasuries, its ending means Bernanke will soon have to hike interest rates in order to attract real money buyers, says Don Coxe. This will put strain on a financial system unable to handle it. Commodities will benefit, as will the loonie, "the new Swiss franc."
Comments (6)
  • Christopher Grey
    , contributor
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    More hype to the commodity bubble. Commodities are already trading at levels not seen for hundreds of years relative to inflation and other goods, services, and assets. Yes, they can inflate further as can anything during a bubble. But the idea that we're at the early stages of a commodities bull market is ridiculous. Most commodities have already reached levels that are killing real demand so that the only marginal buyers at this point are speculators. This is what happens near the end of a bull market, not the beginning.
    8 Apr 2011, 12:52 PM Reply Like
  • Richard640
    , contributor
    Comment (1) | Send Message
     
    Commodities are already trading at levels not seen for hundreds of years relative to inflation and other goods

     

    Apparently for u "inflation" means the latest CPI/PPI stats...I measure inflation long term..like what the $ would buy in 1980 and now...silver hit $50 in 1980...and has just clawed its way to $40...historic inflation?
    Soybeans topped at $12.90 in 1973...
    9 Apr 2011, 10:40 PM Reply Like
  • The Geoffster
    , contributor
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    I don't see QE ending in June. Congress is proving as we speak that politics trumps fiscal discipline. Higher interest rates will not only cripple an already hobbling economy but will further increase the budget deficit. We are witnessing a once in a lifetime credit debacle which has only been made worse by the very Fed actions which will be catastrophic if they end now. It is truly a Catch 22 and the end result may be the same. As the man said, "You can pay me now, or you can pay me later."
    8 Apr 2011, 12:54 PM Reply Like
  • Merigolden
    , contributor
    Comments (34) | Send Message
     
    An ending to the QE in June portends a collapse of the financial system as we know it. Possibly, this is a desired result by some.
    8 Apr 2011, 01:01 PM Reply Like
  • kemkat
    , contributor
    Comment (1) | Send Message
     
    Although Bernanke was re-appointed by Obama, I feel compelled to add to this discussion that the Fed does not need to give into political pressure when setting its monetary policy. The FED today is feeling strong pressure to raise interest rates. The ECB just raised their rates, and the Fed can not continue to buy T-bills. So, I see the Fed very slowly raising rates, so as not to significantly deflate its holdings of treasuries, but at the same time enticing investors by boosting yields.
    8 Apr 2011, 01:02 PM Reply Like
  • Duude
    , contributor
    Comments (3339) | Send Message
     
    Commodities are benefiting now because QE2 isn't done yet. If the Fed should finally rely upon real world demand for treasuries, the resultant rise in interest rates will likely create a reversal on commodities for at least the short term.
    8 Apr 2011, 01:02 PM Reply Like
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