The Controversy over QEII

by Laura Ehrenberg-Chesler on October 15, 2010

in Debt,Economic Indicators,Fiscal Policy

The market has continued to swirl around the notion that the Federal Reserve will likely implement another round of Quantitative Easing.  Otherwise known as QEII.

While some professional investors, traders, and economists believe this will lift the markets higher due to still lower interest rates, many others think it is a major negative that will simply enable Congress’s fiscal excesses by monetizing the federal debt.

The intended purpose of another round of Quantitative Easing is a continued attempt to try to stimulate the economy.  We are not sure that this will work.  It has not worked so far.  One commodity that seems to be telling us that QEII will not work is gold, which continues to hit new highs.  Gold is a hedge against out of control governments.  

To quote the NY post columnist Terry Keenan, it would be nice if  “officials of the Federal Reserve actually  showed some reserve”.  This would provide the biggest long term lift to the markets.

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